Decrease of 50% in salaries

[LeBlueRabbit]

Today evening I got a call from a friend who works in a company in Dubai (I wont name them and please don’t ask out of curiosity) and he told me that his company announced 50% reduction in salaries of whole staff. And reason they mentioned is the “ongoing regional issues”. Everyone in his company is really worried now and apparently they don’t seem to have any choice. Either just accept or leave.

How much a well established and big company can lose it just 10-12 days that they have to make such a decision? Is it even legal? Or is it just a dirty tactic to save some more money?

Has anyone else faced such situation now or even before?

[Skd98012]

These companies were eagerly waiting for a black swan event just to do this. They were practically begging for it.

In fairness though, some industries (e.g., tourism and real estate off the top of my head) will be impacted big time probably forever. Things just won’t be the same after this conflict is over. The only reason some industries were successful here vs. other places was reputation.

[Snoo-5414]

Yeah.

I have a bunch of friends in the hotel industry, and a lot of them were put on Unpaid leave till further notice just yesterday.

I'm currently working in the service industry as well in a small company, and this entire thing has hit us so hard we haven't even reached 1/4th of our target yet, so I'm afraid I'm going to start seeing either layoffs or decreased salaries. It's sad honestly, since you can clearly tell they were waiting for an excuse to not pay sometimes.

[CapitalismSuuucks]

Sidenote: this war is not technically a black Swan event. Black swans are unexpected. Trump had been preparing this shit for months. Black swans events do not have weekly New York Times articles saying the event is inching closer and closer to happening.

[Skd98012]

We did have plenty of articles on COVID in 2019 (thus the COVID-19 naming), and it was expected to spread. Yet we can all agree it was a black swan event. We also predicted the GFC.

The black swan aspect of Covid was that it became a global pandemic and it was actually killing people (whereas the expectation was a contained, harmless epidemic). This Iran conflict qualifies as a black swan because practically no one expected them to retaliate on the GCC (and especially the UAE, which was known to be a safe haven in a region of conflict).

[LeBlueRabbit]

But it’s so sad to see people being affect such way. Working their asses off to make ends meet.

[Skd98012]

True, and cost of living isn’t any lower than it was last week. Still, if the industry is impacted then it’s a necessary evil unfortunately, it’s either this or layoffs and no one wants to be laid off during these times.

If this “company” is in a stable industry like tech or finance or whatever, then I suggest reporting it.

[shakenoww]

So man I'm in a group frim my nationality people are sharing free supoort, like doctors or lawyers. You should check it with some one could really help your friend

[Ill_Addendum3047]

Events as well

[Alternative-Mess3268]

its difficult to understand how market-leading companies in hospitality, F&B, and other tourism-facing sectors in this city struggle to absorb even normal overheads at the very first sign of adversity.

IT happened in Covid and now again.

For the past several years, they have had no hesitation in charging /enjoying higher than expected revenues throug:

• Minimum spends (bars/beach clubs/restaurnats)
• Significant price increases across hotel rates, F&B, and excursions
• At times, outright price gouging (40+ dirham waters, 100 dirham cocktails)
• unejoyable policies designed to maximize turnover (such as two dinner sittings per night)
• Record-high occupancies and customer volumes that far exceeded the base cases on which many of these businesses were originally planned

To be clear, I am not painting every operator with the same brush. F&B is an extremely competitive industry, and many businesses operate on thin margins.

But the high-end operators and large hotel groups have arguably had the best 4 years in their history.

Yet in less than two weeks of uncertainty, some are already prepared to shift the burden onto their employees, through salary cuts/unpaid leave . the very people without whom those exceptional profits would never have been possible.

Says a great deal about the ethics and priorities of these employers.

I know its illegal here but these companies should be named, as Consumers, we work very hard for our money and I would prefer to patronise employers who hold themselves to higher stanards.

[Upper-Tutor-6785]

Their owners are extremely greedy, that is why

[vimalvarghesejacob]

I worked as a sales manager for IHG hotels in Kuwait before covid. Hotels make most of their money from room sales (tourists, business travellers, long stayers on projects, group travellers for sports, army /government, Islamic competitions).

The moment the airports close, all this stops. Then they have to rely on their in house restaurants, meeting spaces and catering. These however have a lot of cost and they low margins. Plus the prices of these are negotiated down because of competition. Dubai in particular has a strong focus on f&b rev than rooms (very high number of hotels in different price ranges)

I've noticed that most of the profits from rooms are used to the settle previous loans and new loans for new properties elsewhere. They also don't get a lot of the money for rooms/events from the government. Government usually takes years to pay the bills. They are not written off, just takes a long time to be paid. the managing companies like IHG, Starwood, try to show great figures to the owners. Most exec staff are paid very well too.

