With all education institutions in the UAE and Saudi Arabia now closed and required to provide educational services through distance learning*, a number of consistent challenges are affecting institutions and education groups. This article focuses on the issue of tuition fees, ongoing contractual issues, employment and data privacy and cybercrime challenges faced by UAE and Saudi institutions. It also looks at similar employment challenges across a number of countries in the GCC.
The fee dilemma
In the UAE, the issue of fees has featured prominently across the popular print media and social media. Many parents expressed early on their expectations for significant fee reductions to be applied for the final term, and possibly for as long as distance learning remains in place; the main reasons cited being (i) a feeling that full fees should not be charged where not all services provided on-site are now available to students, (ii) a generally increased requirement for parental involvement in managing or delivering aspects of the curriculum as an inevitable part of the distance learning arrangements, (iii) and personal financial constraints resulting from the wider economic impacts on the economy and personal employment.
According to the Knowledge and Human Development Authority (KHDA) all outstanding term fees in Dubai need to be paid at the beginning of the term to enable students to continue access to distance learning. Schools have discretion whether or not to offer any discount on fees during this period. Schools may also decide to offer revised payment terms to parents. If parents are experiencing financial difficulties and cannot pay, the KHDA has asked schools and parents to seek to agree on a payment plan, although there is no obligation to reduce fees. Schools have the right to suspend distance learning of students whose parents do not pay fees even after being offered a payment plan. Some assistance for Abu Dhabi families facing financial difficulties may come from the 'Together We Are Good' drive being run by the Authority of Social Contribution - Ma'an, with the support of the Abu Dhabi Department of Education and Knowledge (ADEK), being a public fund of tens of millions of dirhams set up to help parents who have seen salaries cut or jobs lost.
Certainly there are no easy decisions for schools on how to deal with the matter of fees. At the time of writing we have seen reported a number of different fee reductions announced by schools on a general basis ranging widely from 10% to 50%, with an average around the 20% mark (where there have been announcements). We note from some reports that some schools are taking a means-tested approach to discounts and payment plans. This approach is not universal, and has been noted by some commentators to be rather controversial and hugely challenging to assess in practice. The extent to which different arrangements are being sought and considered on a case-by-case basis is unclear, though it is reasonably to be expected that there will be parents who are not accepting of the level of discounting offered, or notwithstanding the discounts will continue to face difficulty meeting the costs, thus presenting schools with difficult decisions around payments and the stance to take where fees are not paid in whole or in part.
The option (or prospect) of removing students from the roll (even if temporarily) for non-payment may well be an early option to compel payment, although it does not assist on the revenue side where it does not result in payment. Schools may also wish look to more formal legal recourse against parents for the recovery of unpaid fees should parents fail to honour the (possibly revised) payment terms of the education contract, or any separately agreed payment plan. Of course, seeking formal legal recourse is a significant step in escalation, which comes with its own costs, not all of which would be recovered even in the event of a favourable outcome in the courts.[harberj1] There would also be important reputational considerations in play for any school pursuing such litigation given the exceptional circumstances, albeit a legitimate right of the school to seek legal enforcement of its rights. As in most situations, going to the courts is therefore likely to remain a last resort. Perhaps a more palatable intermediate position for the time being might be to engage more robustly in communications with particularly recalcitrant parents, seeking to forcefully express payment obligations and the right to (reluctantly) pursue more formal measures. Engagement of external lawyers with debt recovery expertise is certainly one intermediate option to consider.
For those cases where attempts at amicable resolution are not successful, there is now an expeditious remedy available in the local courts under a simplified and expedited process for debt claims. Subject to satisfying certain conditions, a creditor can obtain an enforceable judgment on admitted debt claims without notice to the debtor. In broad terms this applies for any written admission of debt, including an email admission, subject to a minimum period of five days having elapsed from a written demand for payment being issued to the debtor. Judgments can be issued within three days of submitting the claim, and will be immediately enforceable upon issuance. A debtor who is notified of a judgment has only 15 days in which to appeal. We have successfully handled a number of claims for creditors under this procedure since its introduction through civil procedure law amendments last year.
