In theory, losing your job in Dubai is a nightmare: redundancy isn’t recognised as a concept and, for expats, once employment is terminated the clock starts ticking until their residency visa is cancelled and they have to leave the country.
However, when international banks are making cuts in the region they’re offering unusually generous severance packages. Senior bankers are being offered up to a year’s salary when they lose their jobs, according to local headhunters who declined to be named because of the sensitivity of the matter.
“These guys losing their jobs are getting around $350k tax free, which isn’t a bad deal,” said one prominent headhunter in Dubai. “Most are taking the money and then pondering their next move. A few international firms are selectively hiring and local institutions are scouring for talent falling out of the bulge bracket firms.”
Stuart Walker, a partner who specialises in banking employment disputes at lawyers Afridi & Angell in Dubai, agrees that banks are generally being generous to departing employees, but said this isn’t always the case.
“If a role is being eliminated because of a change of strategy within an international firm that results in someone’s job being made redundant, then an annual salary is common as a severance package,” he said. “However, there remains a hire and fire mentality in the DIFC and some banks have been getting rid of senior, expensive employees and paying them the bare minimum.”
Credit Suisse, Deutsche Bank, Morgan Stanley and Nomura are among the international banks that have trimmed headcount in the Middle East over the past few months. Firms like Barclays, J.P. Morgan and Standard Chartered have all made some hires, but few banks are actively expanding.
Although redundancy doesn’t exist as a concept in the Middle East, even in the Dubai International Financial Centre, ‘end of service gratuity’ is the standard severance pay – 21 days’ salary for every year of service.
If you’re brought in on a fixed-term contract, and lose your job before it ends, then an employer is required to compensate for the remainder of the contract. However, most expats in the DIFC are on an open-ended employment contract, said Walker.
Companies in the DIFC are required to give laid off expat staff a reasonable amount of time to find alternative employment – three to six months – meaning that their employer sponsorship isn’t cancelled and they can stay in the country.
Headhunters suggest that most bankers who lose their jobs are staying in the region and attempting to secure a new job locally, because of a lack of opportunities in their home markets.
For example, Tom Emmet, who left Royal Bank of Scotland in December last year, resurfaced as head of M&A in the Middle East and North Africa at Standard Chartered in February.