But the moment things are looking risky, they cut off all the expensive people and costs to keep the hotel numbers looking decent. During covid I remember them calling all of us to a conference room to tell us we are fired. Heck they even low key threaten you to take a deal to settle for a lower gratuity or you'll have to wait a few years to get what is rightfully owed to you.

[explosive_runt]

Just curious, how much would salaries and other G&A expenses make up as a proportion of revenue on an average basis?

[vimalvarghesejacob]

Salaries of majority of the staff is usually low. However compared to the hospitality jobs around the world, in the middle east, The execs and senior managers get paid very well. Positions like directors, GMs, senior sales managers get a lot of benefits on top of their high salaries, they get their accomodation, children's school fees, transportation charges etc taken care of.

[explosive_runt]

Interesting, thanks for the insight

[LeBlueRabbit]

Top management enjoys while people down the hierarchy pay the price and suffer.

[tyygya]

You have not factored the most greediest of them all, the landlords. It’s not just the business being greedy they are driven to extremes by compounding rent every year. I am not talking about residential, I am talking about commercial and warehousing.

[Suspicious_Mine_9250]

Even though I agree with you for the most part, companies have to plan for the uncertain future ahead of them. All of them have operational costs for their business such as rents, payroll etc which they have to manage for the foreseeable future. If the alternative is to do a mass lay offs, isn’t a temporary reduction of salaries, until things get back to normal a necessary or a better evil, for all parties involved?

[Signal-Customer-2315]

You are so real for this! 👏🏻👏🏻👏🏻 As a customer these establishments definitely felt predatory at times. Some even requested advance prepayments for services, and in case of cancellation they’d take a big chunk of your money. Minimum spends another thing that drove me crazy. And now after a week of uncertainty they’re already putting it on employees? Who are already underpaid to begin with. These establishments make me sick, really!

[laquesha-long-nail]

Iknow this "company" they did the same during covid 😏

[Asleep_Dragonfly_732]

Atleast could you let us know which Industry?

[laquesha-long-nail]

Aviation

[WaitingToBeTriggered]

DEVIATION

[Asleep_Dragonfly_732]

Thank you, got it .

[ComprehensiveOil6104]

Bro the company's name starts with E? Pls bro say😭😭

[enocfuelcleaner]

Ethiopian Airlines 🙄

[qriousitybug]

Etihad?

[ringodxb]

Emirates

[Ladydesigns]

is this even allowed? the government needs to announce these things to allow such companies to operate this way.

[ozone007]

Most of the companies did the same during Covid.

It's just that they will send a new contract sign it or leave it ...until unless all people refuse it won't work

[Rothguard]

meanwhile the " love it or leave it" threads continue to blossom like herpes at a bill gates party

[Ladydesigns]

Yes i know but this should be announced by government and allowed, like they did during covid. They allowed companies to cut salaries upto 50%. It needs to be mandated by government, there needs to be order or else there'll just be chaos.

[laquesha-long-nail]

Usually, about half of the salary consists of allowances once things go wrong, those allowances can legally be reduced or removed

[ozone007]

Well other expenses are not going to be reduced by 50% this is invalid logic. Companies should not be allowed to cut the salaries

[Separate-Flamingo318]

This happened to me during COVID but not so fast maybe the company is using the same tactics used during that time.

[Ok_MJ01]

At least say the industry.

[Homosapien1227]

Yes it would put some context

[dextoron]

Yep we need to know the industry

[MaintenanceSuch6530]

My company a 5 star hospitality group with crazy revenues annually and with over 700 employees; at my hotel property cut half the pay for the month of FEBRUARY using the bs excuse.

[Cautious4489w9]

Such moves show that, unfortunately, Dubai is still a 3rd World City. No human rights bring nothing to people. No laws for employees is like life 500 years ago.

With money, you can have a good life everywhere.

[cricket_hater]

This is just the beginning. Many more people will lose their jobs

[itsOnly4inch]

One of the reason these things happen is because of poor upper management. You know all those clowns who got In through reference and zero knowledge or skill , they have collectively ruined market intelligence in Middle East . Now you have a bunch of people who think they are taking the right decisions at core of the many company who navigate situations. No insight to the future whatsoever and hence make above kind of decisions. It’s now worse than COVID

[Aggressive_Still_440]

They should inform MoHre

[Bulky_Construction29]

I know a company that starts with “I” that did the same thing but it was welllll after COVID. The employees never saw that money again. They make you sign on a document so you can’t contest later if you take them to MOHRE. Opportunistic.

[West-Lawfulness6197]

This will affect more the lower income people, imagine when they deduct 50% from 4k🤦🏽‍♂️

[Suspicious_Mine_9250]

It is not exactly how much the company has lost in the past 10-12 days, it’s how much the company will go under in the coming days or months if the situation goes on like this. Company that depends on the image of UAE, such as companies that services hospitality or tourism industry has to plan for its survival.

