In an effort to assist private businesses (the “Companies”) dealing with the financial effects of COVID-19, the Ministry of Human Resources and Emiratization (the “Ministry”) has published “Ministerial Resolution 279 of 2020 on Employment Stability in the Private Sector during the Period of Application of Precautionary Measures to Curb the Spread of Novel Coronavirus” (“Resolution 279”) on the 26 March 2020.
Resolution 279 affects all private sector Companies registered with the Ministry and non-UAE national employees and shall apply during the period of application of the precautionary measures (the “Period”). This seems to imply that the Period of the validity of Resolution 279 shall only apply for as long as precautionary measures related to COVID-19 are to take place.
Article 2 of Resolution 279 states as follows.
Companies seeking to adjust their business structure in the wake of COVID-19 are to gradually adopt the following actions, in agreement with their employees:
1) Implementation of a remote working system.
2) Grant paid leave.
3) Grant unpaid leave.
4) Temporary salary reduction during the referenced period.
5) Permanent salary reduction.
Article 3 of Resolution 279 states that any Companies affected by COVID-19 and having to implement the precautionary measures must further register their ‘redundant workforce’ in the Virtual Labour Market to enable other Companies to be able to utilise the affected employees on a rotation system dependent upon their needs. The affected Companies will still need to remain committed to their employees in terms of accommodation and other entitlements, save for salary, until the employee obtains another job or leaves the UAE. It would appear that the above system is to be implemented once any of the five precautionary methods are taken, however it seems that the implication is that it is only if the employee is redundant. Therefore, employees working remotely whom are still utilised and productive would not likely fall into the intended category. Further to this, only point 3-5 will require employee consent.
Article 4 of Resolution 279 deals with the Virtual Labour Market and Companies seeking Non-UAE National Labour. Any Companies seeking labour of non-nationals during the cessation of the overseas labour supply shall:
1) Announce the vacancies in the Virtual Labour Market and select available employees who meet their needs. The Virtual Job Market can be reached at https://mohre.hyrdd.com/.
2) Apply for all necessary permits with the Ministry through the use of their electronic and smart systems.
Article 5 of Resolution 279 considers the steps that need to be taken by Companies wishing to temporarily reduce the salaries of their employees during the Period must:
1) Conclude, between themselves and the employee (the “Parties”), a “temporary supplement” (the “Supplement”) to the employment contract provided the Supplement expires at the expiry of an agreed term or the term the Period, whichever comes first.
2) Renew the Supplement by agreement between both Parties.
3) Execute the Supplement in two copies, one for each Party with a copy submitted to the Ministry.
Article 6 of Resolution 279 considers cases where Companies are wishing to permanently reduce the salaries of the employees and they shall apply to the Ministry for their approval under a “employment contract details amendment”.
Article 7 of Resolution 279 considers any non-national workers present in the UAE and seeking job opportunities and states that they shall register on the Virtual Labour Market and apply for vacancies matching their qualifications.
Simultaneously with Resolution 279, Resolution 280 of 2020 Establishing the Committee Concerned with the Stability of the Situation of UAE Citizens in the Private Sector (“Resolution 280”) was also passed.
Resolution 279 and Resolution 280 shall be collectively referred to as the “Resolutions.”
As Resolution 279 dealt exclusively with Non-UAE National workers, Resolution 280 deals exclusively with UAE National workers in the private sector.
Article 1 of Resolution 280 permits the establishment of a committee to maintain the stability of the situation of UAE Citizens in the private sector (the “Committee”) and announces the members of the Committee.
Article 2 of Resolution 280 sets out the duties of the Committee which are as follows:
1) Develop a set of support packages to ensure that UAE Citizens remain in the labour market.
2) Fully supervise the control and application of the protection procedures of UAE citizens stipulated in Ministerial Resolution No. 212 of 2018 on the Regulation of Employing Nationals in the Private Sector.
3) Study the cases of termination of labour relations between the UAE citizens and Companies received form the Customer Happiness Centres (Tawteen).
4) Develop recommendations for studied cases and propose support packages to keep the UAE citizens in their jobs or employ them with a new employer and bring the same before the Minister.
5) Follow up on the implementation of appropriations for the support packages with the competent entities in and outside the Ministry.
6) Any other functions assigned to the Committee by the Minister or the Chairman of the Committee.
Article 3 of Resolution 280 states that the Committee shall hold meetings at the invitation of the Chairman or his deputy, periodically or when required and that minutes are to be dictated.
Article 4 of Resolution 280 states that all organisational units within the Ministry shall facilitate the work of the Committee and provide it with the necessary support.
Article 5 of Resolution 280 indicates that the Charmain shall provide a report to the Committee on the achievements of the Committee.
Finally, Article 6 states that the Resolution shall come into force on the date of its issuance and shall be implemented by the concerned parties.
It is clear that around the World, Countries and Companies are dealing with uncharted territory.
No pandemic in recent memory, including Influenza, SARS and HIV, have had such an immediate and drastic worldwide effect on people and economies. New measures are being adopted on a daily basis to stem the spread of COVID-19, so much so that it is impossible to determine what will be implemented tomorrow or next week.
Companies that, rely on tourism, airlines and the gathering of the public at large, such as restaurants, malls and event organisers, to name but a few, are likely going to be incredibly hard hit during this difficult time.
It is in the interests of everyone that a middle ground for Companies and employees be reached.
If Companies are expected to maintain paying redundant staff whilst not earning any income, they can very easily and rapidly go out of business. The size of the Company does not seem to matter either, such as huge airlines requesting bailouts to ensure their survival.
Given the above reasons, it is pertinent that the law be temporally changed to both protect Companies, employees and the economy.
It was the above need that resulted in the publication of the Resolutions.
The UAE law has not permitted such cautionary measures to be taken by Companies before to ensure their survival and these measures are the biggest change.
Some Companies may be fearful of breaching the Wage Protection System (the “WPS”), however, provided these Companies comply with the procedures set out above, there shouldn’t be a breach of the WPS nor any penalties stemming from same.
There is the risk that some Companies may intend to abuse the Resolutions and try to reduce salaries of their staff across the board, or be financially sound and have the ability to remain so by having employees work remotely, but still attempt to utilise the processes availed, however, the Resolutions seem to anticipate this and that is why any permanent changes would require Ministry approval and any changes at all for that matter, require the employees consent other than points 1 and 2 of Article 2 of Resolution 279.
It is as of yet unknown what exact circumstances will qualify any Companies to enact the precautionary measures and to what extent they can enact them (i.e. forced leave vs permanent reduction of salary etc) however, this will likely become clearer in the coming weeks as the situation develops. It is perhaps to be considered on a case by case basis, but again, we are unable to comment on this as of yet.
Authored by Associate, Tyne Hugo