UAE Labor Laws under COVID-19 Circumstances Discussed in Detail

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CORONAVIRUS IMPACT

Implementing changes to the workforce under Resolution 279 highlighted at the recently concluded Structural Change Webinar

After the Ministry of Human Resource and Emiratisation issued ‘Resolution 279’, containing comprehensive guidelines for companies that plan to introduce changes in the workforce due to the adverse effects of COVID-19. The document stirred numerous concerns regarding the implementation procedure and its feasibility. To address these concerns Creative Zone organised a live webinar that answered some key questions about the rules of job redundancies, paid & unpaid leaves being imposed on employees, changes in the hiring process at this time and other critical matters about employer/employee rights.

The session was moderated by Lorenzo Jooris, CEO, Creative Zone and the guest speaker was Luke Tapp, Head of Pinsent Masons Middle East Employment Practice. The one-hour long session began by addressing the main attributes of Resolution of 279. The objective of the document is to support businesses and SME’s by outlining certain measures that will allow them to make changes in the workforce while safeguarding employees from arbitrary decisions.

Out of the main eight topics, working from home and paid leaves are the two topics that do not require consent from the employees. Barring the approved industries, every company should allow its employees to work remotely and article 76 of the labor law allow companies to put employees on paid leaves when considered essential for the business.

Remaining feature of the document like termination due to redundancies, period of unpaid leaves, temporary pay reduction and permanent pay reduction require employee consent. The Resolution 279 is considered groundbreaking by the experts as it takes cognizance of redundancies in jobs for the first time during the COVID-19. The Resolution provides procedural guidance to protect employees in circumstances where the employer finds it difficult to continue the position.

The Resolution states that the employer must continue to provide the outgoing employees’ housing and all of their entitlements (except for their basic salary) until the individual finds employment with another establishment or is repatriated to his/her home country.

This substantial development will act as a disincentive for employers when considering termination.

The employer is required to offer outgoing employees the option of registering their details on the MOHRE’s portal for job seekers known as the ‘Virtual Labour Market System’.

Accordingly, these employees can be rotated and utilised by other establishments seeking to hire candidates within the UAE given the suspension of foreign recruitment. These employees can then be hired and given authorization electronically for the necessary work permits (work transfer permit to the new employer, temporary work permit or part-time work permit).

The recognition of redundancy in the resolution is considered to be an indication of the law being sympathetic with the employer, but to avoid any potential penalization, Tapp advised companies to prepare the evidence that proves the position becoming redundant, like withdrawal of contracts from the clients etc.

The webinar also answered many crucial questions like

What if companies can’t get employee consent for implementing the changes?

In such a scenario the employer can either implement the decision unilaterally or make certain exceptions for those who are not willing to give their consent, since such a measure can lead to establishing a dangerous precedent, the only other way left is to explain to the employees that termination may be the last resort.

How do we implement the changes? Do they have to be reflected at the ministry level?

The Resolution states that employers may reduce salary temporarily, with employee consent, and outline a process which employer must follow to lawfully implement such a change. Specifically, the parties must enter into an official temporary addendum to the MOHRE employment contract, with both parties retaining a copy and the employer prepared to submit it to MOHRE on request.

The terms of the addendum should provide for its expiry either (a) at the end of a specified term, or (b) when the Resolution itself ceases to be enforced (whichever comes first). If the employer wishes to renew the addendum prior to its expiration date, this can be done with the express consent of the employee.

Does the paying of allowance apply to Free Zones as well?

The resolution has kept DIFC and ADGM out of these guidelines and for the rest of the areas it will depend on the constitution of that particular Free Zone. However, some companies are following Resolution 279 in spirit.

If there is temporary pay reduction and eventually termination on what basis will the gratuity be calculated?

As per the UAE labor law the gratuity is calculated as per the last drawn basic salary, however companies can calculate the gratuity proportional to the basic salary over the period of employment

Will people on probation receive all the perks and will the probation be extended if someone was put on leave?

Yes, every employee of the company permanent or temporary will continue to receive the allowances as agreed between both the parties before. As per the labor law, the probation period cannot be extended for more than six months, and this aspect remains unchanged.

The webinar addressed several other relevant questions about Visas, license renewals, and other legal concerns of the attendees. The session can be viewed by clicking here.

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