Overview of UAE Labour Law and Employee Relations: A Practitioner’s Perspective, Saliha Latif

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For all those who wish to learn more about UAE Labour Law, how to handle employee issues such as sickness, disciplinary, grievance, bullying and get avoid the pitfalls of legal fines. The seminar …

For all those who wish to learn more about UAE Labour Law, how to handle employee issues such as sickness, disciplinary, grievance, bullying and get avoid the pitfalls of legal fines. The seminar gives a HR practitioner’s perspective on:
• Employment Law essentials (license, visa, fines)
• Contract of employment – should companies use limited or un-limited?
• Termination, gratuity and repatriation
Disclaimer: views expressed in the seminar don’t constitute legal advice

This presentation was used at HR Summit and Expo 2013 www.hrsummitexpo.com

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  • 1. Employer terminated a limited contract and verbally mentioned due to pregnancy
    2. Employer provided a termination letter mentioning as per the reason discussed and when the employee went back and asked to mentioned due to pregnancy, they issued another letter mentioning due to poor performance.
    4. Employee was asked to leave immediately and was escorted (computer system was shown to the Account personal and in front of him was shut down).
    5. Employer & employee raised complaint to MOL.
    6. Employer provided fake Warning letter back dated and mentioned at the bottom, reluctant to acknowledge the letter.
    7. Employer provided a report from IT mentioning the emails were deleted from the computer ( see point 4).
    8. Local Sponsor has threatened pregnant employee that if the case goes to court, then he will make sure that employee is put in prison.

