The coronavirus disease (COVID-19) pandemic represents one of the most significant global public health crises in the last 100 years. While the impact of COVID-19 remains unknown, it has and is continuing to cause major disruption and commercial instability.

In this climate of uncertainty, there are many difficult decisions business will need to make. The continuation of business as usual is or will become unsustainable for many. How best then to implement changes which preserve business viability, protect the interests of employees and facilitate the continuation of commercial activity?

Employment considerations

Changes to employment arrangements

As a means of reducing the financial impact of COVID-19 many businesses are considering modifications to employment arrangements. Before proceeding with any modification, below are some recommended guidelines based on our knowledge of business practices in the UAE and advice from leading law firms on the UAE Labour Law No. 8 of 1980 (as amended) (the “UAE Labour Law”).

Unpaid leave

• There is no legal mechanism for unpaid leave. Therefore, an employer cannot unilaterally impose unpaid leave on an employee but they can request and seek the agreement of an employee to move to an unpaid leave arrangement.
• Companies are recommended to seek an agreement with an employee on a voluntary basis and ensuring that there is no undue pressure or influence in the process of reaching an agreement.
• Any agreement reached between an employer and an employee should be clearly documented and be unambiguous in its terms. In particular, we recommend that the agreement clearly sets out:
  - the reasons for the request for unpaid leave;
  - when unpaid leave will take effect;
  - circumstances when unpaid leave will not apply;
  - when the employee will return to normal paid employment; and
  - expectations for the employee and employer during the period of unpaid leave.

Unpaid leave and gratuity payments

Employers should also be cognizant of the impact of unpaid leave on gratuity payments and therefore the concerns an employee may have in agreeing to an unpaid leave arrangement. The UAE Labour Law expressly excludes unpaid leave in the calculation of period of service to which gratuity will apply. Employers should therefore consider extending gratuity benefits beyond the statutory position to potentially facilitate agreement with an employee on a change to employment arrangements.

Imposing working from home arrangements

The widely held view is that employers are permitted to mandate working from home as a protective measure in the interests of the health and safety of the work environment and the employees. However, the employer must continue to pay an employee’s salary while they are required to work from home.

For additional guidance on working from home arrangements, the UAE Ministry of Human Resources and Emiratisation’s advice can be found here.

Other changes to employment arrangements

Employers may also consider alternatives to unpaid leave to reduce the financial impact of COVID-19 on their business. These may include:

• reducing working hours;
• redeploying staff;
• reducing salary; or
• requiring employees take any remaining annual leave entitlements in advance.

In all instances, the key to any proposed or mandated change to an existing employment arrangement is communication and clearly documented agreement. Remaining transparent with employees, communicating measures implemented to safeguard their health and wellbeing in the workplace and regularly enquiring as to their welfare are all crucial measures to take at this time.

For many employers, it will be a challenge to get employees to agree to a modification of their existing employment arrangements. Therefore, building trust and communicating openly will be highly valued and useful in establishing a basis for negotiation.

Should you require more detailed advice on how to make changes to your employment arrangement, we would be pleased to refer to you to an employment lawyer.

Sick leave entitlements

Employers should also consider the entitlement of employees to sick leave. According to the UAE Labour Law, an employee who has been employed for more than three months following their probationary period is entitled to receive sick pay due to them if they need to self-isolate because:

• they have coronavirus;
• they have coronavirus symptoms, for example a high temperature or new continuous cough; or
• they've been told to self-isolate by a doctor.

Further details regarding sick leave entitlements can be found here.

Implication of changes to employment arrangements on the Wage Protection Scheme

Unpaid leave or other changes to employment arrangements which result in a reduction or suspension of salary payments to an employee may raise issues with the Wage Protection Scheme (WPS) (For information on the WPS, please refer to our article here). In particular, failure to pay employees who have agreed to unpaid leave may trigger a WPS block resulting in penalties and an inability for the company to continue to employ staff. From our discussions with the Ministry of Human Resources and Emiratisation (MOHRE), submitting a copy of the agreement in Arabic between the employer and the employee for the implementation of unpaid leave may prevent or lift a WPS block. In the current climate, it is likely (although not certain) that the MOHRE will be sympathetic to companies who have negotiated unpaid leave with employees in accordance with the prevailing interpretation of the UAE Labour Law and be willing to lift or not impose a WPS block.

Confidentiality and data privacy considerations

In the course of managing the risks and exposure of COVID 19 to employees in the workplace, an employer may, at some point, be in receipt of personal medical information of an employee. While the UAE does not have extensive data privacy laws, we recommend that companies handle any personal medical information requested or divulged by employees as sensitive personal data and ensure that they have appropriate measures in place to ensure the safety and security of such data. In particular, personal information should, where possible, be anonymised.

Measures to ensure business continuity

Availability of authorised signatories

The conduct, execution and delivery of business in the UAE is largely dependent on the appointment and availability of authorised signatories in the UAE. With the UAE government suspension from Thursday 19 March of entry of all valid visa holders who are currently outside of the UAE, it is possible that an authorised signatory my be unavailable for an indefinite period to conduct business on behalf of the company. Furthermore, given the health risk posed by COVID-19, it may also be prudent to have more than one authorised signatory available in the UAE.

To put in place an additional or alternate authorised signatory, we recommend reviewing the memorandum of association of the company and/or powers of attorney for the ability to delegate authority and if necessary, to prepare documentation for legalisation at the Notary Public to give effect the delegation.

PRO Partner Group can assist you with the review and preparation of the necessary documents. Please contact us to learn more.

Health measures and support for businesses from the UAE government

With one of the highest per-capita testing rates in the world, the UAE is leading global efforts to contain the spread of COVID-19. UAE health authorities are implementing extensive preventative measures to protect public health in line with the World Health Organization’s rules and regulations.

For up to date information on the latest measures and recommendations from the UAE health authorities, we recommend you refer to the following:

• Abu Dhabi Department of Health updates on COVID-19
• Dubai Health Authority updates on COVID-19
• UAE Ministry of Health and Prevention
• UAE Ministry of Foreign Affairs and International Cooperation

Government stimulus

Businesses around the world are affected by COVID-19 and face issues linked to cash flow, profitability and ultimately continuity. The Federal, Dubai and Abu Dhabi governments, are being proactive in rolling out stimulus packages to support the national economy, ensure businesses continuity, and mitigate the coronavirus impact.

For businesses, the most notable aspects of the stimulus packages are:

• New committee to review lending options to support local companies; 
• Reduction of water and electricity charges;
• reduction of fees imposed on submission of customs documents
• Reduction of the customs fees imposed on imported products sold in Dubai
• Performance guarantees for projects up to AED50 million waived for start-ups;
• Reduction in government fees for licence remnals, rent contract registration (Tawtheeq, Ejari)

The UAE Federal Government have supplemented these local government initiatives with an approved AED16 billion economic stimulus package. The measures include a renewable six-month suspension of work permit fees and reduction of labour and other charges to cut the cost of doing business, support small businesses and accelerate major infrastructure projects.

With the support of the “Targeted Economic Support Scheme” announced by the UAE Central Bank on 21 March, local banks have also been able to implement measures to support the ongoing liquidity of their customers.

Businesses are advised to inform themselves of the stimulus measures and seek to take advantage of any support available to maintain business viability.

COVID 19 has caused major disruption across all commercial centres and industries. Staying informed and aware of measures and steps businesses can take to mitigate the economic impact of the pandemic business is crucial at this time.

PRO Partner Group is available to support you with the latest information and provide you with guidance on how best to operate during this challenging time.