Due the the impact of Covid-19 on the global business environment, the UAE's Ministry of Human Resources and Emiratisation (MoHRE, formerly known as the Ministry of Labour) has issued Resolution 279 of 2020. The purpose of the resolution is to preserve the interests of both Employer and Employee during the period of implementing precautionary measures to limit the spread of the novel Corona virus throughout the UAE.
The companies affected by the precautionary measures referred to and who wish to reorganise the work structure there, must include their procedures, in agreement with the non-citizen employee, according to the following:
- Implementing the telecommuting system
- Granting him a paid leave
- Granting him leave without pay
- Reducing his wages temporarily during the period referred to
- Reducing his wages permanently
Following the release of Resolution 279 of 2020 please see the below practical guidance on how it will affect employment obligations for UAE business owners.
End of service benefit (EOSB)
Under the UAE Labour Law, employees who have worked continuously for a year will accrue EOSB on termination of employment based upon the period of service. A temporary reduction in salary is not likely to affect the rate of accrual of EOSB as this is calculated on the basis of the last basic wage. EOSB does not, however, accrue for periods of unpaid leave. Employers can, if they so desire, disregard this provision of the UAE Labour Law to safeguard employees against any further financial hardship.
Working from home
Following the guidance of the UAE Government, most private sector businesses introduced remote working several weeks ago. But as this pandemic continues to affect reduced revenue, business owners are looking for alternative solutions to manage ongoing business costs.
While the UAE Labour Law affords the employer the right to place an employee on paid leave, employers will require the express written consent of their employees before they can impose unpaid leave.
Temporary/Permanent salary reductions
The consent of the employee must be obtained to any temporary reduction in salary. The parties must enter into a form of supplemental agreement prescribed by the MOHRE (Additional Temporary Annex). Employers seeking to make permanent salary reductions must obtain the prior consent of the MOHRE before completing the Additional Temporary Annex.
Term of temporary reduction
The term of any temporary salary reduction must not exceed the duration of the employee’s employment term or the period of the crisis, whichever occurs earlier. Given that it is impossible at this stage to gauge the duration of this global pandemic, a term of 3 months would be a good starting point and reflects the period of lock down experienced in countries which have previously tackled the virus.
Termination of employment may be unavoidable for some businesses. As the concept of redundancy is not addressed by the Resolution or indeed the UAE Labour Law, there is a risk that an employee who is terminated without cause could claim compensation arising from arbitrary dismissal. It is therefore important to seek legal advice before taking this type of action.
Wages Protection Scheme (WPS)
Until such time as there are processes in place for registration of the Additional Temporary Annex with the MOHRE, it is recommended that any deductions above 10% are entered as ‘unpaid leave’ in the WPS payroll. If your labour account has already been blocked as a result of unauthorised salary deductions, it should be possible to unblock this by submitting the Additional Temporary Annex to the MOHRE through a Tas’heel centre.
If you would like further guidance, please contact CBD Corporate Services on +971 (0)4 551 0677 email us at email@example.com and we will be delighted to assist.