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As the 2019 Novel Coronavirus (COVID-19) continues to spread across the globe, businesses are facing weakened financial markets, disruption to workplace operations, and economic uncertainty. We have seen unprecedented measures taken by the UAE to prevent the spread of the disease including mandatory work from home instructions and business shut downs.

However, there has been uncertainty as to what steps an employer can take to mitigate the impact of the virus while protecting the rights of the workforce during this unprecedented time. To address this, the Ministry of Human Resources and Emiratisation (MOHRE) published on 30 March 2020, a new Resolution (279 of 2020) (Resolution). The Resolution provides welcome guidance designed to help employers navigate difficult employment issues arising in connection with the crisis. We have summarised the key elements of the Resolution below.

Who does the Resolution apply to?

The Resolution applies to non-national employees working for private sector companies registered with the MOHRE. However, while the Resolution does not specifically state that it applies to free zone companies, we would expect the spirit of the Resolution to be followed and applied offshore.

Permitted measures to ease financial burden of employment costs on employers

The Resolution permits the “gradual” application of the following steps to be taken with the agreement of the employee:

  • Implementation of a remote working system – Save for those companies which fall within the exempt categories, all companies are currently required to ensure that 70% of their workforce is not working onsite. However, the ability to work from home may not be practical for all roles.
  • Provision of paid leave
  • Provision of unpaid leave
  • Temporary salary reduction – The Resolution allows employers to implement salary reductions. Such reductions must be recorded in a “temporary addendum” to the labour contract. The MOHRE has provided a template temporary addendum document which must be signed by both parties and submitted to the MOHRE upon request. The salary deduction would be removed upon the earlier of: (a) the end of the addendum term; or (b) the expiry of the Resolution.
  • Permanent salary reduction – Permanent salary reductions must be implemented in accordance with the MOHRE’s current salary amendment procedure and require the approval of the MOHRE.

Companies should be able to demonstrate: (a) all alternatives steps have been considered/taken before moving to implement harsher measures; and (b) express employee consent.

Redeployment of excess employees

Employers who have excess employees unable to work should register those employees with the “Virtual Labour Market System”. This is a MOHRE online platform which matches vacancies with suitable candidates. Employers remain required to continue to meet housing and other employment obligations of registered employees (with the exception of payment of salary) until the employee exits the UAE or is authorised to work for an alternative employer.

Employers looking to onboard new recruits must list the vacancies on the Virtual Labour Market and search the database of registered jobseekers.

In light of the current suspension on the issuance of new work permits, this initiative is a sensible move to ensure that the ability to mobilise in-country talent is maximised in order to efficiently address talent gaps in the market.

How long will employers and employees be subject to the Resolution?

The Resolution refers to its terms applying “during the period of applying precautionary measures to control the novel coronavirus outbreak”. It seems that the Resolution is applicable for as long as the COVID-19 procedures are in place. A formal timeframe has not been identified at this time (subject to further government announcements).

You can read our previous alerts on our dedicated Coronavirus Resource Center or our Middle East Insights blog.

For further information, please feel free to contact one of the lawyers below or your usual Baker McKenzie contact.

Author

Joanna Matthews-Taylor is an associate in Baker McKenzie Habib Al Mulla based in Dubai.

Author

Omar Momany is a partner in Baker McKenzie Habib Al Mulla and is the is head of the UAE Corporate/M&A practice and focuses his practice on public and private mergers and acquisitions, corporate restructurings, corporate governance, joint ventures, commercial matters and corporate/shareholders' disputes in the UAE and throughout the region. Omar has over 15 years of experience in the Middle East and has acted for local and regional corporates and financial institutions, governments and regulatory bodies, multinationals, family businesses and royal houses. He is bilingual in Arabic and English.

Author

Hani has been practicing since 2007 with a focus on M&A, reorganizations and post-acquisition integration as well as corporate structuring in the Middle East with a particular focus on the UAE and Qatar. His experience also covers general commercial contracts and advice on corporate governance and compliance. Hani holds an MBA degree and a Master's in Management alongside his law degree. He is fully trilingual and practices in English, French and Arabic, all three at a professional level. Prior to joining Baker McKenzie’s UAE offices in April 2012, Hani worked as a corporate associate at an international law firm in both Dubai and Doha between 2008 and 2012 and prior to that worked at an FMCG company and a private equity group in Kuwait.

Author

Jennifer Leader is an Associate in Baker McKenzie's Dubai office.

Author

Mohamed El Khatib has been practicing in the UAE for over 17 years. He has extensive experience in litigation and dispute resolution across a variety of industries and areas of UAE law. Mr. El Khatib was recommended for insurance disputes by the Legal 500 in 2014.

Author

Tarek Saad is a partner in the Dubai office and is seasoned in maritime and insurance law. He has over 22 years’ experience in general litigation in the Middle East, and has been practicing in the UAE for more than ten years.

Author

Eman Asad is an Associate in Baker McKenzie's Dubai office.