New Federal Labour Law issued in the UAE
Employment, Pensions & Immigration
Employers have certainly had a lot to contend with over the past two years as ‘people’ issues have permeated every business function within an organisation. Analysing the trends coming out of recent events (remote and hybrid working for example) will occupy us for months to come and we are now starting to see Governments in the region modernising employment frameworks to enable employers to address some of these challenges. Initiatives such as the year of 50th, 2022 being the year of the World Cup in Qatar and implementation of Vision 2030 in KSA will change the face of the workforce in this region.
Throughout 2020 and 2021, the MEA Employment Group has sought to assist employers through a range of webinars, articles and videos but in November 2021, we held a much awaited in-person event for over 100 of our clients to talk about the New UAE Labour Law, as well as some of the key challenges employers are currently grappling with in the Middle East and Africa region.
The session included anonymous ‘spot’ polls and discussions on key trends which, on request, we are sharing in this summary article.
One of the key changes required under the New UAE Labour Law is for all employees in UAE to be employed on fixed term contracts (albeit with a notice period). This includes employees currently on permanent contracts.
Our clients expressed a common concern about how their employees in the UAE will perceive this change, with many questioning whether this would make it harder to attract and retain talent in the UAE; as employees typically consider a permanent contract to be more beneficial, offering greater job security.
There was also debate as to the duration of fixed term contracts that employers will offer in the UAE (the New UAE Labour Law provides that the initial fixed term can be for up to three years and may be renewed for shorter periods thereafter) and whether the contracts would be on a rolling basis. It remains to be seen how the Ministry of Human Resources and Emiratisation will implement the New UAE Labour Law in terms of its standard form employment contract and whether, for example, the initial fixed term contract can be for a duration of less than three years.
We believe communication will be key in positioning fixed term contracts, not only with existing employees who are required to change contracts, but also with job applicants in explaining why they are receiving a fixed term contract, as employers begin to transition to exclusively using fixed term contracts in the UAE.
Of course, in the KSA, it is well established law that all non-nationals must be engaged on a fixed term basis; only nationals may be engaged on a permanent basis.
Similarly, following relatively recent amendments to the Qatar Labour Law, the distinction between unlimited and fixed term contracts has arguably become blurred. The position is unclear on the basis that the reference to “unlimited term contracts” in Article 49 of the Qatar Labour Law (which refers to the ability of either party to unilaterally terminate the employment relationship without reason and on notice) was removed whilst Article 40 which refers to fixed term contracts remained unchanged. This raises the question of whether fixed term contract can now be terminated in the same way as unlimited term contracts (i.e. on notice without reason). We do not yet have clarity on this point from the authorities and, given the relatively recent nature of the amendments, we have not seen this tested before the Labour Disputes Committee.
A poll conducted at the seminar revealed that many organisations are not compliant with applicable nationalisation quotas. One of the main reasons for this was cited as being the challenge of identifying suitably qualified nationals within the marketplace and then retaining those employees within the private sector.
Some organisations commented that the Tawteen job seeker’s database in UAE did not necessarily source candidates who wished to develop a long-standing career with an organisation, but some fantastic talent had been identified through partnering with universities and implementing graduate programmes which attracted, developed and trained nationals. Retention of staff was also an issue with some organisations accepting the possibility that employees (often regardless of nationality) would only be within the organisation for a medium term. Nonetheless retention bonuses and long-term incentives are becoming an increased feature of remuneration packages across the region.
In the UAE, employers have a 5-year grace period to reach the new nationalisation targets that have been set by the government. Many organisations are yet to register and use the Nafis programme which was introduced by the Ministry of Human Resources and Emiratisation in September. Further information on this scheme is available at: www.nafis.gov.ae.
All employers in KSA are facing robust Saudisation requirements with the focus now moving to the Saudisation of specific roles and professions. It can be hard to keep up with these developments and the launch of Nitiqat 2.0 has alerted a number of organisations to the need to plan forward for the next three years.
It was noted that, in Qatar, nationalisation is less of a feature. Whilst there are Qatarisation programmes, these are currently only enforced in government and semi government entities and in the banking and insurance sectors.
Many clients have adopted and plan to retain a hybrid or fully remote working culture within their organisations, recognising many of the benefits for both the employer (such as lower overheads, increased productivity, etc) and the employee (less commuting time, more flexible work days, etc) and view this as a competitive benefit in attracting and retaining talent.
It was however identified that this way of working requires employers to update their policies around health and safety, confidentiality, data security, company property, whistleblowing, etc to also accommodate this way of working. There also remains a requirement to have a physical office in order to maintain a trade licence in any GCC country; with visa allocations being linked to the size of an employer’s premises.
The health and safety provisions set out in the Labour Laws of the UAE, Saudi Arabia and Qatar are relatively broadly drafted. The health and safety obligations placed on employers could arguably extend to an employee’s home working environment. Additionally, injuries which an employee sustains whilst working from home could potentially amount to a workplace injury within the meaning of the applicable Labour Law.
Interestingly, the DIFC has recently amended its Employment Law to carve out certain health and safety obligations where an employee is working remotely. For example, an employer’s obligations in relation to ventilation, temperature, lighting etc. This is, of course, a sensible and helpful clarification given employers have no control over those aspects of an employee’s home working environment. A practical guide issued by the Employment Standards Office of the QFC entitled “Return to Work” considers this lack of control and has created a risk assessment template; it also considers an employee checklist which must be completed by employees working remotely.
The New UAE Labour Law contains an express obligation on employers to ensure there is a safe working environment for employees (regardless of where the work is carried out), which will include providing employees with appropriate training and performing regular assessments to ensure compliance (with fines being imposed for breaches).
Employers duties with regard to occupational health and safety has been a focus of the KSA Ministry of HR and Social Development with a series of regulations issued since 2018. Of course, COVID related regulations have seen robust application across the region.
Clients were particularly concerned with ensuring that when employees are working remotely, that confidential information and data security are managed appropriately. This is likely to become increasingly important as confidentiality is a reoccurring feature of the New UAE Labour Law, which also includes new penalties for confidentiality breaches.
New data protection laws across the GCC also raises another dimension with regard to confidentiality and data.
As well as the obligation on employers to provide a safe working environment for employees, the New UAE Labour Law also introduces protection for employees against bullying and sexual harassment at work. Clients expressed concern about the potential for cyber bullying, and in particular the difficulties of identifying and managing this in a remote working environment.
With remote working here to stay for many organisations, and with new protections against bullying being provided to employees in the New UAE Labour Law, an employer’s policies and the training that it gives to its employees in relation to conduct, bullying, use of social media, etc, are likely to be increasingly scrutinised by Courts in the future.
Such an obligation is mirrored in KSA with the Model Work Rules containing extensive regulation of workplace relations together with the Inappropriate Behaviour at Work Regulations and the nationwide focus on compliance and rooting out anti-corruption.
The pace of change across the region has recently been breath taking. In the UAE alone, in the coming months employers must update their documents and procedures to take into account a new data protection law, a new labour law and other revised legislation such as the penal code which can impact on employee matters.
Elsewhere, we are expecting amendments to the KSA labour law to be implemented following a public consultation which closed in early 2021. A new data protection law has already been introduced with far reaching consequence for employee data and further laws including regulations affecting personal status have been announced.
Qatar has also seen amendments to its Labour Law and Immigration Law quite recently, the issue of the long awaited guidelines to its Data Protection Law, together with a new law related to the health insurance system which is expected to come into force on 4 May 2022.
Much of this legislative change should assist employers to modernise their operations and practices to accommodate the new models emerging from the past two years.