KEY EMPLOYMENT
ISSUES IN THE UAE
SME Advisor Success Series Event
RAK Free Zone
Gordon Barr
Senior Associate
26 September 2012
AGENDA
• Practical Employment Considerations
• The Labour Law – Key Issues
1
PRACTICAL EMPLOYMENT
CONSIDERATIONS
PRACTICAL ISSUES
• Sources of law
• RAK Free Zone
• Formal Requirements
• Practicalities for Termination
3
SOURCES OF LAW
• Federal Laws including UAE Federal Law No. 8 of 1980 as amended
(the “UAE Labour Law”)
–
Applicable throughout the UAE, including free zones, other than the
DIFC
–
Applies to all workers, save for limited categories
–
Expatriate employees, even those on short-term assignments in the
UAE, will be covered by the UAE Labour Law
• RAK Free Zone Rules & Regulations
• Islamic Shariah, Civil Code, Penal Code, Laws of an Emirate
4
RAK FREE ZONE
• RAK Free Zone Rules & Regulations:
–
UAE Labour Law prevails over the RAK free zone employment
regulations, except where the free zone regulations are more
favourable to the employee
• Administration of labour relations in RAK entails the following:
–
Employment Rules & Regulations
–
Template Employment Contract
–
Personnel Secondment Agreement between the free zone and the
employer
• RAK dispute management process.
5
RAK FREE ZONE (cont’d)
• Template Employment Contract:
–
English/Arabic
–
Salary in UAE Dirhams
–
Complete Company Name & Stamp
• Very limited detail – requirement for a further ‘internal’ contract
between parties.
6
FORMAL REQUIREMENTS
• An expatriate employee shall be sponsored via the RAK Free Zone
Authority.
• The employer (the licensee) must agree to abide by certain terms
(contained in a Personnel Secondment Agreement) and shall apply
to the RAK Free Zone to obtain the employee’s visa/ID card.
• There are certain exceptions, where the licensee can employ non
sponsored staff, namely:
–
A female sponsored by her father or husband.
–
Where the Authority grants dispensation for employees of a
parent/group company to work in the Free Zone.
7
FORMAL REQUIREMENTS (Cont’d)
• Practical difficulties:
–
Contractor/consultant arrangements
–
It is not possible to use a RAK free zone visa to work onshore
–
Company’s sphere of influence goes beyond RAK
–
Short term international assignments
• Potential implications:
–
It is illegal to commence or carry out work without the appropriate visa
and work permit
–
The RAK Free Zone and the Immigration Authority may impose a
substantial fine on the company
–
The employee could face fine/imprisonment/deportation
8
PRACTICALITIES FOR TERMINATING
• Employer must submit the cancellation of the work permit and
residence visa within 30 days of the termination date.
• Passport of the employee must be obtained in order to cancel the
visa.
• Employee then has a further 30 days from the cancellation of the
visa in which to find alternative sponsorship or leave the country.
• Limited options in UAE:
–
co-operate;
–
abscond;
–
bring claim.
9
KEY CONTRACT ISSUES
THE LABOUR LAW – KEY
ISSUES
10
KEY ISSUES
Limited or unlimited term contract?
• A limited contract is for a fixed duration
–
Notice cannot be given during the fixed term.
–
Early termination compensation payable by employer/employee.
–
Unless the employee has more than 5 years’ service, no gratuity
payable if the employee terminates the contract.
11
KEY ISSUES
Limited or unlimited term contract?
• An unlimited term contract
–
May be validly terminated at any time with a minimum 30 day notice
period.
–
gratuity payable if the employee terminates the contract but on reduced
basis.
–
Risk of arbitrary dismissal compensation.
12
KEY ISSUES
• Hours of work
–
Maximum of eight hours per day (+ national holidays)
–
Ramadan reduction – 2 hours
• Overtime
–
Overtime is payable unless the employee holds a senior managerial
position
–
125% of the normal hourly rate
–
150% of the normal hourly rate - Friday, a public holiday, or between
the hours of 9.00pm and 4.00am
• Probation
–
Maximum of six (6) months during which time eligibility for paid sick
leave and annual leave will not apply.
–
Can terminate with immediate effect with no notice or end of service
gratuity.
13
KEY ISSUES
• Annual Leave
–
First year of service - leave accrues at two days per month after the first
six months.
–
Service exceeding one year - 30 calendar days’ leave each year.
• Sick Leave
–
Maximum entitlement = 90 days (either consecutively or in aggregate)
during each year of service.
–
Sick leave pay entitlement:
—
•
The first 15 days on full pay
•
The next 30 days on half pay
•
The remaining 45 days without pay
An employer may dismiss once the employee has exhausted the 90
day entitlement.
14
KEY ISSUES
• Maternity Leave
–
45 days maternity leave entitlement
–
One year or more service = full pay
–
Less than one year = half pay
–
A maximum of 100 (consecutive or non-consecutive) days‘ unpaid
leave, if illness resulting from pregnancy or birth, which means inability
to resume work.
• Notice
–
Either party can terminate an unlimited term contract by giving a
minimum of 30 days’ notice.
–
If either party fails to serve adequate notice to the other party,
compensation in lieu of notice is payable.
15
KEY ISSUES
• End of service gratuity
–
Distinction between “basic salary” and “remuneration”
–
Commission/bonus – guaranteed and regular?
• Bonus?
–
Entitlement to bonus and the amount is purely discretionary
• Post termination restrictions?
–
Must be reasonable, and limited in respect of geographical
scope/duration
–
No injunctive relief – consider liquidated damages clause
16
Questions?
For further information please contact:
Gordon Barr, Senior Associate
: g.barr@tamimi.com
: : +971 (0)4 364 1641