Connecticut, US
One of the many challenges that successful business leaders have needed to navigate during the COVID-19 pandemic is the efficient management of their employee population. Without a doubt, the safety and wellbeing of staff is at the forefront of every leader’s strategy. As the health crisis continues, many business leaders find themselves in extremely challenging circumstances and are pushed to make difficult decisions to help the business endure.
Recognising the quandary many leaders may be in, between cutting costs to survive and retaining top talent, the UAE government has introduced multiple economic stimulus packages to support businesses. Among those efforts include credit guarantee schemes to stimulate financing by local banks, reducing fees associated with water and electricity connection—as well as for leasing industrial lands—suspending real estate registration fees, tourism and municipality fees and other local and federal initiatives.
Similarly, from a regulatory standpoint, the UAE Ministry of Human Resources and Emiratisation (MOHRE), the federal authority responsible for overseeing the UAE labour market, has recently issued several important decisions that aim to facilitate the flexibility, stability and efficiency of the labour market. While maintaining the balance of workers’ rights and businesses’ increased need for flexibility, the decisions impact the following key aspects of the employment relationship:
- Telecommuting
- Paid leave
- Unpaid leave
- Temporary salary reduction
- Permanent salary reduction
While the MOHRE encourages employers to implement the concessions related to working remotely during the pandemic (also referred to as the “precautionary” or “emergency” period), the other measures require a mutual consent to be recorded in writing as an appendix to the employment contract. These measures are specifically designed for the precautionary period and are to end as per the dates specified in the annex or the period of validity of the resolution, whichever is earlier.
With most economic commentators agreeing that the potential economic fallout may extend beyond the validity of the emergency period, these measures may be applicable beyond the timeframe specified and may provide a good foundation to the UAE authorities to develop this further on a more permanent basis.
Telecommuting
The MOHRE has issued a separate resolution that sets out practical steps and guidance for remote work and the way businesses can implement the telecommuting provisions to minimize the staff required in the office. While this decision has been welcomed by the business community in the UAE, as it provides guidance to a previously unlegislated section of the economy, additional considerations to labour and immigration regulations may be necessary post-pandemic.
Paid and Unpaid Leave
Although the UAE labour law regulates the mechanisms related to paid leave, through the new regulation, the MOHRE encourages a supplemental annex be signed by the parties to recognise the exact period the employee is subject to a paid leave due to the current circumstances. Similarly, the exact period of unpaid leave must be recorded in an annex to the labour contract. This is not only to ensure that the employer remains liable to fulfil entitlements such as housing and health insurance coverage, but also to avoid any violation of the Wages Protection System’s rules. It is important to ensure that the annex is completed prior to the date the leave commences.
Temporary and Permanent Salary Reduction
Under normal circumstances, the reduction of employees’ wages, once the employer commits to them in the employment contract, has many conditions. However, given the current exceptional circumstances, a temporary reduction of salaries of the foreign national workers process has been simplified, although it still requires the employee’s consent. As for a more permanent reduction of wages, the employer must file a separate application and obtain the MOHRE’s approval.
Virtual Labour Market
With the above provisions, the MOHRE is providing the structural regulatory support required by companies to be flexible and creative in their approach. Underpinning the stability of the UAE labour market and ensuring the objective of turning the UAE into a knowledge-based economy, the MOHRE has created a Virtual Labour Market platform to connect companies in the UAE with skilled workers seeking employment. As part of the resolution, it is mandatory for the employer to register their surplus staff on the Virtual Labour Market, so that employers affected by current restrictions due to the COVID-9 outbreak, including the suspension of recruitment of workers from overseas, can use the platform to recruit these individuals. Similarly, the Dubai International Financial Centre (DIFC) has followed suite and mandated that companies registered in the DIFC keep their respective lists ready to supply to the MOHRE when requested. Companies may advertise job vacancies and search for available talent on the platform. The employer must obtain the relevant work authorization required for any new employee, for example a temporary or part-time work permit.
Key conclusions for businesses
Although the structure provided under these provisions is welcome, it is extremely important that each business be compliant with the MOHRE guidelines. The MOHRE has provided the regulatory flexibility companies require, but the burden to remain compliant regarding the multiple provisions during these challenges remains with the employer. This can be particularly challenging for employers and leaders with large employee populations, in that they may choose to implement a varying combination of concessions by different parts or levels of the business. Additionally, careful execution of the relevant applications and tracking of the subsequent expiry of the multiple case periods, including the resolution’s validity or new provisions, can be cumbersome. While we are still in the middle of this crisis, a long-term view to compliance is always prudent.
If you have questions regarding the matters described in this blog, please do not hesitate to contact your Fragomen immigration professional or Shoaib Khaleeli at [email protected].
This blog was released on June 10 and due to the circumstances, there are frequent changes. To keep up to date with all the latest updates on global immigration, please visit our COVID-19 microsite and subscribe to our alerts. You may also follow our LinkedInaccount.