Company being sold: what happens to employees?
I never paid attention to these queries which I had received in the past, “What happens if the management of the company changes or if my company where I work is sold by the owner?”
UAE Labour Law has an Article which clearly states as to ‘what happens if there is any change in the company’s legal status?‘
Article 126 of UAE Labour Law mentions below:
If any change takes place in the form of the establishment or in its legal status, valid contracts at the time of change shall continue to exist so between the new employer and the employees of the establishment, and service shall be deemed to be continuous. Both the former and the new employers shall jointly be liable for a period of six months for the fulfilment of obligations arising from contracts of employment in the period prior to such change and after the lapse of the said period the new employer shall be solely responsible.
Explanation: This Article clarifies lot of details with regard to the doubts. Basically it mentions that if ever the company where you work is sold or if there is a change in the legal status of the company, the employment contracts which are valid at that time remain valid. This means, the new owner can not change the employment contracts of the employees just because they have bought the company. Further, it states that, for the first 6 months of the new employer, for all obligations within the employment contract of employees, the new employer and old employer are jointly responsible to fulfil the obligations. These obligations could include, salary, medical insurance, overtime, commissions, bonus, housing etc. After the first 6 months of being sold, the old employer has no obligations and all the obligations are with the new employer.
This way UAE Labour Law protects the rights of the employees and employers. It also provides enough time for the new employer to judge the workings of the company so that they are clear over a period of 6 months, how the company operates. Hope this has clarified your doubts.
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