Need to know: UAE Labour Law in the time of Coronavirus

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 many 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.

Ministerial clarification

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:

  1. Working from home
  2. Taking annual leave
  3. Taking unpaid leave for a specific period
  4. Accepting a reduced salary for a specified period
  5. 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.

Employer action

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

Housing and allowances

If an employer provides accommodation, this must remain available no matter the other changes to salary.

It has also been stated that employers will remain liable for housing costs and other entitlements, except for the basic salary, for any members of their workforce that they made redundant until such time as the employee in question leaves the UAE, or joins another employer, or until these precautionary measures are revoked by the UAE Government.

End of Service Gratuity

The announcement made no reference to gratuity payments or whether it should be calculated based on the earlier higher salary or any temporary reduced amount. The benefit is calculated using the final basic salary so for the avoidance of doubt, this is an issue that individuals should raise with their employer.

Where there is an temporary salary reduction, if the employer says the gratuity calculation will be unchanged, you would  be wise to get written confirmation and so have evidence of this, in case it is required.

The Virtual Labour Market

As many employees are on unpaid leave, a facility has been set up for expatriates to be temporary employed elsewhere.  The employer should register the individual staff member on the Virtual Labour Market https://careers.mohre.gov.ae/ which means the employee can work for another UAE employer. Employees should also be able to do this themselves. An employer in need of staff gets to expand the workforce, on a short-term basis, despite the suspension of new visa applications at this time which means they cannot take on anyone even they need extra staff.

Additional employees can be employed in a number of different ways and the new or temporary employer can select the relevant work permit options without any change of visa status. These are transfer of work permit, temporary work permit or part time work permit.

It is also possible for an employer to provide a NOC (letter of no objection) so someone can take up temporary work elsewhere at this time.

Summary

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 keren@holbornassets.com     Please take a look at the other useful articles on this website.

Updated with more details 08/06/20

About FinancialUAE

A qualified and experienced Independent Financial Adviser based in Dubai, UAE. Professional and ethical. Freelance writer on personal financial issues & the On Your Side column in The National. Weekly co-host in Capital Radio UAE. Senior Partner at Holborn Assets LLC, Dubai, UAE.
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3 Responses to Need to know: UAE Labour Law in the time of Coronavirus

  1. Dan Ivory says:

    Hi Karen.

    Thank you for posting this.

    May I ask a question please. With salary reduction is this just in basic or including your housing and transport allowence also. This is something I am very unclear about.

  2. Shabina Osman says:

    Hi Karen,

    I have a couple of questions as I seem to be getting conflicting information from JAFZA where my company was held:

    Where it says “… until such time as the employee in question leaves the UAE” does this mean until ‘they can’ leave the UAE? So as soon as flights are available to the UK for eg?

    Also: those that have had their visa cancelled by their employers have 28 days to leave? And not able to return on a tourist visa? Is this correct?

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