United Arab Emirates: Hiring Staff In The ADGM

Last Updated: 29 December 2016
Article by Rebecca Ford and Sara Khoja

The Abu Dhabi Global Market (ADGM) international finance centre has had a healthy start since it opened in 2015 and during the course of 2016 we have seen an increasing number of businesses being registered. It was reported in November 2016 that the ADGM has attracted over 180 local and international companies to set-up in the UAE's newest financial free zone. It is expected that in time, over 20,000 staff will be employed by ADGM registered entities. This article considers some of the key points to bear in mind when hiring staff in the ADGM.

One aim of the ADGM is to establish a well-regulated and enduring market place that is aligned with international standards and best practices of global financial centres such as London, Hong Kong and Singapore.  It was not too unexpected therefore that the ADGM decided to apply English common law to the law of ADGM (with appropriate safeguards to ensure that any undesirable or inappropriate evolvement of the common law may be overridden by the ADGM) so as to create a familiar legal environment for banks and financial institutions entering the free zone. 

While the intention behind the adoption of English common law is to give parties who find themselves before the courts in the ADGM increased certainty, this does create some potential issues.  By way of example, if a UK decision has been made on public policy grounds it might not necessarily flow that that the same public policy decision would apply to a similar issue in the UAE. 

For employers and employees alike, the establishment of the Employment Court of First Instance shows that the ADGM recognises the importance of the employment relationship to business efficacy.  It remains to be seen what types of disputes may arise but with the ADGM Employment Regulations 2015 (the Employment Regulations), covering issues such as employer and employee obligations, protection of wages, maternity and paternity leave, discrimination and liability for work place injuries, it is fair to say that employer and employee relationships in the ADGM will be well regulated.

It is also likely that there will be greater scope for companies to better protect their business interests in the ADGM, where we expect there to be potential for the ADGM courts to have the power to provide for injunctive relief in connection with contractual post-termination restrictions. This may mean that companies could potentially block a departing employee from moving to a competitor within the ADGM until such time as any (properly drafted) non-compete is no longer applicable.  This would be in addition to the employer's ability to claim damages for breach of these contractual clauses.  However, the effectiveness of post termination restrictions in the UAE has been, and looks set to remain, a topic of debate for some time and whilst it is hoped the ADGM will take a robust approach, we will have to wait and see how (if at all) the ADGM courts will enforce post-termination restrictions.  In any event, to be effective, post-termination restrictions must be drafted carefully into employment contracts and must not go further than is necessary to protect the employer's business interests and be limited in duration, geographical scope and type of work restricted.  These provisions will need to be assessed, and potentially amended, each time a contract is issued and/or updated. 

Employees in the ADGM may only be employed pursuant to a written contact which must be in English and signed by both parties.  The Employment Regulations prescribe the information that must be included in any employment contract such as salary, term, notice period, work location etc. 

Another interesting provision in the Employment Regulations relates to employers' ability to ask employees to opt out of the limits on weekly working time.  While the maximum working week (over 7 days) cannot exceed 48 hours, employees can be asked to give consent in writing that this will not apply to them.  One way to obtain this consent may be via the employment contract signed at the start of the relationship when the employee's consent is likely to be more forthcoming, however there is potential scope for an employee arguing that the consent given in this manner was not, in fact, freely given.  Employers might therefore want to consider preparing a short side letter and/or agreement, in addition to the employment contract, for employees to sign once they have started work, which may be more persuasive evidence of consent having been freely given. 

For many individuals and organisations based in other jurisdictions, data protection is a highly relevant compliance issue.  The Employment Regulations include provisions to ensure that employee personal data is processed safely and appropriately. 

Another interesting issue will be the extent to which the anti-discrimination obligations factor in any disputes.  As in the Dubai International Financial Centre (the DIFC), employers in the ADGM are prohibited from discriminating against employees on a number of specified grounds and whilst discrimination claims are relatively few and far between in the DIFC it remains to be seen whether any such disputes will arise in the early days of the ADGM.  

Together with the points identified above, there are other distinctive employment related matters that businesses either already established in the ADGM and/or considering setting up there should consider when it comes to the employment relationship – express recognition of employers' and employees' ability to agree to waiving their rights under the terms of a settlement agreement, part-time working and paternity leave to name but a few.

Hiring Staff In The ADGM

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Sara Khoja
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