In the Kingdom of Saudi Arabia (KSA), the Ministry of Education is undertaking studies to consider reduction of fees for private school students by 25% to 50%. However, these are still under review. The Ministry of Education is also studying how families that have already paid private school fees will be affected as well as the impact on teachers and private companies to try to avoid the reduction of salaries and other benefits. As a result of the financial impact of COVID-19, the KSA government has announced certain financial measures including the discontinuation of the cost of living allowance that has been available to Saudi nationals in both the public and private sectors as of June 2020 and the increase in the rate of VAT from 5% to 15% effective July 2020.
Additional measures relating to higher education in the KSA
The KSA Ministry of Education has issued several other decisions relating to higher education facilities such as universities in the KSA. These decisions included giving students the option to withdraw from courses and/or postpone semesters at university until Thursday 23 April 2020. The purpose behind such decisions was to ensure that students withdrawing or postponing semesters do not have their grade point averages (GPA) affected by COVID-19. Decisions from the KSA Ministry of Education also include higher educational facilities being requested to grade students on their current average marks or on the previous year's grade. Students are then receiving pass/fail grades depending on these results. The KSA Ministry of Education has also stipulated that if a student’s GPA is higher than the previous educational year, then it should be calculated from this GPA, but if the student failed in the previous year, then the GPA is not counted and remains the same.
KSA Scholarship Students studying overseas
The KSA Ministry of Education also issued several decisions addressing the conditions of KSA scholarship students studying abroad (some of which were limited to three months duration). One of these decisions stipulated that the financial fees, medical insurance and other benefits should continue to be provided to scholarship students who are currently abroad, as well as their dependents, even if courses have been suspended or ended. Scholarships and financial aid will also continue for scholarship recipients and their dependents including for those who have graduated but are still overseas. Although the full effects of these measures on the KSA education sector are not yet clear, what is clear is that any reduction in the income of parents will impact on their decisions regarding education for their children. This may result in education providers needing to restructure finances, headcount, class sizes and/or assess the way that education programmes are delivered to deal with the fallout from such measures and not to lose market share.
As with most commercial leases, Covid-19 related measures have impacted the operators' ability to make use of their premises as a school over a certain period of time. Where the premises are subject to a commercial lease, an operator may be entitled to relief.
- A first step in assessing whether any relief is available to an operator in its capacity as a tenant to a commercial lease, resides in a considered review of the terms of the lease itself. The lease may, for example, expressly provide for the suspension of the requirement to pay rent or for a reduction in rent in the event that the premises cannot be used for its intended purpose owing to a government directive and/or a deemed event of force majeure.
- A second step is to consider whether the law governing the lease provides for any relief. For example, in certain circumstances Article 247 of the UAE Civil Code (Federal Law No. 5 of 1985) provides a tenant with a legal basis to suspend the payment of rent corresponding to the period over which a landlord is unable to make premises available for their intended use. Where, as often is the case, post-dated cheques were issued by an operator for payment of future rent and the obligation to pay rent is suspended over a certain period of time (for example on the basis of Article 247 of the UAE Civil Code), arguably the landlord is not entitled to present the cheques for payment inasmuch as the cheques were provided to cover the period (or part of the period) during which the obligation to pay rent is suspended.
Other contractual issues
Aside from the central issue of impact on revenues from fee reductions and possible non-payment issues, we anticipate there is likely to be impact on other contractual relationships between schools and their counterparties; in particular with contracted service providers. Schools will very likely have much-reduced need for externally contracted services while sites are closed, in relation to which rights and obligations need to be carefully assessed. As with any commercial contract, the parties' respective obligations to perform under the relevant contract need to be reviewed against the facts to determine the impact (if any) of the Covid-19 pandemic on performance. Issues such as force majeure, frustration, payment delays and termination are just some examples of issues we have been advising on in recent weeks. It is imperative that schools know their legal contractual position to be able to act positively in their interests, or be ready to respond to the actions of counterparties that may not be in your interests. Being ahead on this (and certainly not being behind) can have a direct financial impact, and is therefore highly recommended.
Data protection, privacy and cybercrime
As homebound students attend school in record numbers via online education technology platforms, e-learning environments and video conferencing, distance learning has raised questions about how to protect students' personal information, child data privacy and the risk of cybercrimes.
