When an international company goes into administration and employees in the UAE are concerned about their end-of-service entitlements, it is important to be aware of several legal points, experts say.
International oilfield services company Petrofac laid off 180 people in the UAE earlier this month, after a multibillion-dollar Dutch offshore wind contract was cancelled, as the firm struggles with mounting debts. Reports claim total unpaid gratuities could exceed Dh27 million.
On October 27, Petrofac said its board had applied to the High Court of England and Wales to appoint administrators for its holding company after Dutch grid operator Tennet cancelled a major offshore wind contract in the Netherlands.
Preferred creditors
“If an employer enters formal restructuring or bankruptcy and cannot pay gratuity, employees [including expatriates] become creditors in the court‑supervised process,” says Michael Kortbawi, partner at BSA Law.
“Unpaid end‑of‑service benefits [UAE gratuity], and wages and salaries that are paid periodically rank as ‘preferred’ debts ahead of ordinary unsecured creditors.
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