UAE labour law confusing, needs overhaul - lawyers
by This email address is being protected from spam bots, you need Javascript enabled to view it on Tuesday, 16 June 2009
The UAE's labour law is in need of an overhaul and is confusing employers, according to associates with law firm Clyde & Co.
New legislation in the emirates would need to recognise redundancy as a valid reason for dismissal as well as outline procedures for termination of staff contracts and disciplinary procedures, said Sara Khoja, associate with the firm in Dubai.
The current law, which dated from 1980, had only been updated via decrees by the government but was expected to be overhauled, she said.
“Many employers seem to be confused as to when they can terminate (employees’) employment in the UAE and, in particular, when they can make redundancies,” according to Joanne Hennessy, another associate.
“Redundancy is not recognised in the UAE and so, strictly speaking, is not a valid reason for dismissal in the UAE. However, the labour courts have recognised an employer’s right to restructure their business and not doing so would be unrealistic and potentially jeopardise the continued employment of the entire workforce as opposed to part of it.”
The labour law implied staff could only be dismissed for performance or misconduct reasons, she said.
There was was widespread confusion over compensation for dismissed employees in the UAE.
“Contrary to popular belief, an employee has no automatic entitlement for compensation or three months remuneration on their dismissal,” said Hennessy.
An employee would have to complain to the Ministry of Labour or the free zone authority where their employer was based before they could make a claim for compensation.
Only a labour court could order payment of compensation by an employer to an employee and up to a maximum of three months remuneration if it established an employee had been arbitrarily dismissed, she said.
She also warned that extra care needed to be taken by employers contemplating dismissing a UAE national following a recent Ministry of Labour decree protecting national workers from dismissal where an expat performed the same role.
But it was not yet clear how the decree was going to be enforced, she added.
Domestic workers were excluded under the labour law in the UAE but the emirates may follow Saudi Arabia, which had published draft law protecting domestic workers.
Hennessey also pointed out that different labour law applied in the UAE depending on where an employer was based, with Dubai International Financial Centre (DIFC) having its own employment rules.
“The DIFC labour law does not provide a right of complaint for employees who think they’ve been unfairly dismissed and it also provides fairly limited guidance for employers as to when they can dismiss an employee," she said.
The absence of unfair dismissal rights in the DIFC was an “oversight” rather than a “deliberate omission” and it remained to be seen whether the DIFC would update its rules, she added.
READERS' COMMENTS
Posted by Akbar Kazmi, Dubai, UAE on Wednesday 17 June 2009 at 23:30 UAE time
Labour Unions are banned in the UAE, which is not in line with the standards set forth my the International Labour Organisation (ILO), of which UAE is a member. Thus, there a great divide between UAE labour laws vis a vis the developed world. In the absence of Labour Unions, employees as a block cannot negotiate with employers to seek resolution of their grievances. In the current recessionary environment whereas some corporations indeed have and will continue to post losses and are therefore justified in terminating jobs to reduce costs, there are other corporations including banks in the UAE that are cutting jobs in dramaitic numbers despite having made more profits in the 1st quarter of 2009 than even in the 1st quarter of 2008, which was a better economic period. Comparatively, the massive job losses in the west have occurred in those companies that have sustanined significant losses for several quarters or have declared bankruptcies. There are only just one or two companies in the UAE that have offered to reduce salaries of staff or curtail other financial perks in these times as a possible measure for cutting costs while still retaining staff with good performance. The preferred strategy has been to let go of staff instead. The policy makers at the highest level should recognize that the UAE remains an engine that sustains itself for consumer consumption by a vast expat population. Significant cut in expat numbers will have a negative long term impact on rebuilding the economic well being of the country in the times when talent is again sought in the future as those who leave now will need a lot more assurance to return to the work force unless better laws pertaining to severence and end of service benefits are promulgated. Whereas letting go of UAE nationals from a company has come restrictive under new laws, the ease with with jobs of the expats can be eliminated by a company stands at the other extreme of the equation.
Posted by Buddhadeb Mookerjee, Dubai, UAE on Wednesday 17 June 2009 at 17:39 UAE time
UAE has made tremendous progress in the past 2 decades towards globalisation. But the country has not taken concrete steps to upgrade its legal framework. In order to be recognised as a world power one needs to have world class institutions including legal and financial institutions. Having the tallest tower in the world is awesome but not sufficient to become a world power. Unless the laws are of world standards and are applied uniformly all over the countryUAE will not be able to inspire the confidence of major investors from all over the world.
Posted by Maverick, Umm Al Quwain, United Arab Emirates on Tuesday 16 June 2009 at 15:18 UAE time
This just shows how there is no equal rights in this country. When all along labour force is the first thing should be given importance as they are the backbone of any industry. Most people they just open business without even knowing lots about business ethics and all others for considerations.
Posted by gamby on Tuesday 16 June 2009 at 07:07 UAE time
what's new??? with all the leniency to the employers/business owners, why would they protect employees? they are replaceable, business is important than human right, right? welcome to their world!!
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