Involuntary loss of employment can be a very stressful experience for employees and employers. However, some aspects could alleviate all the stress caused by involuntary dismissal. Furthermore, with the help of experts who advise you, you can cope with the negative emotions and other aspects generated by the dismissal actions.
In this article, you will learn what involuntary dismissal is about, as well as the implications it has for you and your employees. Likewise, you will be able to learn about other aspects of involuntary loss of employment insurance in the UAE.
What is the involuntary loss of employment?
A large proportion of the costs of a company goes towards staff salaries. Therefore, when business is in a downturn, it may be necessary to reduce staff to save costs. If you are considering layoffs at your company, here is a guide to the pros and cons of voluntary redundancy.
Involuntary loss of employment occurs when you as the employer terminate the employment contract, even though the employee wishes to continue working. Similarly, you may have to do this because your business may be in recession and you must reduce staff. This is because most of the company comes from paying hired workers.
The politics of involuntary loss of employment
For you to ensure a consistent procedure for employee termination, you must follow certain established standards. Therefore, the manager and human resources staff must approve all layoffs and under labor law. However, if the employee commits serious misconduct, you can suspend the employee while you notify to HR an open an investigation.
Additionally, the policy will apply to both temporary and full-time employees.
How to proceed with involuntary dismissal
- If you dismiss the employee before the end of the contract, it may be considered an involuntary loss of employment.
- The involuntary termination of a contract may be due to serious misconduct by the employee or due to workforce reduction.
- Before proceeding with the dismissal, you must give some warnings. However, if the employee continues to violate company regulations, you may apply discipline or terminate the contract.
- When you give warnings, you will have to document it and generally you must fire the employee if he/she has more than 3 violations.
Concerning the involuntary loss of employment scheme, you will proceed as follows:
- You must inform the employee of the reason for the dismissal.
- The date of dismissal is the last day on which the worker held his or her job.
About involuntary and unjustified dismissals:
- You will place in the file of the employees that there is no cause for dismissal.
The severance payment will be at the discretion, following the base salary that the employee earned. However, an employee dismissed for misconduct will not have the right to compensation.
Recommended process for the involuntary loss of employment
The process of involuntary loss of employment UAE that you can apply in your company is as follows:
- The Human Resources department of your company should schedule an interview with the departing employee. In this way, companies can obtain information that helps them improve their relationship with their employees. Moreover, it will serve to inform the employee about the payment process and other legalities of the process.
- Next, the manager of the worker should complete a payrollform that the HR department will provide. Thus, you will be able to comply with the processes uniformly and under the appropriate dismissal systems. Additionally, the employee will be able to receive adequate payment under the UAE labor laws.
- In the same way, you must pay the amounts owed to the employee, corresponding to the laws of the country.
- Likewise, you should review the validity of the medical insurance, which would generally expire on the last day of the month of dismissal. However, there may be an agreement between the parties for a different expiration date or according to local laws.
Positive Aspects of Involuntary Job Termination
Currently, laying off employees may be the only way to keep your business profitable in the UAE. Also, although it may seem contradictory for the employee, the involuntary loss of employment can provide hundreds of benefits to your company. Therefore, with involuntary dismissal, you can save on costs and avoid financial problems if you are in a recession.
This is because the company use most of the money collected to pay the salaries to all their employees. Consequently, the fewer workers the company has, the less money will be invested in the payroll. Additionally, by reducing the number of employees, you can use this capital to develop your company or to acquire elements necessary to sustain it.
Personal and Professional Impacts of Involuntary Loss
With the involuntary loss of employment, certain emotional turmoil is generated in employees, as well as in managers and HR. However, you can implement some measures to improve the experience of affected employees. These considerations may include advance notice, detailed reasons for dismissal, and some transition services.
Likewise, the measures have to be in line with the values established in the company that demonstrate its concern for its future. With this action, you will demonstrate to the affected employees, as well as those who continue to work, that you value their contribution to the company.
Pros and Cons of Involuntary loss of employment
Involuntary loss of employment UAE can bring both positive and negative aspects. Thus, below you can see the pros and cons of this process:
Perspectives on Involuntary Employment
With the Dubai involuntary loss of employment, communication processes from the first moment are important. Thus, in the early stages, you can reduce the feeling of denial and shock, and influence better acceptance of the fact. Furthermore, with consulting it can be extended to the employees who will remain in their positions for moral strengthening and, in turn, production.
At the same time, for workers affected by loss of employment, you can contract transition and outplacement services. These organizations will be able to help the worker cope with the emotion of the loss, as well as the search for a new job. Therefore, laid-off employees will be able to concentrate their efforts on finding a new job.