Enhanced data collection
Distance learning has forced schools to use new technologies and systems in order to ensure continuity of education. For example, schools are using a range of video teleconference applications, such as Zoom and Microsoft Teams, to deliver live online content to students. These online tools are used for students to deliver student assignments, to engage in activities and to communicate with other students. Additionally, in order to ensure good student behaviour and effective teaching, schools are encouraged to monitor their students and teachers. Often such monitoring and the use of the varied technologies involves the collection, storage and sharing of personal information. Many schools have been unsure what they are permitted to do in light of data protection laws – which exist in some of the free zones in the UAE – or under privacy laws more generally. Qatar, for example, has its own standalone Personal Data Protection Law; data relating to children are considered "personal data of a special nature", which cannot be processed in Qatar without approval from the Data Protection Regulator. In addition, the KSA Basic Law of Governance mentions that telephone conversations and other means of communication must be protected. As such, they may not be seized, delayed, viewed, or listened to except in cases set forth in relevant KSA laws. Schools therefore must be mindful of protecting personal information – particularly when it comes to information relating to children. Educators and parents should familiarise themselves with how laws can protect student data. Schools, in particular, should ensure they have consent (usually parental consent) when collecting, storing and sharing data about students, they are transparent about all data collection activities (including the recording of lessons) and all such data should be stored securely and carefully to avoid unlawful and unauthorised breaches.
Cybersecurity and cybercrimes
The coronavirus has brought about new or different cyber dangers, which can be particularly harmful to children. Cybercrimes committed by malicious actors and hackers are on the rise. Cyber specialists have reported a big increase in email compromises leading to extortion and ransomware attempts. Scammers are taking advantage of COVID anxiety by issuing phishing emails with donation requests and offers to provide relief that appear from legitimate sources. There is a higher risk of student or teacher impersonation due to reduced controls. Moreover, video teleconference platforms have come under increasing attack from "zoomboombers": this occurs when online trolls interrupt online classrooms with offensive content through the platforms' screen sharing features. Schools should ensure they put in place appropriate security procedures and systems in order to protect students and teachers from the threat of cybercrimes. Students and teachers should be reminded of the usual controls and best practices, including avoiding clicking on suspicious links or providing information to unknown third parties.
Social media and defamation
With students being encouraged to engage primarily online, there is a risk of misbehaviour, cyberbullying and sharing of fake information and harmful opinions through social media channels. Schools should educate students, teachers and staff about the legal and appropriate use of the internet and online education platforms. For example, a student or parent who posts a message on social media mocking a teacher's online teaching method could face a defamation claim under UAE law. Defamation is potentially a criminal offence in the UAE; the UAE has provisions within its Penal Code (Federal Law No. 3 of 1987) and Cybercrimes Law (Federal Law No. 5 of 2012) that criminalises any person who publishes secrets about a person's private or family life or who insults a third party. A breach of such laws could lead to large fines (for example, AED 250,000 under the Cybercrimes Law) and possible imprisonment. Similar defamation offences exist in the KSA under the Law of Printing and Publication, Royal Decree M/32, 3/9/1424 H, corresponding to 28 October 2003 (as amended), where individuals or companies that print or publish anything (including online through social media platforms) that prejudices the dignity or liberty of another person or injures the reputation or commercial name are subject to strict penalties including fines of up to SAR 500,000. In addition, penalties may be applied under other laws depending upon the severity of the offence. In addition, the Anti-Cyber Crime Law issued by a Royal Decree No. 79, dated 7/3/1428H, corresponding to 26 March 2007 mentions that any offence relating to defamation and infliction of damage upon others through the use of electronic means will be considered a cyber-crime and shall be subject to imprisonment for a period not exceeding one year and a fine not exceeding SAR 500,000.
Schools should bear in mind that these are times of heightened risks with teachers, students and parents operating online. As such, there is a greater risk to schools as well as individuals under these types of law.
