overview of uae labour law and employee relations: a practitioner’s perspective, saliha latif
DESCRIPTION
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.comTRANSCRIPT
Employment LawEssentials
’HR PractitionerPerspective’
Saliha LatifHead of HR
CONTENTS:Legal Set-up UAE License
3Legal Set-up UAE License
3Employment Contracts
9Employment Contracts
9Termination of Employment & Gratuity
13Termination of Employment & Gratuity
13Employee Relations
25Employee Relations
25Questions
39Questions
39
LEGAL SET-UP UAE
• Licenses
• Partnership Ownership• Sole Ownership
• Visa Regulations• Fines
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
LICENSES
PARTNER OWNERSHIP1. 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 desiredbusiness
3. Limited Liability Companies (LLC)• 2 – 50+ employees
SOLE OWNERSHIP
• FZCO start up or establish branch / representativeoffice
• Example IT – Dubai Internet City, DMC• DIFC minimum capital requirement ranging from
AED 50,000 to AED 1,000,000 depending upon theselected Free Zone
Or:• Can have company set-up and power of attorney
to state sole ownership with you and local –sleeping/ silent partner
VISA REGULATIONS
• To work in the UAE, all employees must havevalid visa before commencing employment
• An employee must be medically fit to acquireemployment 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
FINES – MINISTRY OF LABOUR(MOL)
Description Penalty / FineLabour card delays pre- 60 days AED, 1,000Mission Labour card (temporary assigneesmaximum 3 months)
AED 100 daily
Fake Emiratisation targets AED 20,000Incorrect information entered into wageprotection system (WPS)
AED 20,000
Delay of employee salary pre 60 days AED 5,000 per employeemultiple workers AED 50,000
Fake signed receipts slips AED 5,000maximum limit multipleworkers AED 50,000
Poor Labour accommodation not in linewith MOL standards
AED 20,000
Mis-use of company visa and no salary fortwo months
AED 20,000 (in cases whereemployee not working)
THE EMPLOYMENT CONTRACT:
• Limited• Un-limited• Internal
Limited VS Un-limited?
Limited Contract Unlimited Contract
• Has commencementand expiry date set
• Term cannot exceed 4years
• Can be renewed onmutual consent for asimilar or reducedperiod
• Employment willterminate at end ofperiod
• Penalty for bothparties if contractterminated early
• Contract will statecommencement date but noexpiry
• Contract will be considered"unlimited" if verballyconfirmed or if it is not for aspecified period or it hadbeen for a specified periodand the parties continue toact on terms & conditionsafter expiry
• Contract may be terminatedby mutual agreementproviding 30 days notice
Internal Employment Contract
• A much more detailed internal contract (tocover policies and procedures, code ofconduct, ethics benefits etc)
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
INTERNAL EMPLOYMENTCONTRACT
WHEN TO TERMINATE?
