Involuntary Redundancy and Dismissal of the UAE Employees

Introduction

Many organisations are faced with uncertainty, economic confusion, and changing demographics. The ability to manage change is a concern of all and begs the question of what this means and what is involved. As organisations attempt to remain competitive and profitable they need to be aware of how their actions are affecting their human resources.

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Organisational change can have negative repercussions as it causes involuntary redundancy or lay-offs that threaten workers’ physiological and psychological well-being. Layoffs refer to reduction-in-force to reduce costs in human resource aspects. Redundancy affects the economy and influences organisational behaviour as each and every employee is affected by it. The process of downsizing is determined by workplace oversupply (size, duration, certainty) (Abejdid, 2012).

This research focuses on involuntary redundancy and dismissal of employees. This is supported by the literature and the qualitative research using questionnaire on a sample of six employees (two experienced involuntary redundancies and 4 dismissed from previous work). Redundancy is the common term used in the United Kingdom (UK) and Australia for employees terminated from their jobs due to organisational change (Parris & Vickers, 2010). In the British context, the term involuntary redundancy does not mean dismissal caused by the worker’s attitude; it is mainly caused by organisational restructuring (Doiron & Mendolia, 2012).

The research investigates the psychological impact of involuntary redundancy and dismissal of employees following an organisational change. Parris and Vickers (2010) argue these are common practices nowadays and can lead to involuntary redundancies and dismissal.

Rationale

There is not much research on redundancy regarding the Gulf region and specifically the United Arab Emirates. Limited research has also been afforded into the personal experiences of employees and executives who encountered redundancy because of organizational change or downsizing.

Layoff and redundancy studies were more focused on survivors of downsizing, meaning those who were retained by their respective organisations (Horsted & Doherty, 1994), but not much attention has been given to employees and executives who were laid off as a result of downsizing. This research will provide the gap on the lack of studies on both types of redundant employees.

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Aim/Objectives

This research aims to investigate the emotional impact of involuntary redundancy and dismissal of employees in the GCC work environment. The research will allow people to understand full impact of involuntary redundancy and dismissal in the United Arabic Emirates workforce better in comparison to countries. Voluntary redundancy rarely happens in the Gulf countries, the reason behind will be explained in the literature review.

Research Question

The research will deal with the question: how does involuntary redundancy and dismissal affect the individual self-esteem on the expatriate workforce in the UAE?

The second parallel question is: In what way does involuntary redundancy and dismissal affect the GCC workforce emotionally?

Literature Review

In an attempt to reduce the effects of involuntary redundancy, the process in Australian workplace environment is to use the term “spill and fill,” wherein all or some positions are declared vacant and employees holding such positions are dismissed but invited to apply for new positions. The employees are not guaranteed that they get the positions because they are considered new applicants (Wells, 2014).

In an involuntary redundancy, management has the option of which employees to layoff, while in voluntary redundancy employees volunteer to be laid off (Chhinzer, 2007). Layoff, according to Kidd (1994 as cited in Chhinzer, 2007) is involuntary and employees who were classified involuntary earned a bit higher than job stayers. In the study by Picot, Lin, and Pyper (1998 as cited in Chhinzer, 2007), they used a sample of Canadian workers to investigate causes of layoffs or dismissals.

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The study also aimed to empirically prove an increase in layoffs in the 1990s, and examine if layoffs were isolated or continuous events. The study found an increase in unemployment associated with a decrease in quit rates, an increase in temporary layoffs and a decrease in hiring rates. Chhinzer (2007) noted that involuntary layoffs were in opposite direction with voluntary ones. Also, a number of correlations between various factors and layoff existed, such as age, gender, and skill level. Layoff victims were older (more than 25 years of age at time of layoff) (Chhinzer, 2007).

Gulf Cooperation Council (GCC) Work Context

The GCC work environment is unique because of the many multinational companies operating in this market segment. The United Arab Emirates (UAE) and the GCC have created many jobs, which the World Bank has described as unprecedented (Forstenlechner, 2008). The job market promises expats a chance to save and aim for higher goals with endless opportunities to grow and expand.

Most people who come to the Gulf region are from the Indian sub-continent and various parts of Africa and Asia (Rehman, 2013). In contrast, most UAE and GCC nationals prefer to be part of the government workforce. According to UAE statistics, there were 16,187 nationals who joined the workforce in 2006 and this was expected to rise in succeeding years (Forstenlechner, 2008). UAE nationals alone could not be accommodated by the bloated public sector and expatriate labour is being absorbed by the private sector (Forstenlechner, 2008).