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  • 1. Employment Law Essentials ’HR Practitioner Perspective’ Saliha Latif Head of HR
  • 2. CONTENTS: Legal Set-up UAE License 3 Employment Contracts Termination of Employment & Gratuity Employee Relations Questions 9 13 25 39
  • 3. LEGAL SET-UP UAE • Licenses • Partnership Ownership • Sole Ownership • Visa Regulations • Fines
  • 4. LICENSES Commercial License • Issued to a company that will engage in any kind of trading activity Industrial License • Issued to a company that will engage in manufacturing or any industrial activity Professional License • Issued to service providers, professionals, artisans, and craftsmen
  • 5. PARTNER OWNERSHIP 1. Public and Private Shareholding Companies • Banking, insurance, and financial activities • Must have chairman and majority of directors UAE nationals 2. Joint Venture • A contract agreement between a UAE party and a foreign party for the engagement in a desired business 3. Limited Liability Companies (LLC) • 2 – 50+ employees
  • 6. SOLE OWNERSHIP • • FZCO start up or establish branch / representative office Example IT – Dubai Internet City, DMC DIFC minimum capital requirement ranging from AED 50,000 to AED 1,000,000 depending upon the selected Free Zone • Or: Can have company set-up and power of attorney to state sole ownership with you and local – sleeping/ silent partner •
  • 7. VISA REGULATIONS • To work in the UAE, all employees must have valid visa before commencing employment • An employee must be medically fit to acquire employment visa / residency visa • All visa cost must be shouldered by the employer • Emirates ID needs to be arranged through EIA and paid by the employee • Certain professions require attested documents such as degree/ diploma
  • 8. FINES – MINISTRY OF LABOUR (MOL) Description Penalty / Fine Labour card delays pre- 60 days AED, 1,000 Mission Labour card (temporary assignees AED 100 daily maximum 3 months) Fake Emiratisation targets AED 20,000 Incorrect information entered into wage protection system (WPS) AED 20,000 Delay of employee salary pre 60 days AED 5,000 per employee multiple workers AED 50,000 Fake signed receipts slips AED 5,000 maximum limit multiple workers AED 50,000 Poor Labour accommodation not in line with MOL standards AED 20,000 Mis-use of company visa and no salary for AED 20,000 (in cases where two months employee not working)
  • 9. THE EMPLOYMENT CONTRACT: • Limited • Un-limited • Internal Limited VS Un-limited?
  • 10. Limited Contract • • • • • Has commencement • and expiry date set Term cannot exceed 4 years • Can be renewed on mutual consent for a similar or reduced period Employment will terminate at end of period Penalty for both • parties if contract terminated early Unlimited Contract Contract will state commencement date but no expiry Contract will be considered "unlimited" if verbally confirmed or if it is not for a specified period or it had been for a specified period and the parties continue to act on terms & conditions after expiry Contract may be terminated by mutual agreement providing 30 days notice
  • 11. Internal Employment Contract • A much more detailed internal contract (to cover policies and procedures, code of conduct, ethics benefits etc)
  • 12. INTERNAL EMPLOYMENT CONTRACT Points to Cover: Date, title, type of contract, Compensation package & Benefits Company conduct, ethical standards Summary of key policies and procedures (or add paragraph to refer to such) • Non-Competition/ solicitation clause • Termination covenants • Role profile and other relevant documents can be included as appendix • • • •
  • 13. WHEN TO TERMINATE?  Both can decide mutually to move ahead – in writing providing notice  Un-limited contract notice from either party  Expiry of fixed term (limited) contract  If probation extended and not satisfactory – not exceeding six months  Sickness, disciplinary or other employee relation matters (following UAE Law and procedures)
  • 14. TERMINATION OF LIMITED CONTRACT • Provide notice in advance to inform employee of expiry – either extend or terminate • If decide to terminate in advance must provide notice and valid reason • 3 months notice pay or remainder of contract period to be paid (whichever lower) • Employee entitled to gratuity • If employee resigns before expiry, liable to pay employer 45 days salary – no gratuity
  • 15. TERMINATION OF UN- LIMITED CONTRACT In accordance with UAE Labour Law: • 30 days notice must be provided in writing • Notice can be waived if both agree or paid in lieu • If employee has more than one year service entitled to end of service gratuity • Annual Leave until last day must be calculated in settlement and any expenses
  • 16. ARTICLE 120 GROSS MISCONDUCT • An employee can be terminated without notice if an act of Gross Misconducted is committed • No notice or gratuity Examples:  Fraud, theft, bribery or financial loss  Drunk, physical assault, abusive  Absent without legitimate reason  Fails to adhere to management instructions despite previous warnings
  • 17. EMPLOYEE’s RIGHT • Employees may terminate the employment contact without notice in accordance with Article 121 • The employee will be entitled to compensation if the termination of the contract had been for an unjustified cause • Court may award employee damages, against the employer, not to exceed three months wages • The compensation for damages awarded to the employee for unreasonable dismissal, will be without prejudice to the employee's entitlement of gratuity and payments in lieu of notice, if notice had not been provided
