Recent revisions to UAE labour laws were wholeheartedly welcomed by the expatriate workforce, especially the provision permitting employees to change jobs after two years, without obtaining a 'no-objection certificate' from their employer. However, according to recent media coverage on the topic, employees still require their employers consent and face a ban without this.
2010 amendments to the Labour Law
Cabinet Resolution No. 25 of 2010 concerning Internal Work Permits states that when a labour contract is terminated, the Ministry of Labor may allow an employee to change their job without risking a 6 month employment ban. From a practical perspective, this allows for the immediate transfer of sponsorship, provided that the termination was by mutual agreement, and that the employee had been in continuous employment for no less than two years.
These changes were intended to allow more flexibility and facilitate sustained economic growth. It was apparent that the economic crisis, stimulated by the crash of the Dubai real estate market, contributed to the decision. Many projects were delayed or abandoned and many completed projects could not attract buyers, even where prices were substantially reduced. Consequently, most companies in the real estate/construction sector suffered and were forced to take cost cutting measures such as redundancies, salary cuts and forced vacation time. This in turn affected many other sectors as liquidity became a serious issue affecting cash flow. Hence, the labour revisions provided an element of relief to the expatriate workforce.
In November 2011 the media quoted a legal consultant at the Ministry of Labour saying that expatriate workers would still receive a ban if they failed to obtain their sponsor's consent before changing their job. Subsequently, the same legal consultant clarified that "no one is allowed to switch jobs even if they complete many years in their current job, without the consent of their sponsor and the new resolution allows workers to change employment in cases such as when the company employing them has closed down and no longer exists".
It is not clear under what circumstances the comments were made, or, if the Ministry has officially retracted from its position in 2010. However, one thing is certain; these comments have created confusion for employees and employers.
As the world economy continues to recover from recession and still faces the threat of another recession, it is difficult to protect against impending threats. A slump in the economy would result in reduced buying power, receding exports and diminishing liquidity.
Need for an overhaul
Motivated employees can contribute greatly to the growth of an organisation and unsatisfied employees may adversely affect productivity and in such a scenario, forcing these employees to continue working may be detrimental. Sustained growth within the private sector is absolutely critical to the growth of an economy such as the UAE, where the majority of the workforce are expatriates.
The impact on existing labour bans
It is not clear as to how the clarifications made by the Ministry in the media above, will impact labour bans already in place. Another media report quoted a senior administrator at the Ministry of Labour stating that employees, who have been given a six month labor ban for breaking their contracts without completing the minimum two year period of continued service, can work for a new company, provided they meet certain educational and earnings criteria. It was also reported that no fee would be imposed for lifting the ban when these conditions are met.
Unfortunately, this is still an area where confusion prevails over transparency. Neither employers nor employees are sure about legislation regulating employment in the UAE. This, consequently, results in uncertainty and in most scenarios, ensuing disputes. The court's current interpretation of the Cabinet Resolution has exacerbated the situation.
A solution to the current problem requires a balanced approach and an understanding of the mutual rights and obligations in an employment contract is necessary. The first step in this regard is to understand the existing situation and redesign the legal framework accordingly. It is essential to have clear and transparent legislation governing the labour sector.
The federal labour law was enacted in 1980 when economic conditions in the UAE were very different. Since then, the country, its economy and the nature of its workforce have undergone a major transformation. Legislative requirements have therefore also changed and in spite of this, the labour law in its current form falls short of meeting these requirements.
A balanced working environment with flexible regulations attracts talented workers to the UAE. This approach to employment would improve the quality of the private sector and contribute to the economy. It is essential that the authorities address the situation and amend the labour laws accordingly with transparency as the main focus.
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