Over the last  few weeks, we  have seen positive social and economic benefits from the continued easing of restrictions and reopening of the UAE economy.

However, UAE companies are still suffering greatly from the shutdown with many being unable to pick up where they left off. Many employers have reduced salaries  by up to 75% or placed employees on enforced annual or unpaid leave.

As companies continue to search for ways to preserve cash, we look at the option of redundancy and the use of the Virtual Labour Market in accordance with UAE Labour Law and the Ministerial Resolution No. 279, 2020.

How is redundancy processed under UAE Labour Law?

As per the UAE Federal Labour Law (No. 8 of 1980), there is no statutory definition of redundancy or a procedure for the management of redundancy. The absence of a defined reference to the concept of redundancy has previously created challenges for employers, with ambiguity and misunderstanding surrounding the process.

Although in the past there have been labour cases whereby the labour court has recognised the employers right to restructure its business, employers are repeatedly advised to refer to the provisions on the termination of employment set out in the Labour Law when enquiring as to the process of redundancy.

Under the current legislation, there are two ways whereby an employer can lawfully terminate an employee’s contract.

1. Valid Reason
   Reference to Article 117, an employer may terminate an employee with notice, as per their contract for a ‘valid reason’. Although a specific definition is not provided for the term ‘valid reason’ it is understood that the reason must be work-related, for example under performance or continued misconduct.
   
2. Gross Misconduct
   Articles 88 and 120 set out the provisions in relation to the termination of an employee’s contract due to gross misconduct.

How does the Ministerial Resolution No. 279, 2020 affect the process of redundancy in the UAE?

As part of the UAE Government’s support to employers in the UAE, the Ministry of Human Resources and Emiratisation (MOHRE) released the Ministerial Resolution 279/2020 effective March 26, detailing measures to support UAE private sector employers during the Covid-19 outbreak. Click here for the Resolution pdf.

The Resolution identified the  actions listed below which should be followed in the order of

1. remote working
2. paid leave
3. unpaid leave
4. temporary wage reduction
5. permanent wage reduction

The Resolution requires the respective employee’s agreement and consent to any employment contract changes and it is therefore suggested that all changes are reasonable and acceptable. 

Most notably, Article No.3 of the Resolution provides guidelines for where an employer identifies a ‘surplus’ of non-national employees, presenting the concept of ‘redundancy’ to the UAE Labour Law for the first time.

Article No.3 of the resolution further details that:

• Employers must register the surplus employee’s data on the MOHRE.’s Virtual Labour Market system where they can search for new employment.
• Employers are required to provide accommodation and all other entitlements (except for salary) until the employee obtains new employment or leaves the country.

What is the Virtual Labour Market?

The Virtual Labour Market is the MOHRE’s electronic platform which was set up to enable job seekers inside and outside the UAE to search for a job in the UAE. Job seekers register their CVs and companies post their vacancies. The platform then matches the requirements of the jobs posted by UAE companies with the job seekers’ profiles.

Effective March 25, the MOHRE launched a new interactive package of features in the Virtual Labour Market with the objective of advancing the services it offers to support the employers and job seekers using it. As stated on the MOHRE website, ‘The Virtual Labour Market platform contributes to enhancing the flexibility of transfer and reducing operational burdens of  establishments that have surplus non-Emirati employees. This is achieved through registering the data of those employees on careers.mohre.gov.ae This supports the labour market’s need for internal employees at a time when recruitment has been suspended by the UAE as a precautionary measure to combat the novel coronavirus (COVID-19).

Features of the new interactive package include:

• Companies can now set up remote job interviews via an innovative video program supporting physical distancing measures.
• The ability for companies to communicate directly with job seekers registered in the platform and therefore not requiring the use of company email
• Features a new dashboard which can be set up to show the details of the employment process, enabling employers and managers to receive a complete picture of the recruitment process.

These innovative introductions by the MOHRE. are greatly welcomed by employers who are looking to recruit and have been impacted by the current restrictions  on recruitment of overseas workers and/or travel restrictions to the UAE.

Employers who are seeking to recruit should list all available positions on the Virtual Labour Market and search the registered jobseekers section when looking to fill any positions.  Work permissions should then be obtained electronically where a suitable candidate is identified, by applying to MOHRE.

The option to proceed with the redundancy process is a first for the UAE however, it is apparent that the MOHRE is encouraging employers to avoid taking measures such as redundancy without firstly exhausting the options of paid leave, unpaid leave and salary reductions.

How can PRO Partner Group help?

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.

If you need assistance on how to handle staffing and PRO matters for your UAE based company or for further information on any other related company set up, restructuring or local partner matters in the UAE and wider Gulf region do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at info@ppg.ae or complete the contact form below and we will be delighted to assist you.