  • 18. END OF SERVICE - GRATUITY • Statutory right of employee after completing one year service • Calculated on last basic salary only • Free zone and LLC Contracts differ in calculation
  • 19. UN-LIMITED CONTRACT Gratuity Resignation :  1-3 years = entitled to one third of the severance pay  3-5 years = two thirds of the severance pay if continuous service exceeds three years up to five years  5+ years = full severance pay Termination: • 21 days' wage for each of the first five years of service • 30 days’ wage for each additional year of service provided severance pay should not exceed two year's wage
  • 20. UN-LIMITED CONTRACTGRATUITY Resignation Service range Service years 1 2 3 4 5 6 & up Termination Service range < 1 and <3 7 7 7 21 > 3 and <5 >5 14 14 14 14 14 21 21 21 21 21 21 30 < 1 and >3 21 21 21 21 >3 and <5 21 21 21 21 21 21 >5 21 21 21 21 30 30
  • 21. LIMITED CONTRACT GRATUITY • 21 Days multiplied by the number of service years • Same applies to most FZCO companies and both pay 21 days irrelevant of resignation of termination
  • 22. REPATRIATION • If employment contract terminated company must provide one-way return air-fare • If employee finds suitable work elsewhere then repatriation cost not included and employee should provide company new labour approval (after visa cancelled) • Applicable only if included in contract for resignation –otherwise not applicable
  • 23. LABOUR CLAIMS • Employees can raise complaint with MOL who will mediate between both parties • If no amicable settlement then can be timely and costly court case • Company liable to pay court fees • Written evidence will be considered • Appoint Arabic speaking legal advocate
  • 24. EMPLOYEE RELATIONS Sickness Performance management Handling Grievance Dealing with Bullying at work • Disciplinary • • • •
  • 25. SICKNESS • As per UAE Law employees entitled to 15 days per year • No sick pay during probation • Create internal sickness policy and ensure all employees are aware of such • Two days absence request medical certificate • Consistent absence /pattern – follow informal route then formal, ensure confirmed in writing • If no improvement's despite previous adjustment's/ warnings issue notice to terminate
  • 26. PERFORMANCE MANAGEMENT • Job profile provided at onset, bi- yearly performance reviews with clear measurable targets (SMART) • Hold regular 1:1 meetings • Where feel employee not meeting target do not wait until formal review hold discussion and look at way forward together • Hold two way- feedback • Be clear what outcome is if performance does not meet company objectives
  • 27. PLAN • • • DEVELOP • • • Identify+ agree upon expectations Clarify how results will be evaluated Document Plan PERFORMANCE MANAGEMENT Assess + Evaluate progress On-going feedback Talent Discussion ASSESS • • • RECOGNIZE • • Bi-annual performance review Promotions/ Bonus Assess + Evaluate progress On-going feedback Talent Discussion
  • 28. PERFORMANCE MANAGEMENT PROCESS Performance Plan Performance Support Performance Review Performance Recognition
  • 29. HANDLING AN EMPLOYEE GRIEVANCE • If employee has concern first step to resolve informally; • At times may be of a serious nature or employee may want to make formal grievance • Companies should have written grievance procedure explaining timescale and process • Carry out formal investigation • Witnesses should be interviewed (confidentially) • Outcome / decision explained to employee • Next steps/ action plan
  • 30. BULLYING AT WORK? Examples: • Shouting/ belittling and making someone feel unimportant/ disrespected • Excessive monitoring/ constant criticizing / deliberate over-load of work • Regular undermining of a competent worker/ setting them up to fail • Denying someone’s training or promotion opportunities • Excluding someone from normal workplace/staff conversations and making someone feel unwelcome
  • 31. BULLYING AT WORK? CONT… Employers are responsible for preventing bullying and harassment • Un-acceptable and can cause serious problems for company • Can lead to poor performance, loss of respect for managers, high turnover, damage company reputation • Having anti-bullying and harassment policies can help prevent problems
  • 32. Informal Approach Counseling Mediation Formal Approach
  • 33. DISCIPLINARY • Set clear disciplinary policy highlighting procedure and process for any misconduct • Try to nip matter in the bud – informal process • Where Misconduct arises investigate matters, speak to potential witnesses confidentially • Issue warning – oral, first or final dependant on seriousness • Retain on file for period of 6 -18 months
  • 34. EXAMPLES OF MISCONDUCT Oral • • First Offence Punctuality First Warning • • Where previously been warned verbally and repeated error Performance or sickness management process –stage 1 Final Warning • • • Bringing the employer into serious dishonor Act serious but does not warrant immediate dismissal Performance or sickness management process –stage 2 Dismissal • • • • • Failure to Follow Management Instruction Fighting resulting in physical violence/trauma Deliberately damaging company property Serious bullying or harassment Serious infringement of health and safety rules Fraud or falsifying work documents
  • 35. BEST PRACTICE FOR HR PROFESSIONALS • Be a good listener • Ask open questions • Do not argue - present in persuasive manner rather than argumentative one • Make sure you understand all views – some people have difficulty expressing themselves • Treat all with dignity & respect – do not ridicule or criticize • Gather all facts • Make a decision and explain to employee (you may want to consult higher management before making decision) • Thank employee / explain confidentiality aspect
  • 36. Questions ?