Both can decide mutually to move ahead – inwriting 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)
TERMINATION OF LIMITEDCONTRACT
• Provide notice in advance to inform employee ofexpiry – either extend or terminate
• If decide to terminate in advance must providenotice and valid reason
• 3 months notice pay or remainder of contractperiod to be paid (whichever lower)
• Employee entitled to gratuity• If employee resigns before expiry, liable to pay
employer 45 days salary – no gratuity
TERMINATION OF UN- LIMITEDCONTRACT
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
ARTICLE 120 GROSSMISCONDUCT
• An employee can be terminated without notice ifan act of Gross Misconducted is committed
• No notice or gratuityExamples: Fraud, theft, bribery or financial loss Drunk, physical assault, abusive Absent without legitimate reason Fails to adhere to management instructions
despite previous warnings
EMPLOYEE’s RIGHT
• Employees may terminate the employmentcontact without notice in accordance with Article121
• The employee will be entitled to compensation ifthe termination of the contract had been for anunjustified cause
• Court may award employee damages, against theemployer, not to exceed three months wages
• The compensation for damages awarded to theemployee for unreasonable dismissal, will bewithout prejudice to the employee's entitlementof gratuity and payments in lieu of notice, ifnotice had not been provided
END OF SERVICE - GRATUITY
• Statutory right of employee after completing oneyear service
• Calculated on last basic salary only• Free zone and LLC Contracts differ in calculation
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 fiveyears
5+ years = full severance payTermination:• 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 twoyear's wage
UN-LIMITED CONTRACT-GRATUITY
Resignation Termination
Service range Service range
Serviceyears
< 1 and< 3
> 3 and< 5
> 5< 1 and
> 3
> 3and< 5
> 5
1 7 14 21 21 21 212 7 14 21 21 21 213 7 14 21 21 21 214 14 21 21 215 14 21 21 30
6 & up 21 21 30 21 21 30
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
REPATRIATION
• If employment contract terminated companymust provide one-way return air-fare
• If employee finds suitable work elsewhere thenrepatriation cost not included and employeeshould provide company new labour approval(after visa cancelled)
• Applicable only if included in contract forresignation –otherwise not applicable
LABOUR CLAIMS
• Employees can raise complaint with MOL who willmediate between both parties
• If no amicable settlement then can be timely andcostly court case
• Company liable to pay court fees• Written evidence will be considered• Appoint Arabic speaking legal advocate
• Sickness• Performance management• Handling Grievance• Dealing with Bullying at
work• Disciplinary
EMPLOYEE RELATIONS
SICKNESS
• As per UAE Law employees entitled to 15 daysper 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
PERFORMANCE MANAGEMENT
• Job profile provided at onset, bi- yearlyperformance reviews with clear measurabletargets (SMART)
• Hold regular 1:1 meetings• Where feel employee not meeting target do not
wait until formal review hold discussion and lookat way forward together
• Hold two way- feedback• Be clear what outcome is if performance does not
meet company objectives
PERFORMANCEMANAGEMENTPERFORMANCEMANAGEMENT
PLANPLAN
ASSESSASSESS
RECOGNIZERECOGNIZE
DEVELOPDEVELOP
• Identify+ agree upon expectations• Clarify how results will be evaluated• Document Plan
• Assess + Evaluate progress• On-going feedback• Talent Discussion
• Bi-annual performance review• Promotions/ Bonus
• Assess + Evaluate progress• On-going feedback• Talent Discussion
PERFORMANCE MANAGEMENTPROCESS
PerformancePlan
PerformanceSupport
PerformanceReview
PerformanceRecognition
HANDLING AN EMPLOYEEGRIEVANCE
• If employee has concern first step toresolve informally;
• At times may be of a serious nature or employeemay want to make formal grievance
• Companies should have written grievanceprocedure explaining timescale and process
• Carry out formal investigation• Witnesses should be interviewed (confidentially)• Outcome / decision explained to employee• Next steps/ action plan
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
BULLYING AT WORK? CONT…
Employers are responsible for preventing bullyingand harassment• Un-acceptable and can cause serious problems
for company• Can lead to poor performance, loss of respect
for managers, high turnover, damage companyreputation
• Having anti-bullying and harassment policiescan help prevent problems
Informal Approach
Counseling
Mediation
Formal Approach
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
EXAMPLES OF MISCONDUCTOral First Warning Final Warning Dismissal• First Offence• Punctuality
• Where previouslybeen warnedverbally andrepeated error
• Performance orsicknessmanagementprocess –stage 1
• Bringing theemployer intoserious dishonor
• Act serious butdoes not warrantimmediatedismissal
• Performance orsicknessmanagementprocess –stage 2
• Fighting resulting inphysicalviolence/trauma
• Deliberatelydamaging companyproperty
• Serious bullying orharassment
• Serious infringementof health and safetyrules
• Fraud or falsifyingwork documents
Failure to Follow Management Instruction
BEST PRACTICE FOR HRPROFESSIONALS
• 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
Questions ?