Navigating Pandemic Redundancies under UAE Labor Law

With the ongoing challenges posed by the pandemic, the United Arab Emirates (UAE) has introduced new directives and legislation to support private sector employers. These measures provide crucial guidance for businesses facing unprecedented times, including the concept of redundancy.

Introduction to the New Legislation

Two recent resolutions, Ministerial Resolution No. 279 of 2020 and Ministerial Resolution No. 281 of 2020, introduced by the Ministry of Human Resources and Emiratisation (MoHRE), address various aspects of labor law to support private employers during the pandemic. These resolutions offer important guidance on workforce restructuring and remote work.

Understanding Redundancy under UAE Labor Law

Ministerial Resolution No. 279 of 2020

This resolution introduces the concept of redundancy into the UAE Labor Law for the first time. Under these provisions, employers can restructure their contractual relationships with employees, particularly when they have identified a surplus of non-UAE national staff. The resolution mandates that employers provide former employees with their entitlements except for basic salary, including housing, transport, allowances, and private medical insurance, until the employee secures alternative employment or leaves the UAE.

Moreover, the resolution requires employers to register employees onto the MoHRE’s 'Virtual Labour Market,' which can be particularly helpful for sectors experiencing an increase in business operations despite the current suspension of foreign recruitment.

Redundancy and the Courts

While Resolution 279 does not explicitly define redundancy termination as an automatically 'valid' reason, it is likely that the courts will be more sympathetic to employers who can prove that redundancy terminations were the only viable option for the business.

Changes to Employment Terms and Conditions

Resolution 279 also provides guidance on gradual restructuring of employment terms and conditions. This includes implementation of remote work systems, granting paid and unpaid leave, temporarily and permanently reducing salaries, as well as permanent reduction in salary requiring MoHRE’s approval.

Employee Consent and Salary Reduction

A temporary or permanent reduction in salary requires advance written consent from the employee. Employers must sign an annex to the employment contract as provided by MoHRE when temporarily reducing salary. For permanent salary reduction, the employer must first obtain MoHRE’s approval by applying for a change to the registered employment contract. Additionally, employers should consider how the employees' post-employment gratuity will be calculated.

Wages Protection System (WPS)

While employers in the 'onshore' jurisdiction are subject to the WPS rules, Resolution 279 allows the MoHRE to relax these rules during this unprecedented period.

Remote Working Policy (Resolution 281)

Ministerial Resolution No. 281 of 2020

This resolution provides a policy for employers and employees working remotely during the coronavirus crisis. Although non-binding, the policy sets out obligations for both parties to ensure effective remote working. Employees are expected to perform tasks according to specified timeframes and maintain confidentiality. Employers are required to provide necessary technical equipment and facilitate communication with colleagues, management, and leadership.

This policy serves as a useful benchmark for companies adapting to the new norm of remote working.

Conclusion

The new resolutions introduced by the MoHRE offer significant support to private sector employers navigating the challenges posed by the pandemic. By providing clear guidelines and support mechanisms, these measures aim to ensure business continuity while protecting the rights of employees.