The reason behind poor representation of local workforce in the private sector is due to the long working hours and the focus on the employees’ performance which the local population could not provide (Naithani, 2015). Industries prefer to hire expatriates because of their work habits and the kind of training they attained.

However, expatriates working in the GCC region are not entitled to the pension scheme whereas all GCC nationals are, regardless of which part of the GCC workforce they belong to. Expatriates also face the challenges of visa requirements and other legal aspects of redundancy (Naithani, 2015). The expatriates’ stay in the country is limited; their visas have to be renewed within 2-3 years, which puts them into an unsecured situation where the employer can terminate them anytime (Naithani, 2015).

Redundancy and the Legal Aspect in the UAE

Redundancy does not exist in the UAE law, neither is there a legal definition of ‘redundancy’. The Ministry of Labour does not require an employer to legally justify a serving notice of termination of employment (Clark, 2012).

In recent years, the UAE government has embarked on “Emiratisation” of the private sector as the country has realised that dependence on expatriate labour has serious long-term consequences on UAE society (Al-Lamki as cited in Forstenlechner, 2008). This led to the establishment of a government agency known as Tanmia (National Human Resource Development & Employment Authority) in 1999 which marked stronger government control on the private sector’s demand of expatriate labour.

The Negative Repercussions: Effects on Employees

A research focusing on reactions of redundant employees in the public sector in the United Kingdom (UK) found that the decision to downsize affected majority of the employees emotionally (Davey, Fearon, & McLaughlin, 2013). Employees who received the news experienced the cycle of grief, leading to psychological problems. It was followed by denial for a certain period of time, and anger towards the organisation, family members or colleagues. Some tried to desperately negotiate or surrender, or eventually gave up the fight and resigned, while others tried to be realistic and looked at the situation in a brighter way by searching for new career alternatives and adapting (Davey, Fearon, & McLaughlin, 2013).

Involuntary redundancy does not only lead to economic hardship but to a possibility of “family dissolution” (Doiron & Mendolia, 2012). Loss of job and involuntary redundancy are associated with family and marriage factors. Doiron and Mendolia (2012) also used data from the British Household Panel Survey (BHPS) to analyse job displacements and outcomes. According to the study, dismissal due to worker’s characteristics such as misbehaviour, poor performance, absenteeism and similar attitude has more severe implications than dismissal due to redundancy (Doiron & Mendolia, 2012).

Redundant or laid off workers are perceived to experience more hardship in changing labour environments because they have to find new jobs. They have lower self-esteem and are less motivated than other workers, which reduces their chances of finding new jobs. Within Central Europe, laid-off workers engage in prolonged job search since job-loss is associated with lower worker performance (Herzog, 2003). Redundant employees experience mixed emotions that vary depending on age, gender and ethnicity. Some experience depression, others difficulty in job search activity. Financial cost as a result of job loss causes illnesses (Black, Devereux, & Salvanes, 2015).

Herzog (2003) examined job-search during the challenging times of the Central European economies. The study found that involuntary job-loss was associated with stigmatisation; redundant workers had a hard time applying for a new job. Potential employers used redundancy as a “screen” in not hiring redundant workers (Herzog, 2003).

The relationship of stress and job loss can be traced to the redundancy process and then to the “re-employment” phase. Stress is a highly complex human experience. Its relation with stressors and stimulants has been the subject of various research aimed to mellow down its outcomes. Job loss and job insecurity are stressors that cause physiological and psychological effects (Hamilton et al. 1990; Kasl et al., 1975 as cited in Snell, Schmitt, Glavas, & Bamberry, 2015).

The research by Snell et al. (2015) asked: Why do workers experience stress before they are laid off, or before the company closes?

The pre-lay-off phase is when the worker feels an uncertain future, not knowing what will happen. Downsizings usually come with less “noise” but can be initiated with some rumour and speculation that increases worker stress and uncertainty. Anaf, Baum, Newman, Ziersch, and Jolley (2013) commented that the pre-lay-off or the threat of redundancy is even more “destructive” than the “actual event” (p. 2). Empirical studies support the finding that job loss results in negative psychological impact (Battisti, Gilardi, Siletti, & Solari, 2014).

Job insecurity comes before job loss. In the 1990s, this was a primary job stressor experienced before the threat of unemployment in industrialised countries because of market and labour factors (Wilkinson as cited in Anaf et al., 2013).

