Linde Company: Terminations of Employment Contracts Case Study

Abstract

The necessity of termination is a challenge for companies that need to apply the effective termination procedures in order to reduce the number of employees. The case related to the termination issues in Linde, the industrial gas company, demonstrates that organisations often lack the effective termination procedures. In order to overcome the termination issues, it is necessary to formulate and apply the effective procedures that are useful to avoid the violation of employees’ rights.

Introduction

The termination of employment contracts is a problem for regional and global companies because of the necessity to balance between attracting new talents and reducing costs in the situation of an economic crisis (Deakin & Morris, 2012). In situations when companies have no properly stated procedures and regulations for terminations, the risk increases. In the United Arab Emirates (UAE), Linde is one of the gas industry leaders that are characterised by frequent terminations, and it is important to focus on examining the company’s case in detail.

Background Information

Linde is the multinational industrial gas company that operates in the UAE and the United States, as well as in Europe. Linde was established in 1879 (Linde Group, 2016). It is important to note that in spite of its long history, the company is characterised by the high rate of terminations during the periods of crises.

Termination Situations and Issues

In the UAE facilities of Linde, the human resources are mostly the qualified expatriates who have degrees in Engineering. The percentage of nationals working in the local facilities is only 15%. The annual rate of turnover is about 82% for 2015 in comparison to 68% for 2014 (Linde Group, 2016). During recent two years, expatriate workers report frequent cases of the involuntary termination, and they note that managers began to promote nationals actively while firing approximately two to four expatriates from different departments and facilities monthly.

The problem is in the fact that most expatriates have limited term contracts in comparison to nationals who sign unlimited term contracts with the company. Employees report on the following typical termination scenarios that are observed in Linde:

1. Expatriate workers who have the limited term contract for the one-year period are terminated in the first place.
2. Expatriate workers may be terminated without the warning, and cases of violating the contract terms by the employer are observed.
3. Terminated workers are often not provided with the termination compensation.
4. In Linde, terminations observed during the past two-year period were not related to such issues as employee absenteeism, poor performance, misconduct, or insubordination. Thus, employees were fired because of causes that are not usually discussed as leading to terminations.
5. Terminations became used as strategies to save costs that are necessary to support human resources.

Another problem is the necessity of developing the effective termination procedure that should be adapted to the labour marker of the UAE and the strategy of ‘Emiratisation’.

Alternative Solutions

In order to overcome the issues associated with the termination in the discussed company, it is possible to propose several solutions:

1. The termination procedure for Linde facilities in the UAE should be formulated with references to the country’s labour law. The disciplinary policies should also be discussed (Gingles, 2016).
2. The proportion of expatriate and national workers should be approved by the company’s top management with references to global tendencies.
3. The procedures of terminations associated with limited and unlimited contracts should be improved.

Conclusion and Recommendations

In order to address the termination problem in Linde facilities that are located in the UAE, it is important to focus on the first alternative solution among the proposed ones. The company should have the properly formulated written termination procedure. It is necessary to formulate the procedure according to the principles of the Emirates’ labour law and address the issues associated with terminating limited and unlimited contracts. The focus should also be on rights and responsibilities of expatriates and nationals in the context of the UAE.

References

Deakin, S. F., & Morris, G. S. (2012). Labour law. London, UK: Hart Publishing.

Gingles, S. (2016). UAE employment contracts: Limited or unlimited. Web.

Linde Group. (2016). Web.