The extended distance learning programmes in the UAE, KSA, Qatar and Oman will make it increasingly difficult for some education employers to maintain roles which are dependent on the physical presence of students at the premises (for example, teaching assistants, librarians, etc.). Many education employers that we are speaking to are reluctantly considering measures to reduce staffing costs including, where necessary, making headcount reductions. Before implementing headcount reductions and other measures to reduce staffing costs such as salary reductions, reducing working hours and unpaid leave, employers will need to consider local legislation and announcements as well as internal contractual terms and policies. The past few weeks have seen a flurry of announcements regarding various government initiatives in response to COVID-19 and the latest position will therefore need to be confirmed. Our update article should assist in this regard.
Measures to reduce staffing costs
From a UAE perspective, the Ministry of Human Resources and Emiratisation (MHRE) has issued a resolution (279 of 2020) (the Resolution) which, in essence, requires employers to gradually implement a range of measures in order to mitigate the financial impact of COVID-19 and, ultimately, reduce the need to make headcount reductions. Such measures include, in turn, remote working, annual leave, unpaid leave, temporary salary reduction and permanent salary reduction. In all cases, the measure must be agreed to in writing by the employee. The position is largely the same as a matter of law in KSA, Qatar and Oman. Any amendments to an employee's contractual terms (such as a reduction in salary) would therefore need to be agreed with the employee in writing to avoid potential claims. Employers subject to the Wages Protection System need to consider the impact that any proposed measures may have on their obligations in this regard. In Qatar, for example, the authorities have confirmed their expectation that employees will be paid in full throughout the COVID-19 protective measures and there is currently therefore no relaxation of the rules relating to the Wages Protection System although this may change over time. To avoid issues under the Wages Protection System, a new e-government contract would therefore need to be issued, but currently only contracts for new employees are being approved. Reductions in salary may (depending on how the reduction is structured and how the relevant benefit is calculated) impact on an employee's statutory and contractual entitlements, for example to end of service gratuity and/or contributions into the state pension scheme. To incentivise employees to agree the reduction, employers should consider measures to protect such benefits such as ring fencing end of service gratuity accrued up to the reduction date or (in jurisdictions where end of service gratuity is calculated on basic salary only) making the reduction to allowances only.
An employee's contract type and terms would need to be considered to understand the potential implications of termination by reason of redundancy. From a UAE perspective, whilst the Resolution does not prohibit employers from making terminations, doing so without first implementing the measures referred to above is, in the event of a dispute, likely to be taken into account by the labour court in determining whether the dismissal is arbitrary and, if so, the level of compensation due. Of course, many employees in the education sector (and all ex-patriate employees in KSA) are engaged on fixed term contracts which cannot be terminated prior to their expiry date without attracting an obligation to pay early termination compensation. In Qatar, for example, this would include salary for the unexpired contract term. There are a number of measures that employers can consider to minimise the legal risk of making headcount reductions. For example, employers should (subject to local law) consider termination during probation and/or the non-renewal of fixed term contracts. Employers could also consider implementing a voluntary redundancy programme, whereby those who voluntarily agree to leave their employment receive an enhanced payment / benefit. The UAE, KSA, Oman and Qatar all have in place nationalisation programmes which means that significant caution (and, in some cases, approval of the relevant authorities) would need to be exercised before terminating the employment of a national.
Borrowing" of staff
The UAE and KSA have both implemented (or, in the case of KSA, extended) a system whereby employees can effectively be borrowed by other employers; in Qatar such "borrowing" arrangements have always been available for 6 month periods if approved by the Ministry of Interior. In the UAE, this is set out in the Resolution which states that, where an employer has a surplus of employees, it should register them in the virtual labour market place such that they can effectively be "borrowed" by other employers. During such time, the employee remains sponsored and employed by their main employer, who remains responsible for providing medical insurance and physical accommodation (if provided). However, the main employer has no ongoing obligation to pay the employee's wages. In KSA, the Ajeer system which usually only applies to limited sectors in limited circumstances, has been extended to apply to all sectors enabling employees to work for another employer.
*In the case of the UAE for the remainder of the 2019/2020 academic year and in the KSA until further decision on when they may reopen by the KSA Ministry of Education
Clyde & Co is one of the only law firms in the Middle East that has a dedicated education team, with particular strength advising independent schools and universities on issues arising from COVID-19. If you require assistance, please contact the authors of this article.