As many will be aware, I have been writing about UAE employment regulations, and other matters, in my weekly column in The National newspaper since 2008. This is addition to my main business as an Independent Financial Adviser. All columns are online but in view of the current economic situation in relation to COVID-19, I thought it would be useful to clarify both employee and employer rights at this time.
First of all, the law has not changed and if you are on a mainland visa, or run a business with a mainland licence, UAE Labour Law (Federal Law No.8 of 1980) still applies. This is adopted by most free zones although DIFC has its own regulations and it does not apply to government entities.
It has always been the case that no employer can change the terms of a contract of employment without the written agreement of the employee and this has not altered in anyway, even if there are a significant number of employers who don’t see to think the law applies to them.
I am aware of redundancies with the given reason being it due to the coronavirus but this this alone is not a sufficient reason to make an employee redundant. Employers do have the right to terminate employment for genuine financial reasons but not before looking at other options.
On 30th March 2020, The Ministry of Human Resources and Emiratisation (MoHRE) issued a Ministerial Resolution (No, 279 of 2020) which set out the steps employers should take at this time. This details the steps that the employer must take before any changes can be made. The options to be discussed with employees, in order, are:
- Working from home
- Taking annual leave
- Taking unpaid leave for a specific period
- Accepting a reduced salary for a specified period
- A permanent reduction in salary
In all cases, any action must be with the agreement of both parties and before a company can terminate any member of staff, they must consider all the available options. I am aware that some companies have told staff that they will take a particular course of action but if the company is registered with MoHRE, taking action without agreement is not legal. These are difficult times, and many companies have found their incomes slashed, but they must still treat staff properly and with respect. In many cases, employees will react well to an honest explanation and will prefer to take unpaid leave or accept a salary reduction for a period of time so that there is still a job for them.
If, however, no agreement is reached the employee can be terminated but the employer must be able to give a full and proper explanation as to why and what other solutions were offered. As is standard, the employee must be given the appropriate period of notice and be paid in full for the notice period with a final settlement to include any end of service gratuity due and any days of annual leave accrued and not taken. Redundancy in this situation, provided other options have been offered and discussed, is unlikely to be arbitrary dismissal so there will not be an option to claim any extra payment, especially if alternatives have been offered.
Where agreed changes are to be made to salaries, the employer must add a Temporary Additional Appendix to the labour contract and this must state the period for which the changes apply. Two copies are required, signed by both parties so that the employee has a record as well as the employer and the latter must submit a copy to MoHRE when requested.
The day after the Resolution was issued, MoHRE issued a template for employers to use. The template can be found here: MoHRE salary amendment form
As I stated at the start, the law has not changed, but employers have been given guidance as to the options available to them if their financial position means they cannot support full salaries. I would reiterate, that all employees of companies that fall under MoHRE, and most of the free zones too, can only make changes with explicit permission.
Times are tough for many, particularly small businesses, but employers can retain staff loyalty by being honest and fair, even if harsh choices have to be made. If any employer does not comply with this guidance, employees do have the option to register a case against them with MoHRE but it is best for all parties to come to a reasonable agreement.
I write articles such as this one as part of the holistic personal financial planning service and that I provide to expats, and the general consumer, financial and legal information that I provide in The National newspaper, on Capital Radio UAE, and on the Facebook group British Expats Dubai. I do not provide an employment advisory service to individuals, only via my newspaper column and radio show.
To arrange a meeting to discuss any aspect of your personal financial planning, please email me at firstname.lastname@example.org Please take a look at the other useful articles on this website.