Immigration Aspects of Termination of Workers in the UAE
October 7, 2015
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The decision has been made, perhaps due to poor performance. You have tried it all – cajoling, serious conversations, a performance improvement plan – and the employee is not living up to company expectations. The record has been established, you have done your HR due diligence. The next step is to advise the individual to begin the termination process. Now you have to consider the immigration aspects of this employment action. Here are some FAQs to provide guidance to assure both the employer and employee comply with legal requirements:
What form of notice is required to initiate the process of immigration termination?
A written letter or termination notice signed by the employer will do. The exact form and timing of notice may vary depending on the type and terms as specified on the employment contract. In case of any ambiguity or dispute about the form or timing of the notice, appropriately qualified labour counsel should be sought.
Can the employee be discharged immediately?
In the event of termination, an employer may prefer to not have the employee on premises and to cut their access to all of the employer’s files and systems and to avoid an uncomfortable atmosphere at the workplace for the discharged employee and co-workers. Typically, an employee would be accompanied by an HR representative in packing up their personal items and then escorted off premises after all company property (keys, company phone, badge, etc.) are returned. However, the employee (or the employer in the event of a resignation) is accorded a notice period before the employment actually ends. So while an employer may send an employee home, never to return, the employer is required to compensate the employee at the labor contract for the period. Again, look to the labour contract or confer with labour counsel to see whether there may be requirements in addition to those related to immigration provisions.
What are the steps to be taken with sponsoring or immigration agencies?
Assuming the employee’s residence status was gained through the sponsorship of the employer, as opposed to someone under a spouse’s sponsorship, the employer must assure that the residence permit is cancelled as soon as possible after completion of the last working day (including the notice period). Certainly, cancellation of a residence permit must not be delayed beyond 30 days from the end of employment. The residence permits for any dependents sponsored by the employee must first be cancelled and then that of the employee. As part of the notice and exit interview process, the employer should complete and have signed by the employee the cancellation forms. These are then submitted to the Immigration Authorities along with the original passports and Emirates ID cards for the employees and dependents. From the date of cancellation of residence permits, individuals are typically given 30 days grace period to exit from the UAE or to change their sponsorship (perhaps by another employer or by a spouse). If the employer is located in the mainland jurisdiction, a labor card will also have to be cancelled ahead of residence permit. Labor card cancellation releases the employer from Wages Protection System obligation which, if violated, results in the company suspension with the Ministry of Labor. Note that outstanding traffic fines accrued by the employee or any criminal or civil actions currently pending would prevent cancellation until they are settled.
An overstay fine will be imposed by the Authorities due to overstay in the UAE after expiry or cancellation of entry permit, residence permit or appropriate visa and it will be calculated as follows:
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AED 25 per day for the first 6 months,
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AED 50 per day for the following 6 months,
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AED 100 per day in excess of one year.
The overstay fine can be paid upon departure at the airport, or during the status amendment if individuals are changing sponsorship.
What if the employee refuses to cooperate with the cancellation process? Is the employer responsible if the employee fails to depart?
Not a smart thing for the employee nor good for the employer. The employer may need to report the employee to the authorities including possible reports as an absconder which has serious ramifications for the employee. Some jurisdictions will impose a fine on employer who fails to provide a copy of an exit stamp of the employee whose visa had been cancelled. In any event, in such disputes, the employer should seek advice from appropriately qualified labour counsel before taking any action.
Are there any other financial obligations to the employee which arise in the immigration context beyond the cost of the notice period?
Indeed there are. Whilst going through the administrative procedures, official cancellation application forms require the signature of the employee usually with a declaration sighting that they have received all their dues from the employer. It is therefore imperative that the employee is satisfied that salaries, accrued leave, end of service gratuities and other benefits as per the terms of the employment contract or relevant labour laws have been received. The employer must also take into account the cost and procedures related to the repatriation of the employee, his things and his dependents abroad, except where the employee may be changing their sponsorship to another employer in the UAE.
Does the employer assume liability for the loans or debts of the employee?
The employer is not responsible for any loans or other debt the employee accumulated with third parties, assuming the employer is not a co-signer or a guarantor of such debts. It is important to note that some banks may require employers to provide salary transfer commitments in order to provide their employees with banking facilities such as accounts, credit cards and personal loans. Hence, the employer may be required to notify the bank in cases of termination of employment. An employee should ensure that he or she proactively address their debts with banks as failure to do so may be subject to immigration restrictions and prosecution. If the employee’s lease was in the name of the employer, the employer is on the hook for it.
Considerations for the employee if new employment is found.
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Labor ban. The UAE has liberalized its policies quite significantly over the past few years and labour bans apply in limited circumstances and can also be waived. Procedurally, labour bans for 6 months are generally applicable to individuals working in the mainland jurisdiction (although rarely in the free zones as well), where they have completed less than 2 years’ service with their employer (or non-completion of a limited term contract). Also, the Ministry of Labour may waive the ban based on the employee’s professional qualifications, designation and salary offered. On the other hand, the employer may impose a labour and immigration ban for a limited period and only if there are valid reasons (e.g. the employee committed fraud). Generally, qualified legal advice should be sought by employers before requesting such bans given that the authorities may impose penalties on frivolous cases filed by employers.
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Accommodation. An employee who is provided with accommodation by their employer must vacate the premises generally within 30 days from the date of termination of the service, unless otherwise agreed with the employer.
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Sponsorship transfer. Sponsorship transfers are not permissible outside of the free zones: existing employment residence permit must be cancelled, and separate approval sponsored by a new employer must be secured.
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Dependents’ permits. Residence permits of all dependents, including domestic helpers, must be cancelled prior to cancelling principal’s employment residence permit.
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Both labor card and residence permits must be cancelled. Individuals will not be allowed to depart UAE if their labor cards have been cancelled, but the employment residence permits remain valid.
The above analysis speaks to requirements under the UAE law. Employers need to account for any other provisions contained in the labor contract or a separate agreement they may have in place with the employee, so long as they do not conflict with the UAE regulations. Employer should review them with the guidance of their employment counsel.
