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Mon 15 Jun 2009 01:34 PM

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Legal firm saw UAE job loss inquiries peak in Dec

Clyde & Co says drop off in advice requests in 2009 could signal that worst is over.

Law firm Clyde & Co saw a 100 percent increase in requests from UAE companies for employment law advice in December 2008 compared to the previous month, associates of the firm said on Monday.

But the firm said requests it received about redundancies had dropped to form only 20 percent of its total instructions, indicating the worst of the restructuring phase for companies was mostly now over.

“There was a shocking increase in employers turning around and saying ‘we need to get rid of 10 percent of our labour force, how are we going to do that?’,” said Sara Khoja, associate of Clyde & Co in Dubai.

Local advocates were still inundated with labour claims going through the legal system, she said.

Since the economic downturn hit the emirates, the firm’s clients had been looking at ways of reducing costs, ranging from making redundancies to less drastic options like deferring new joiners, seconding employees or reducing working hours, said Joanne Hennessy, also an associate.

She said redundancies were still taking place.

Employers had to be more aware of their legal obligations to terminated staff to reduce their exposure to labour claims, said Hennessy.

As dismissed employees were more likely to struggle to find alternative employment, there was a risk they would adopt a more litigious attitude, challenging the reasons for their dismissal and end of service entitlements, she said.

With salary payments representing the single biggest expense for firms amid the economic downturn there was likely to be a move in the region from annual salary increases to performance-based pay, said Bronwyn Colgan, an associate with Clyde & Co.

There was a growing trend among local UAE firms to set up employee incentive schemes similar to those adopted by firms in the US and Europe in an effort to minimise staff costs and boost employee morale, she said.

Clyde & Co had received a number of inquiries from local companies about such schemes, which would mirror company shareholder plans, by offering staff a payout if a firm achieved its annual performance targets, she added.