PRO Partner Group’s clients have raised some very important and frequently asked questions at this time as business are trying to balance the interests of their employees against ensuring the continuity of their business.
As a starting point, there are limited legal mechanisms in the UAE (and globally) to dealing with many of the employment issues arising from the COVID-19 pandemic. As a result, the general advice is largely untested, based on general practice in the market and speculation as to the position UAE labour courts are likely to take in the event of a dispute. Our guidance on these matters comes from leading law firms and our practical knowledge arising from our business services.
The answer depends on the reason for the employee’s inability to work. If the employee is unable to return to work in the UAE because of the UAE government’s order preventing the return of UAE residents, the first question will be whether the employees are able to continue working remotely from abroad?
If the nature of their role means that they have to be physically present on site, then remote working options may not be available. Nevertheless, it would be potentially important to show that the company has taken steps to consider remote working options in advance of taking any other action including stopping salary payments. Alternate options therefore to consider are:
The general position is that if an employee can work remotely, then this period would be paid. If an employee cannot work remotely and cannot gain entry to the UAE, then employers may place them on unpaid leave. For specific legal advice on this subject, we recommend you consult an employment lawyer in the UAE.
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 UAE Ministry of Human Resources and Emiratisation (MOHRE) Wage Protection Scheme (WPS). 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 recent 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 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.
PRO Partner Group are keeping all clients updated as we receive further information in relation to the WPS.
In relation to unpaid leave arrangements, the advice from leading law firms is that 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 ensure that there is no undue pressure or influence in the process of reaching an agreement. Furthermore, 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 question here is referring to ‘limited employment contracts’ as opposed to ‘unlimited employment contracts’. If employees are under ‘limited employment contracts’ then such contract will terminate at the end of the term unless terminated earlier by either party or renewed by both parties. If the company wishes to continue the employment arrangement with the employees outside of the UAE, an option may be to renew their existing employment contract which can be done online and remotely. However, at present there is no mechanism to renew the UAE residency visa while the individual is outside the UAE. Therefore, when employees are able to return to the UAE, they may be unable to use their UAE residency visa (depending on the expiry date of the visa) and rather may need to enter on another category of visa such as a tourist visa.
To address the uncertainty surrounding the effects of COVID-19 on the domestic employment market, the MOHRE has issued Ministerial Resolution No. 279 of 2020 on Employment Stability in the Private Sector (the “Resolution”).
The Resolution details steps that businesses/employers can take to modify existing employment arrangements in the interests of preserving business viability.
Key points from the Resolution;
It should be noted that any temporary reduction of salary adopted in accordance with the Resolution will only be valid for the duration expressed in the written agreement between the employer and employee or the validity period of the Resolution, whichever is earlier.
Measures to implement aspects of the Resolution have not yet been put in place. PRO Partner Group will continue to monitor the situation and provide clients with any updates as and when they become available.
Book a call with one of our company formation specialists.
Business Development Manager
Business Consultant – Abu Dhabi
Business Consultant - Qatar
Head of Operations
Head of Corporate Structuring