Author: afridi-angell

New labour regulations take effect January 1, 2016

A number of recently announced initiatives could introduce potentially significant changes to the rules governing the workforce in the UAE.

 

Earlier this year, the Ministry of Labour promulgated Ministerial Resolutions Nos. 764, 765 and 766 of 2015. According to the reports of Ministry of Labour spokesmen that appeared in the local press, the new resolutions were designed to deter a number of undesirable practices. Chief among these was the practice by recruiters of luring potential employees to the UAE with attractive job offers, only to change the terms of employment when the new recruits arrive.

 

Specifically, Ministerial Resolution No. 764 of 2015 requires that an employee sign an offer letter in advance of being recruited and that the signed offer letter support the application for the employee’s residence visa and labour permit – an application that the employer must submit to the concerned authorities in the UAE. A signed offer letter must also support an application to hire a new employee from the local labour market.

 

The new Resolution not only ensures that the employment contract will be consistent with the original offer letter. It also ensures that the employment contract must be followed in all respects. As regards employers that maintain collateral agreements, the Resolution provides that, “No new clauses may be added to the stated contract unless they are consistent and comply with the Ministry’s legal requirements, do not conflict with other clauses of the standard contract and are approved by the Ministry.”

 

Of course, many employers use international employment contracts and detailed HR policies to supplement the brief standard employment contracts that are required by the Ministry of Labour. Provisions in such collateral documents that are inconsistent with the official registered contract would be unenforceable. It could now be the case that such collateral terms will be unenforceable if they are not approved in advance by the Ministry of Labour.

 

Resolutions Nos. 765 and 766 facilitate the transfer of employees within the UAE. They do this by providing, in Resolution 765, clear criteria as to when the authorities may deem an employment relationship to have ended. Ending an existing employment relationship is a pre-requisite to allowing an employee to seek work with another employer. Of course, most employment relationships end with the routine cancellation of an employee’s labour permit and residence visa, a process that is not disturbed by the new resolutions.

 

Specifically, Resolution No. 765 provides that the employment relationship ends if:

 

  • The employer misses payroll for 60 days or otherwise fails to meet its contractual and legal obligations to its employees.

 

  • The employer becomes inactive, provided that this is verified by a labour inspection and provided further that the employee reports the same to the Ministry.

 

  • The employee files a labour complaint with the Ministry, which is referred to court, which in turn pronounces a final ruling in favor of the employee awarding the employee no less than two months’ salary, or indemnification for arbitrary or early termination, or other benefits denied by the employer, or end of service gratuity.

 

Resolution 766 addresses the conditions under which an employee may transfer from one employer to another. It was previously the rule (with limited exceptions) that an employee would have to complete 12 months of service with an employer before he would be eligible to transfer to another employer. This general provision has now been reduced to six months.

 

Other initiatives also have an impact on the labour market. A Federal Law enacted this year, Federal Decree-Law No. 2 of 2015, is designed to criminalize acts of discrimination and hatred. Although not expressly directed at the workplace, this would apparently criminalize discriminatory hiring practices, if they were based on distinctions of religion, creed, doctrine, sect, caste, race, color or ethnic origin.

 

As a final matter, the requirement for employer provided medical insurance coverage is being introduced in phases in the Emirate of Dubai. Coverage was imposed on employers with more than 1000 employees in 2014, and employers with between 100 and 1000 employees in 2015. All other employers will be subjected to the same requirement by the end of June 2016. ■

Do I need a DIFC will?

The Wills and Probate Registry in the Dubai International Financial Centre (the “Registry”) opened in late April of this year. It is now possible to register a will in Dubai, and to have a high degree of confidence that it will be enforced in accordance with its terms. Prior to the establishment of the Registry, it hadn’t been possible to be so confident that foreign wills would be enforced in the United Arab Emirates. There were concerns that Shari’a law would be applied to the estates of non-Muslims, particularly with respect to real property (land and buildings).

 

In summary therefore, the establishment of the Registry is a welcome initiative, and if you have assets in Dubai then you should almost certainly register a will with the Registry.

 

A few points to note right from the beginning: firstly, only non-Muslims may lodge their wills with the Registry. At the time of registering the will the testator (the person making the will) must confirm that they are not a Muslim, nor have ever been a Muslim. If this confirmation is later proved to be inaccurate then the will becomes void. Secondly, testators must be at least 22 years old. Thirdly, the will can only relate to assets in the Emirate of Dubai. Finally, the value of the Dubai assets must be balanced with the costs of using the Registry. There are a number of fees payable, some reasonably significant for many people. (The cost of registering a will is currently AED 10,000.)

 

Prior to the introduction of the Registry, a multitude of approaches were taken in respect to estate planning by Dubai residents. Many people, of various faiths, made no will at all. For those people who were aware of the applicable inheritance and intestacy rules, this was (and continues to be) a perfectly sensible choice. If your family structure is straightforward, and you understand and are comfortable with how your assets will be distributed where there is no will, then there is no reason to make one.

 

Historically, a variety of solutions were offered to those people who were not sure how their assets would be treated if there was no will, and who wished to create one. Some were told that it was necessary to register a Dubai will with a local notary. Others were told to make a will in their home country, have it translated into Arabic, and then registered locally. Others were told that it was sufficient to sign the will and have it witnessed by a staff member at their home country consulate in Dubai. In short, there was no consensus as to the most appropriate method of creating a will in the UAE, or of ensuring that it would be enforced in accordance with its terms.

 

The DIFC Registry seeks to resolve these concerns. Wills are reviewed by Registry staff prior to being accepted for registration. This review is anticipated to prevent the registration of wills with blatantly unacceptable terms (ie “. . . and finally, I leave the balance of my estate for the funding of international terrorism, and general crimes against the state”). More significantly, the review ensures that the will formalities are properly attended to (that the will is correctly witnessed, and so forth).

 

Once registered, the intention is that the terms of the will can be given effect to by the DIFC Court if necessary. Decisions of the DIFC Court must, as a matter of UAE law, be enforced by the Dubai Courts. It is then anticipated that other relevant Dubai governmental entities (such as the Economic Department in respect of assets such as company shares, or the Lands Department in respect of real property) would automatically abide by orders issued by the Dubai Courts (or even by the DIFC Court directly).

 

This process appears robust, but a small note of caution must be sounded. This is a new, and so far untested, system. It remains to be seen whether the relevant government departments will indeed recognize DIFC wills. We anticipate that this point will be resolved relatively soon, as there appears to be a significant number of individuals eager to make use of the Registry. Furthermore, we have no reason to believe that the system will not work as it should. On that basis, we welcome this beneficial addition to the legal landscape of the Emirate of Dubai. ■

 

* * * * *

 

Afridi & Angell can assist with the drafting and registration of DIFC wills. Please contact Stuart Walker if you wish to arrange an appointment to discuss any of the issues mentioned in this note.