What happens to employees when a company closes in UAE

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Have you ever wondered what happens to the employees when a company abruptly closes its doors in the UAE? It’s a daunting situation that brings forth a plethora of questions. Let’s unravel the answers together.

Background of the UAE Labor Market

The United Arab Emirates boasts a unique labor market. A significant portion comprises expatriates, drawn to the nation for its promising career opportunities and tax-free salary. Yet, just like any thriving market:

  1. Economic dynamics in UAE:

    Economic ups and downs are inevitable. The UAE, while known for its opulent skyscrapers and luxury lifestyle, isn’t immune to economic challenges. Oil price fluctuations, global market conditions, and regional political issues can impact its economic health. And, like a ripple effect, businesses sometimes feel the crunch leading to closures.

  2. Prevalence of company shutdowns:

    Not all closures result from financial issues. Strategic shifts, mergers, acquisitions, or even global restructures can result in a company winding down its operations. Did you know that in recent years, several firms, especially in the SME sector, faced shutdowns in the UAE? Yes, it’s an unsettling reality but one that every employee should be aware of.

The Legal Process of a Company Shutdown

So, a company decides to shut down. What next? This is not a simple “pack up and leave” situation. The UAE’s stringent labor laws ensure protection for its workforce, and a company must adhere to them.

  • Announcement and Notice Period:

    Legally, an employer has to provide a minimum notice period, typically of 30 days, before terminating an employee due to a company’s closure. It’s not just a courteous heads-up; it’s a mandate. Can you imagine the chaos if companies didn’t have to provide a notice?

  • Settlement of Employee Dues:

    When a company decides to shut its operations, it’s legally bound to settle all dues with its employees. And, by dues, we mean:

Type of Dues Description
End-of-service gratuity A sum given based on the duration of service, longer you’ve worked, the larger the amount.
Unpaid Salaries Compensation for the days you’ve worked but haven’t been paid for yet.
Pending Vacations Amount equivalent to the number of vacation days not availed.
Other Benefits Might include bonuses, commissions, or any other agreed-upon benefits.

Such detailed measures ensure that an employee isn’t left high and dry when a company ceases operations.

Impact on the Employees

We’ve spoken about the legal process. Now, let’s delve into the personal ramifications for the workforce.

  • End of service benefits:

    As touched upon earlier, the longer you’ve been with a company, the more you’re entitled to in terms of end-of-service benefits. It’s a silver lining, an acknowledgment of the time you’ve spent contributing to a firm. Still, is it enough to cushion the blow of sudden unemployment?

  • Visa implications:

    Here’s the part where it gets tricky, especially for expatriates. When you’re employed in the UAE, your company typically sponsors your visa. So, what happens when that company no longer exists?

    1. Process of Visa cancellation:

      A company’s closure often leads to the cancellation of your employment visa. This cancellation process is generally initiated by the employer and should ideally be done within 30 days of the termination.

    2. Impact on dependents:

      If you have dependents under your visa, like a spouse or children, their status too becomes precarious. They might need to exit the country temporarily until a new visa is secured, which, understandably, can be quite stressful.

Seeking New Employment

The aftermath of a company closure can be overwhelming. But as the adage goes, “When one door closes, another opens.” Let’s delve into the journey of seeking new horizons in the UAE:

  1. Challenges in the job market:

    The UAE, with its dynamic and competitive job market, can be a challenge to navigate, especially when a sudden influx of job seekers enters the scene after a prominent company shutdown. Recruiters often find themselves flooded with applications, making the competition fiercer. Additionally, prevailing economic conditions and industry-specific downturns can further intensify the job-hunting challenge.

  2. Opportunities after a company shutdown:

    Yet, all is not bleak. Company shutdowns, especially of significant players, often create a buzz in the industry, leading competitors to scoop up the talent. Networking events, job fairs, and industry conferences become prime opportunities for those affected. Remember, it’s essential to remain proactive, update your skillset, and tap into your professional network.


In essence, the closure of a company in the UAE, while daunting, is not the end of the road for its employees. The nation’s stringent labor laws ensure the workforce’s rights are protected. While the immediate aftermath might be challenging, with resilience and the right approach, new opportunities can be forged. Life, as in business, is full of unexpected twists, but remember, every end is a new beginning.


Q: What is the minimum notice period for employees when a company closes in the UAE?
A: Typically, the minimum notice period is 30 days. However, it can vary based on the employment contract and the specific circumstances of the company’s closure.

Q: Are there any legal provisions for employees in case of sudden company shutdowns?
A: Absolutely. The UAE labor laws stipulate that employees must receive all their pending dues, including end-of-service gratuity, unpaid salaries, pending vacations, and other benefits.

Q: What happens to my employment visa if the company I work for shuts down?
A: If a company shuts down, the employment visas sponsored by that company will typically be canceled. This process is generally initiated by the employer and should be completed within 30 days of the termination.

Q: Can my dependents stay in the UAE if my visa is canceled due to a company closure?
A: If your visa gets canceled, the status of your dependents (like spouse and children) also becomes precarious. They might need to leave the country temporarily until a new visa is arranged.

Q: How can I secure a new job quickly after a company shutdown in the UAE?
A: It’s crucial to be proactive. Attend networking events, utilize job portals, tap into your professional network, and consider seeking the help of recruitment agencies. Updating your CV and skillset can also give you an edge in the competitive job market.