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How UAE employers can support their business during COVID-19 outbreak

The novel coronavirus (“COVID-19”) has been declared pandemic by the World Health Organization in March 2020 and with person-to-person transmission, reported cases have continued to grow exponentially. As COVID-19 continues to unfold, employers are facing avalanche uncertainty over what they must do and what they can do. As governments and public health authorities adjust their policies to respond to the challenge, companies need guidance on how best to address the situation with regard to their employees. Accordingly, we have listed key points on employers’ rights under UAE Federal Law No. 8 of 1980 (“UAE Labour Law”) and recommended safety measures followed by global businesses.

Employers Rights under UAE Labour Law

Sick Leave: The UAE Labour Law entitles all employees, who are actually sick, a maximum sick leave of 90 calendar days in any 12-month period. The salary of the sick employees during this period will be paid as follows:

  • the first 15 days are payable at full pay; Øthe next 30 at half pay; and
  • the remaining 45 days are unpaid.

In light of the recent situation of COVID-19, where most of the countries around the globe have announced closure of their air-space and governments has been taking precautionary measures to apply social distancing, employees have to abide by these precautionary measures in order to reduce any chances of contamination.

In case the employee recklessly did not respect (i) the country travel restrictions and/or (ii) the employer’s internal policy in relation to the current situation, and consequently got infected, it is in our views that sick leave as organized under the UAE Labour Law would not apply. This is because the sickness of the employee in question has occurred as a result of his/her recklessness behavior. However, employers may choose to class the absence as sickness and apply normal sick pay rules as a precautionary measure to protect their business.  

Annual Leave: in the UAE, employees are entitled to a minimum annual leave of 30 calendar days. An employer has the right to determine the time and periods of annual leave and therefore, employees could be required to take paid annual leave provided, of course, that they have sufficient leave balance available.  In a situation where the annual leave entitlement is exhausted and the employee cannot return to work due to COVID-19, employers may place them on unpaid leave. However, employees cannot be forced to accept unpaid leave. This has to be mutually agreed in writing between both parties.

Salary Reduction: as a general rule under the UAE Labour law, employers cannot compel employees to accept salary reduction. However, they can discuss salary reduction plan and terms with employees and an employee might want to accept the cut for the greater good of the company. Any agreement to reduce salaries must be accepted by both parties (employer and employee) and noted in writing (please consider the amendment of the employee’s contract with the Ministry or free-zone authority as the case may be).

Although cost-cutting reflex is understandable, employers are obligated to make responsible decisions to keep your business afloat. Accordingly, employers should consider calculating pay cut percentage based on a hierarchy system. We believe that cost cutting should be top down approach, i.e. senior leaders/officers as these cuts will cover for the salaries of employees that are the bottom of the pyramid (operational dayto-day).

Another tip in relation to cost cutting- it is more favorable to the employee if the reduction apply to the allowances and not to the basic salary, which will have no effect on his EOSB later on.

Un-paid Leave: similar to the salary reductions, employer cannot force the employee to go on an un-paid leave. This principle is not organized under the UAE Labour Law and has never been tested in practice. Therefore, whilst this is an option for employers to reduce the running cost of salaries, this has to be done by way of written agreement with the employee. Unpaid paid leave may take the form of:

  • specific period of, for example, one, two or three months; or
  • un-paid leave of a week per month, with the understanding that the employee would work three weeks only each month.

Layoffs: employers are not allowed to terminate employees’ contracts with no cause and, in such event, employers will likely face claims for arbitrary dismissal as per the UAE Labour Law. Further, as per recent publications, the Ministry of Human Resources and Emiratizations (“MOHRE”) confirmed that their stance thus far is that the COVID-19 outbreak has not been declared a force majeure event and in the absence of special provisions relating to the exceptional measures taken as a result of the COVID-19 outbreak, the status quo remains and both employers and employees will be bound by their rights and obligations as outlined under the UAE Labour Law and their relevant agreements. Thus, we believe that forced terminations will be treated as a breach of contract, and applicable precedents as to unlawful termination shall apply.

Hiring and Termination of employment contracts before commencement: Unfortunately, due to the COVID-19 outbreak, many employers have to withdraw employment offers given to potential employees (offers given before the outbreak started), as this became a financial burden to the business. However, this situation may be considered as a breach of contract causing the potential employee material damages, having resigned from his/her current position.

Furthermore, the MOHRE did not declare COVID-19 as a force majeure event. Should your company be in a similar situation where it needs to withdraw an offer which has already been accepted by the employee, we strongly encourage employers to review all relevant employment agreements/offers and consult with their legal counsels to further understand their rights. 

How to Protect your Business

Employers should review and update the business continuity plan to ensure sustainability of their business, cash flow and capital. Setting people up to work from home is certainly the most logical, safer and popular, route for an employer. Ensuring therefore that you have the proper infrastructure in place is critical which will include making sure there are sufficient laptops, mobile phones, printers and any job specific technology or facilities available for all employees who may need them. But that’s not the only thing to consider: the duty to protect the health and safety of workers extends to home working. Employers should be carrying out risk assessments which will vary depending on the type of work and how long the employee is expected to work at home.

How to protect your Employees

Employers owe their staff a duty to protect their health and safety. As part of this employers should communicate with employees to assure them that the employer is aware of the issues, monitoring the situation and taking steps to plan for disruption. The communication should also relay the current government advice in relation to infection prevention, including in relation to hygiene. As well as communicating advice, employers should make sure there are adequate hand-washing facilities available at the workplace. The advice from government and health professionals is that regular proper hand washing is the best way to protect ourselves against infection. Providing alcohol-based hand gel and tissues, is also sensible, for staff but also for members of the public who may use facilities, such as in hotels, shops and cafes.

For any questions or inquiries, please feel free to contact:

Mohamed Abdelrehiem

Litigation Director

mohamed.abdelrehiem@matoukbassiouny.com

Dania Yassin

Associate

dania.yassin@matoukbassiouny.com

 

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