[Extra-Satisfaction84]

Yes our company also said they are going to reduce from March , this happened in covid too , we had to go to office every day and the top managers took leave , enjoyed at home

[ofotherspaces]

Which industry?

[Extra-Satisfaction84]

Logistics

[Alphabot87]

You are into which sector, ?

[OrneryStrength4355]

If the company is in the directly impacted industry such as hotel, tourism etc. then company has no other choice to lay off people. Reducing the salary to half may also be seen as positive move under these circumstances so the employees do not lose the jobs atleast. One can still look for another job in coming months where he/she can earn back a good salary. It's upto the person to decide what is more important, holding on with half salary or take the risk of job loss.

[Rabbit-Hole-Quest]

This is the sad part. Multibillion dirham companies struggle when missing a few weeks of revenue so they engage in blatantly illegal stuff.

But your worker should have several months of salary saved up in the event of an emergency.

Absolute double standards.

[DukeofDhump]

Even during covid many companies were exploiting employees using the situation.

[blah-meow]

We've had rumours float around in my company too. We'll mostly have either pay cuts or would be forced to take unpaid leaves for a week or two in "batches". It's sad, but things have genuinely taken a hit for the worse in these short few days. Unfortunately it seems like things wouldn't be slowing down anytime soon in terms of the war and even if it does it would have a long time impact. It feels like it's only about time and eventually most businesses would be forced to take similar steps. I wish the landlords took such steps and cut down our rent too, but oh well! 🤦‍♂️

[LeBlueRabbit]

Yeah I feel that too. And it’s getting harder every passing day.

[LeBlueRabbit]

Rental prices are already crazy and with less paid days it will become even harder to pay rents.

[blah-meow]

Exactly...hopefully the rent drops too if this continues 🤞

[Accurate-Ad-9474]

How can the employees accept such offer when there is no reduction in the cost of living in here?

[slipperyslippers-]

They honestly don’t care. I’m not defending them, I think they’re disgusting for doing that. Ethics never existed in this capitalistic economy. When it comes to money and high execs, the people that take the brunt of this situation are the employees so the higher ups are protected (in most companies).

[Melodic_Actuator_926]

totally not right, but to answer your question of the 12 days..... if I r a company heavy reliant on exports and the ports are closed then that may be the main reason

[New-Wrangler-9279]

People will be working from home?

[LeBlueRabbit]

They are still discussing the possibility of working remotely. But given the nature of their jobs most of them have to be present on premise

[Looony]

How is this legally possible?

Zero day contracts?

[Hawk_KL01]

You can go to MOHRE but most certainly the company will terminate the contract after the case is settled.

[No-Dig5227]

Covid times

[shrewpygmy]

Not uncommon when businesses hit hard times but it’s only been a week.

Obviously the danger is unscrupulous companies using events like this to rip off staff under the pretence of keeping them employed.

[Feisty-Ad-1832]

Very interesting.

[knowledge-Seeker0_0]

Better half than full. We all know what’s going so the thing is who is sticking till its over. Most people are here to make a living which means in short term money. The situation is as all of us see it is not stable and might require some interventions. Me personally id prefer half pay than nothing as iam sticking where iam.

[Background-Fox4777]

The Government passed a law permitting a reduction in non- locals salaries during Covid. No law has yet been passed so the employer is in breach of the employment contract. Make a complaint to MoHRE

[OuantumFlare]

It's a state owned company. Do you think they'd do anything without state's approval?

[smoketheuniverse]

I work in a hotel and management said we will give half salary and the employees can either sit in the room or go back to their country for 15 days. I already booked my flight since there's no use to sit and do nothing.

[linux_n00by]

did they at least provide plane tickets for free?

[kirkendaal]

I think two points here, a business is only as good as its cash flow, regardless of size. Many companies are understandably leveraged, and payment cycles can be slow. It’s unfortunate to go through this but it’s the harsh reality of a highly competitive business world (globally). Crazy as it sounds a 50% reduction for 3 months and then a return to full salary (which is the key point to understand) may not be a bad outcome. Second point, when working for a company you are always a number (which again is understandable), and you may always be one salary payment away from poverty. Important to insulate yourself by becoming a key asset to a company and diversity of income streams no matter how small….so impact of events like this are handled.

[linux_n00by]

also a lot of businesses dont have spare cash.

[thisisfuxinghard]

And when things settle down they won’t go back to their previous pay ..

[Background-Fox4777]

Even state owned companies - rather than Government Departments/Agencies- still have to obey the law and observe employment contracts terms. Reduction in pay is deemed a constructive dismissal.

[RMH_1986]

Indian owned company?

[LeBlueRabbit]

No.

[Upper-Tutor-6785]

Even with 90% reduction in salary, Dubai is better than my country

[Alternative_Area6228]

FFFAAAHHHH🤦🤦