United Arab Emirates: Continuing The Drive For Emiratisation

The UAE's Vision 2021 strategy includes a number of goals to promote 'Emiratisation', with a key aim being to have fifty percent of the UAE national workforce employed in the private sector by 2021. As part of achieving these goals, the Ministry of Human Resources and Emiratisation (MoHRE) has introduced a number of measures over the past three years to increase workforce nationalisation. The latest measure was published last week when the MoHRE issued a new law that will strengthen and support the nationalisation framework already in existence. This article explains the details and effects of the new law which introduces significant changes.

Ministerial Decree Number 212 of 2018 on Regulation of Employing Nationals in the Private Sector is to some degree an abridged version of Ministerial Resolution No. 176 of 2009 which imposed restrictions on termination of UAE nationals employed in the private sector and Ministerial Resolution No. 293 of 2015 which set out the rules and procedures pertaining to the recruitment of UAE nationals, both of which are repealed under the new decree.

It is worth noting that whilst this new decree is available on the MoHRE's website, it does not come into effect until it is published in the official gazette, which has not yet taken place.

The new decree deals with the following aspects:

Recruitment

As was previously the case, unemployed UAE nationals may apply for employment with any companies registered with the MoHRE. Once they are successful, the decree prescribes various rules which must be followed in order to successfully employ the UAE national. This includes the requirement to secure the usual work permit. Once issued, the MoHRE will issue the employee with an employment pack that will include, amongst other things, a Guide of the Rights and Obligations of Private Sector Workers (a copy has not yet been made available).

As part of such process, the decree provides for UAE national employees to be employed on a two-year employment contract (which may be renewed by mutual agreement) and for the MoHRE to make available to the UAE national training programmes relevant to his or her role and in line with market requirements. The MoHRE is also obliged to update the General Pension and Social Security Authority (GPSSA) with the employee's current employment status.

While the new decree does not prevent an employer offering a UAE national employee an unlimited term contract, the decree appears to envisage that UAE nationals will be engaged for a minimum of two years on fixed term contracts and its rules on initial and renewed fixed term contracts applicable from January 2016 will apply (to read more on these rules, click here).

On-going Support

The decree also provides for the MoHRE to monitor the employment of UAE nationals, ensuring the working environment is appropriate, adequate equipment and resource are provided to the employee and the employee continues to be properly registered for social security benefits. It also provides for the MoHRE to take a potentially more active role in resolving any work place disputes.

Terminations

The new decree sets out various rules and procedures pertaining to termination of UAE nationals, including the basis on which such employees may have their employment relationship terminated, what is expected from both employers and employees and the potential consequences for breaching such obligations.

In essence, UAE nationals may be terminated in any of the following circumstances:

Limited Term Contract

• The contract term has expired and has not been renewed;
• Parties' mutual agreement;
• Unilaterally by either party where the employee is on a renewed limited term contract (not the initial two year term) on the proviso that the notice and compensation provisions are observed;
• Due to one of the gross misconduct reasons as provided for under Article 120 of the Labour Law (Law no. 8 of 1980).

Unlimited Term Contract

• Parties' mutual agreement;
• Termination by either party upon serving contractual notice and continuing to perform the contractual obligations during such period;
• Due to one of the gross misconduct reasons as provided for under Article 120 of the Labour Law (Law no. 8 of 1980).

In addition to the above, the employment relationship will also be regarded as terminated in any of the following instances:

• Where the employer fails to perform its legal or contractual obligations such as delaying payment of wages for more than 60 days;
• The employee is unable to attend work as the employer's place of work has been closed for more than two months and the employee has issued a complaint against the employer in this regard during such period which has subsequently been verified by an inspector from the MoHRE;
• A court ruling in favour of the employee for unpaid wages of not less than two months' wages, arbitral dismissal or any other unpaid contractual or statutory sums without a legal justification.

Invalid Termination

The decree further sets out the remit of when termination will be considered invalid and parties should be mindful and take note of the below carefully to ensure they do not fall foul of the same before exercising any of the above termination options. To this extent, any termination exercised by either party will be considered invalid if any of the below circumstances can be shown:

• Where the preceding termination circumstances pertaining to limited and unlimited contracts have not been followed;
• Where it is established that the employer employs a non UAE national undertaking the same role as the terminated UAE national or where the termination has been processed in order to enable the employer to recruit a non-UAE national in place of the terminated UAE national;
• Termination is unrelated to the UAE national's employment or where the termination is as a result of the UAE national making a complaint to the MoHRE against the employer which is subsequently proven true.

The decree is not entirely clear as to how these provisions interact with those relating to lawful termination. It remains to be seen for example whether a decision by an employer not to renew a two year fixed term contract would be subject to having to justify its decision.

Enforcement and Penalties

The new decree certainly does not neglect to give itself teeth as it asserts appropriate enforcement powers on parties who fall foul of its provisions. Set out below is a snapshot of some of its powers.

Where it is established that the termination is invalid due to the reasons set out in the above section and the dispute is not settled amicably, the MoHRE may undertake any of the following:

• Refer the matter to the labour court;
• Downgrade the employee's priority on the MoHRE job seeker register for a period of up to six months, therefore making it harder for the employee to find alternative employment using such register; and/or
• Suspend issuance of new work permits for the employer up to a period of six months.

The MoHRE may also impose a financial penalty on employers of AED 20,000 per incident where any of the following is established:

• Breach of the decree or any of the guides issued following the publication of the decree;
• Illegal termination and failure to reinstate the employee to his or her role;
• Failing to make the appropriate pension contributions to GPSSA on behalf of the UAE national employee;
• Failing to adequately implement Emiratisation policies and requirements within the workplace where UAE nationals are employed.

Given the pace of change and ambitious targets being set by the MoHRE it is imperative that employers ensure they keep abreast of changes that impact their workforce and understand the Emiratisation legislative framework in place as it evolves. It is also important to monitor obligations imposed by regulatory authorities on specific sectors, including the Insurance Authority and the UAE Central Bank.

To recap on former changes, review our series of Emiratisation articles published here.

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.