Unemployment is characterised by psychosocial and psychiatric disorder, especially depression which can further lead to cognitive and neural outcomes (Davis as cited in Anaf et al., 2013). The study by Anaf et al. (2013) demonstrated the noteworthy mental health effects because of job insecurity and job loss. Battisti et al. (2014) noted that employability can help in dealing with the psychological consequences.

In the study by De Cuyper, De Witte, Vander Elst and Handaja (2010), they sampled workers from one organisation and told some workers of the news but did not yet tell others about the redundancy. They found that workers experienced strain in the presence of situational uncertainty and the possibility of unemployment. The threat of unemployment was related to feelings of job insecurity and stress. Those who were not informed experienced more strain but those who knew of the involuntary redundancy found the right coping mechanism (De Cuyper et al., 2010).

The study by Parris and Vickers (2010) recorded the reactions of redundant employees. For example, some men viewed themselves as “being less a person” when they were laid off. There was an understood belief that these men should be able to control the situations and the relationships around them. When they were made redundant they felt they did not have personal control.

One particular case study was a young man “at the height of his career,” who viewed his career was unexpectedly stopped when he was made redundant. Most employees expressed that they were totally unprepared at the time redundancy was announced. The respondents spoke of the countless emotions they had at the time of redundancy. These emotions included anger towards the organisation, sadness at the thought of being alone, and fear for their future and families.

Some respondents refused to speak about their experiences and were unwilling to admit their fears, while others wanted to present themselves as strong amid the uncertainties. There were also feelings of embarrassment as they described their situation: before they had competence and ability at work but involuntary redundancy forced them to feel worthless. While management assured them that the redundancy activity was a mere “part of business,” the male respondents spoke of their being assaulted of “their sense of worth” (Parris & Vickers, 2010).

Respondents expressed their desire to restore their confidence – to look and feel successful despite what happened to their jobs and careers. They had to restore their once-held statuses in their previous jobs. The status issue is also noted in other studies which states that the social conception and authentication of male identity is established around such traits as success and self-reliance in the work setting (Rees & Garnsey; McCarthy & Holliday as cited in Parris & Vickers, 2010).

Job Insecurity and Perceived Control

Work stressors include qualitative job insecurity. Qualitative job insecurity refers to insecurity from loss of valued job features, such as loss of career prospects and higher salary as a result of downsizing and reorganisation (Probst, Stewart, Gruys, & Tierney, 2007).This stimulates stress and poor job performance (Hu & Zuo, 2007 as cited in Elst et al., 2014). Scholars focus on control to explain the loss of performance, or perceived mediating mechanism. Job insecurity is a long and complex work stressor and employees suffer with lack of defence and coping resources (Elst et al., 2014).

According to Lazarus and Folkman (1987 as cited in Elst et al., 2014), perceived control refers to the ability of the employees “to control the job situation”; or, it is the ability to control one’s self in the presence of the prevailing job loss. Perceived control can be considered a possible mediator of the relationship between involuntary redundancy or dismissal and psychological effects.

Studies have shown that perceived control has a mediating effect on job strain. High perceived control can deal with the negative impact of job loss (Brockner et al., 2010). Survivors, or employees who are retained after organisational change, are also negatively affected and they need an equal amount of control to be able to cope with the organisational change (Abejdid, 2012).

Elst et al.’s (2014) study on perceived control focused on “qualitative job insecurity” that triggers stress (e.g. depression) and psychological symptoms and they used mediation or indirect effects to test their hypothesis. In their study, they collected data for a period of 14 months in 4 Swedish groups comprised of white-collar workers. One sample consisted of administrative clerks and managers working in manufacturing companies; another group consisted of employees in an accounting firm; the last two remaining groups consisted of administrative personnel and teachers. Job insecurity was one of the outcomes measured using the questionnaire.

The research also measured perceived control based on two items of powerlessness scale (Ashford, Lee, & Bobko, 1989 as cited in Elst et at., 2014). Perceive control could mediate the relationships between insecurity in the job on one aspect, and depressive symptoms and upper musculoskeletal disorder, including affective organisational commitment and turnover intentions (Dekker & Schaufeli; Tarris et al. as cited in Elst et al., 2014).

Patel (2009) indicated that involuntary redundancy and dismissal could be the time of a worker’s life where one can focus on change and take it as a positive sign. He reported an incident where UK accountants were subjected to involuntary redundancy and dismissal during a recession in the country. The “victims” also felt anxiety and fear of not finding another job. However, their fears were gone when they found a new career, from accountant to math teacher in the UK (Patel, 2009).

