Friday, April 14, 2006

Buyer beware :: Khaleej Times
DUBAI – About 200 workers of Al Khoori Marine Contracting staged a protest at the labour camp in Al Aweer yesterday morning, demanding the payment of their salaries — overdue for the past three months.
. . .
"It seems that the delay in salary payments might be due to the change of ownership from one businessman to another," he noted.

"The new employer, Matar Rashid A Jabiri, expressed his readiness to instantly pay the salary arrears," said the official adding, "The new employer will do so on Saturday."

According to the rules, the former and present employers are both jointly responsible for honouring all the financial commitments of a company, even when it involves a change of ownership."
When you buy a company, you typically buy its assets and its liabilities. In the case cited, the workers of the company were found to be owed three months wages. The new owner has promised to pay tomorrow.

How did it happen that the workers had to demand their back pay? Here are the possibilities that I can think of: (1) the old owner did not inform the new owner about this unpaid wage bill, (2) the new owner was told but failed to pay either because the new owner (a) was hoping for a ruling that said he would not have to pay, (b) had trouble setting up a system to pay the workers, or (c) did not have the funds to pay the workers on time.

When there is ambiguity there is a chance to pull a fast one. (Making the old and new owner jointly responsible doesn't help.) And in the UAE there is fair degree of ambiguity over whether workers have been paid because of the frequency with which employers fail in their obligations to workers. And that is because the workers lack the ability to change jobs and so do not have a credible means of punishing the firm for failure to honor its promises.

Gulf News also carries a story today of a group of workers claiming they have not been paid for five months.

If you have two blackeyes in one day is that all you can get?

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Blogger KingKaiser said...

I've read your blog a few times, and it is definitely one of the more insightful ones about the UAE. Its a sheer pleasure to read.

8:03 PM  
Blogger John B. Chilton said...

KingKaiser: Your generous assessment is appreciated.

8:07 PM  

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