Legal update

05 July 2016

Author: Sara Khoja


Legal update

Sara Khoja, partner at Clyde & Co in Dubai, gives an overview of legislative changes in the GCC that HR professionals need to know about

UAE enforces non-competes
 
Former employees who fail to abide by ‘non compete’ agreements could be refused a work permit, following a new cabinet decision on the regulation of labour in the UAE.
 
Cabinet Decision Number 297 of 2016 was published as an official notice in May and introduces a new Ministry of Labour obligation on Article 127 of what is commonly referred to as the UAE Labour Law.
 
Article 127 provides that an employer may oblige an employee not to compete with the employer’s business following the end of their employment – as long as the employee is 21 years of age; the agreement is in writing; and it is reasonable with regard to the activities it prevents the employee doing, the geographical remit of the restriction and the period for which the restriction applies. It must also go no further than necessary to protect the employer’s lawful interests.
 
The decision means that the Ministry of Labour can refuse to issue a work permit, or can cancel one already issued, to an individual to whom a final judgment has been issued, ruling that they failed to abide by their non-compete agreement put in place in accordance with Article 127. The period during which the Ministry of Labour should refuse to issue or cancel a work permit is equivalent to the period identified in the court judgment as being the legitimate period of the restriction. The Ministry of Labour is also under a duty to inform the individual of the situation and its refusal before formally refusing or cancelling the work permit.
 
New rules on Saudi staffing
 
Saudi Arabia plans to implement new regulations on the levels of nationals employed in the private sector, which could have wide-ranging effects.
 
Proposals on the horizon include the complete Saudisation of the HR and recruitment functions, as well as a weighted ‘Nitaqat’ based on an organisation’s employment of Saudi women (as a percentage of the total workforce), the retention of Saudi nationals for three years or more, and the percentage of Saudi nationals within the top 25 per cent of its highly paid employees.
 
Already, businesses that sell and repair mobile phones must be 50 per cent staffed by Saudi nationals, with the requirement increasing to 100 per cent by 1 Thul Hija.
 
The Ministry of Labour has also published its implementing regulations for amended labour law – its new prescribed employment contract and work regulations. The model work regulations are extensive, and their notable provisions include:
  • Clarification that a repatriation ticket is not payable by the employer if an employee resigns without reason during the probationary period, if the employee is not capable of performing the role they were recruited for, or if their repatriation stems from the violation of a law and a fine being imposed whether administrative or criminal.
  • Eligibility criteria for the selection of equal candidates for promotion.
  • Clarification that nursing breaks following a return from maternity leave are applicable whether the employee’s baby is being breastfed or bottle-fed, and that it is the employee’s duty to provide written notice to the employer requesting the break and when she would like to take it during the working day.
  • A duty on all employees to follow and adhere to Islamic principles and morals of behaviour, and a duty not to mix with employees of the opposite sex.
  • A duty on employers to inform employees and instruct them on what is acceptable behaviour in the workplace, and in particular to instruct staff on the prohibition of any form of harassment or action that would undermine dignity and morals or any form of assault or harm of another employee.