Also, transition and outplacement services will be able to provide these employees with very valuable support and training.
Financial Considerations Pros and Cons of Job Termination
The dismissal of employees results in an automatic reduction of expenses associated with salaries, insurance, and labor benefits. Additionally, the additional capital you will have may make it easier to have low-cost or limited contract staff. Also, you may compensate high-performing employees with additional payments to what they already earn.
Similarly, involuntary loss of employment could help improve your business if you are having financial problems, it will also improve long-term profitability. Additionally, if the dismissal was due to serious misconduct towards the company or lack of performance, your dismissal will bring a moral improvement in the productivity of the other employees.
Involuntary loss of employment UAE
The authorities of the United Arab Emirates implemented a scheme for the loss of employment since January 1, 2023. This plan will provide income protection to residents and expatriates in the event of loss of employment. The ILOE, or involuntary loss of employment scheme, is mandatory for all employees who work in the UAE and anyone who does not comply will receive sanctions.
Similarly, this plan is administered by MOHRE to protect the financial well-being of workers and compliance with labor law. Subscription for the insurance is mandatory by law, according to recently established regulations. Otherwise, you may receive the legal sanctions establishes in the laws as you will see below:
- For non-compliance with the subscription term, you will pay a fine of AED 400.
- For not paying premiums you will receive penalties of AED 200.
Additionally, as a guarantee that it will comply, MOHRE may reduce fines through the WPS or Wage Protection System of the Emirates. In addition, it will be applied if the fines are not paid within 3 months. Likewise, you must take into consideration that when you fail to pay fines will negatively affect your employees.
Exemptions from mandatory involuntary loss of employment plan enrollment
As we have mentioned, the ILOE plan is mandatory, however, there are some categories excluded from this subscription. Hence, you will see the exemptions to this mandatory registration:
- Workers with temporary contracts.
- Young people less than 18 years of age.
- Investors.
- Domestic staff.
- For retirees entitled to a pension and who have a new job.
On the other hand, regarding the process of subscribing to the ILOE plan, workers will be able to do so regularly through various channels. However, the simplest will be online registration through the official platform of the scheme.
Features of involuntary loss of employment insurance
For involuntary job loss in Dubai, the ILOE scheme offers certain features for the protection of the worker when he or she loses his or her job. Below you can see in detail what they are about:
- Employees will be eligible to receive their job loss compensation after 1 year of enrolling in the plan.
- The plan will offer two categories for beneficiaries, which will provide more flexibility to subscribed employees.
- The ILOE plan will provide compensation for up to 3 months so that subscribers have sustenance while they find a new job.
- Compensation will cease when the subscriber finds employment or leaves the Emirates.
ILOE Terms and Conditions for involuntary loss of employment
To claim compensation from the ILOE plan, subscribed employees will have to meet the following conditions:
- Be subscribed for at least 1 year to be eligible for compensation.
- To have uninterrupted coverage, timely payment of premiums will be necessary.
- The termination of employment cannot be voluntary or due to a dismissal caused by a disciplinary sanction from the company.
- Timely filing of the claim when involuntarily losing your job.
For Dubai involuntary loss of employment, the policy will be issued by an authorized insurer. Likewise, if you wish to make the claim, it will also be through this means, since the manager can contact the insurance manager of the ILOE plan.
Involuntary loss of employment insurance compensation
A worker may lose his or her right to receive compensation due to the following circumstances:
- If you lost your job for disciplinary reasons as established in the Labor Law of the country.
- If your claim involved any fraud or deception.
- The company where he says he works is fictitious.
Disadvantages for your company when Firing Staff
Laying off your employees can make the work environment for other employees one of total uncertainty. In many cases, it will be necessary for the remaining employees to take the position that their laid-off colleagues have left. Thus, employees may suffer from low morale and growing concerns about their job integrity.
Likewise, employees who have to fill the positions of their colleagues have to deal with overwork and as a consequence make more mistakes. On the other hand, customer service can also be negatively impacted by involuntary job loss of workers.
For example, in a store where there are 6 customer service employees and due to the dismissal there are only 3 left, it could cause discomfort among customers. Consequently, due to a lack of employees, perhaps your customers will have to wait longer to be served, which may cause the loss of some of them.
Consequently, any termination program related to involuntary loss of employment may present certain challenges. However, if for some reason you have to proceed with termination, consider the pros and cons you have seen here. Therefore, taking this knowledge into account, you will be able to choose the best way to terminate involuntary contracts with your employees.
Either way, if you need accurate information about labor laws in the UAE, we can help you obtain the necessary information. To do this, you just have to contact us and learn about each of the services we offer you as employment professionals.