References

Abejdid, E. (2012). Employees’ descriptions of the experience of surviving layoffs and downsizings in their organizations: A qualitative descriptive study (Doctoral thesis, Capella University).

Anaf, J., Baum, F., Newman, L., Ziersch, A., & Jolley, G. (2013). The interplay between structure and agency in shaping the mental health consequences of job loss. BMC Public Health, 13(110), 1-12. doi: 1471-2458/13/110

Battisti, F. de, Gilardi, S., Siletti, E., & Solari, L. (2014). Employability and mental health in dismissed workers: the contribution of lay-off justice and participation in outplacement services. Quality and Quantity, 48(3), 1305-1323. doi: 10.1007/s11135-013-9836-2

Black, S., Devereux, P., & Salvanes, K. (2015). Losing heart? The effect of job displacement on health. ILR Review, 68(4), 833-861. doi: 10.1177/001979391558638

Brockner, J., Spreitzer, G., Mishra, A., Hochwarter, W., Pepper, L., & Weinberg, J. (2010). Perceived control as an antidote to the negative effects of layoffs on survivors’ organizational commitment and job performance. Administrative Science Quarterly, 49(1), 76-100.

Chhinzer, N. (2007). Evaluating layoff techniques: A policy-capturing study of voluntary versus involuntary layoffs (Doctoral thesis, McMaster University).

Clark, P. (2012). Your redundancy rights: United Arab Emirates.

Cuyper, N. de, Witte, H. de, Vander Elst, T., & Handaja, Y. (2010). Objective threat of unemployment and situational uncertainty during a restructuring: Associations with perceived job security and strain. Journal of Business Psychology, 25(1), 75-85.

Davey, R., Fearon, C., & McLaughlin, H. (2013). Organizational grief: An emotional perspective on understanding employee reactions to job redundancy. Development and Learning in Organizations: An International Journal, 27(2), 5-8. doi: 10.1108/14777281311302012

Doiron, D., & Mendolia, S. (2012). The impact of job loss on family dissolution. Journal of Population Economics, 25(1), 367-398. doi: 10.1007/s00148-010-0353-5

Elst, T., Richter, A., Sverke, M., Näswall, K., Cuyper, N., & Witte, H. (2014). Threat of losing valued job features: The role of perceived control in mediating the effect of qualitative job insecurity on job strain. Work & Stress, 28(2), 143-164. doi: 10.1080/02678373.2014.899651

Forstenlechner, I. (2008). Workforce nationalization in the UAE: Image versus integration. Education, Business and Society: Contemporary Middle Eastern Issues, 1(2), 82-91. doi: 10.1108/17537980810890275

Herzog, H. (2003). Transition and unemployment in Central Europe: How redundant workers fare in regional labor markets. Papers in Regional Science, 82(1), 75-99.

Horsted, J., & Doherty, N. (1994). Poles apart? – Integrating business process redesign and human resource management. Business Change & Re-engineering, 1(3), 49-56. doi: 10.1348/096317906X100004

Naithani, P. (2015). Changes faced by expatriate workers in Gulf Cooperation Council countries. International Journal of Business and Management, 1(2), 1-15.

Parris, M., & Vickers, M. (2010). “Look at him … he’s failing”: Male executives’ experiences of redundancy. Employee Responsibilities and Rights Journal, 22(4), 345-357.

Patel, B. (2009). Redundancy: The time of your life?. Accountancy, 144(1392), 42-43.

Probst, T., Stewart, S., Gruys, M., & Tierney, B. (2007). Productivity, counterproductivity and creativity: The ups and downs of job insecurity. Journal of Occupational and Organizational Psychology, 80(1), 479-497. doi: 10.1348/096317906X159103

Rehman, A. (2013). Expatriate work force in the Gulf Cooperative Council countries (GCC): A short perspective. Journal of Business and Finance, 1(0), 1-10.

Snell, D., Schmitt, D., Glavas, A., & Bamberry, L. (2015). Worker stress and the prospect of job loss in a fragmented organisation. Qualitative Research in Organizations and Management: An International Journal, 10(1), 61-81. doi: 10.1108/QROM-03-2014-1210

Wells, P. (2014). Spill and fill: a fair redundancy process. New Zealand Journal of Employment Relations, 39(3), 30-39.

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