March 18, 2020
The Ministry of Human Resources and Emiratisation (MOHRE) has issued a new Ministerial Resolution (No. 279 of 2020) (Resolution) containing guidance for onshore based employers as to employment related measures they can take in response to the global Covid-19 outbreak. The Resolution is effective 26 March 2020 and the measures introduced will remain in place while other precautionary measures in relation to Covid-19 remain active.
The Resolution will be welcomed by onshore employers as it effectively sanctions measures which many employers may be looking to implement (if they have not done so already). While the Resolution expressly states that it is applicable to all onshore employers regulated by MOHRE, it remains to be seen whether it, or similar guidance, will be implemented across the various free zones in the UAE. Importantly, the provisions of the Resolution only apply to non-national employees, who are not afforded the same protections as UAE nationals under existing UAE legislation.
We summarise the key points of the Resolution below, as they relate to business contingency plans which clients may wish to consider. The wording of the Resolution states that these measures are to be implemented “gradually”. It remains to be seen what will satisfy this requirement in practice, for example whether these measures need to be implemented in the order in which they appear in the Resolution or in accordance with their impact.
Working from home
The Resolution states that all onshore companies affected by current measures to reduce the spread of Covid-19 may implement a remote working system.
Ministerial Resolution No. 281 of 2020, published on 29 March 2020, includes guidance for employers and employees as to how a remote working system is to be implemented in practice.
In accordance with Federal Law No. 8 of 1980 (Labour Law), employers may specify the dates on which employees are to utilise their annual leave, without the need for employee consent. The Resolution expressly confirms that this measure may be adopted by employers but calls for “agreement”.
Employers will need to consider the practical effects of requiring employees to utilise their annual leave now as it could result in employees not having enough accrued leave remaining should they wish to visit families overseas once travel restrictions relating to Covid-19 are lifted.
The Resolution allows onshore employers to mutually agree a period of unpaid leave with employees. This is a welcome introduction for employers, as unpaid leave is not expressly recognized under the Labour Law and so implementing it previously carried a degree of uncertainty.
Employers may wish to utilise this option as an alternative to dismissals. One advantage of doing so is that an employee who remains sponsored will retain medical insurance while in the territory (and they may be unable to leave the UAE due to current travel restrictions).
While Covid-19 will be dealt with on an emergency basis along with any other critical needs it is important to consider the provision of basic medical care. The option of unpaid leave may be preferable to dismissals in many instances.
Temporary reduction of salary
The Resolution states that employers may reduce salary temporarily, with employee consent, and outlines a process which employers must follow in order to lawfully implement such a change.
Specifically, the parties must enter into an official temporary addendum to the MOHRE employment contract, with both parties retaining a copy and the employer prepared to submit it to MOHRE on request.
The terms of the addendum should provide for its expiry either (a) at the end of a specified term; or (b) when the Resolution itself ceases to be enforced (whichever comes first). In the event that the employer wishes to renew the addendum prior to its expiration date, this can be done with the express consent of the employee.
The introduction of the Resolution, and its express references to unpaid leave and temporary salary reductions, will provide comfort to employers who may have been cautious about implementing such measures due to the risk of penalties being imposed by the Wage Protection System in the event that wages paid to employees did not match amounts as stipulated on registered MOHRE contracts.
In our view, provided that employers follow the guidelines as outlined in the Resolution, we do not anticipate any such issues.
Permanent reduction of salary
Where employers wish to permanently reduce salary, the Resolution states that such a reduction must be consented to by the affected employee(s) and can only be implemented by the employer applying to MOHRE to have the MOHRE employment contract officially amended.
Importantly, the list of measures which are effectively ‘sanctioned’ by the Resolution does not include redundancies. However, the Resolution does provide procedural guidance in circumstances where an onshore employer identifies a ‘surplus’ of non-national employees.
Specifically, the Resolution states that such employees must be offered the option of registering their details on the MOHRE’s portal for jobseekers (the Virtual Labour Market), through which they can seek alternative employment.
Employers are then required to continue honouring existing obligations with regard to accommodation and all other entitlements (other than salary) until the earlier of (i) the employee leaving the UAE; or (b) the employee obtaining alternative employment.
Clarification is required as to whether this relates to the continued provision of housing allowances where an employer does not provide accommodation, although we consider that this could be caught and that this would be consistent with the spirit of the Resolution which seeks to ensure employees’ basic needs if they remain in the UAE without work.
We anticipate that this development will make employers wary of implementing redundancies during this period as the Resolution does not introduce any relief from existing damages for termination of employment for employers affected by the Covid-19 crisis.
However, it remains to be seen whether the measures introduced by the Resolution could infer a wider leniency that may be adopted by the authorities in relation to any terminations arising out of the present circumstances.
What is clear is that the MOHRE is providing a range of sanctioned options short of dismissal which employers can utilise and which ultimately can retain staff for the future.
Conversely, the above introductions will be a welcome development for onshore employers looking to hire, who may have faced difficulties in doing so owing to the current ban on overseas recruitment and / or travel restrictions into the UAE.
Such employers are directed by the Resolution to:
- list all available jobs on the Virtual Labour Market and search through registered jobseekers when looking to fill any positions; and
- obtain work permissions electronically where a suitable candidate is identified, by applying to MOHRE.
In addition to the above considerations, employers should also be aware that Federal Law No. 14 of 2014 on the Control of Communicable Diseases has recently been amended such that Covid-19 has been added to the list of communicable diseases.
As such, the following individuals are required to notify the Ministry of Health immediately where they know or suspect the infection of any person with Covid-19:
- any adult person in contact with the individual; and
- the direct superior in the place of business of the individual.
The penalty for non-compliance with this provision according to the law is imprisonment and / or a fine not exceeding AED10,000.