“Dynamic” new UAE labour laws will make HR more strategic

Author: Emily Burt | Date: 13 Oct 2015

Legal expert says moves to liberalise labour market are an important step forward

New workplace decrees from the UAE Ministry of Labour offer HR departments the opportunity to take a more strategic role in businesses, according to a regional legal expert. Three decrees, which build on the Ministry’s far-reaching labour policy of December 2010, focus on vulnerable unskilled workers, and are aimed at gradually encouraging a more open workplace environment.
 
“The new resolutions are a continuation or development of the UAE Ministry of Labour's 2010 policy to liberalise the labour market, delink the sponsorship system from the employment relationship and produce a more dynamic workforce in the UAE,” said Sara Khoja, partner on the employment team at Clyde & Co. “The resolutions in December 2010 were directed at more skilled employees whilst the new resolutions are directed at the lower skilled and unskilled workforce.”
 
Decree 764 solidifies the need for a written contract offer letter to be exchanged between an employer and an employee; and to ensure that employees are fully aware of their contractual terms and conditions before either moving to the UAE to work or moving into employment with a new UAE organisation.
 
Decree 765 requires a fixed term of notice to be served in both fixed term and unlimited contracts, preventing employees from being locked into a specific term when trying to leave the workplace. It additionally clarifies the circumstances under which employees can be relieved of their professional obligations, such as employers not paying them on time.
 
Meanwhile, the third decree (766) reduces the minimum length of service for lower-skilled or unskilled employees working in the UAE. Currently, they can face a six-month labour ban if they break their contract within two years of starting a job to move elsewhere. As of next year, providing an employee has fulfilled their contractual obligations, they will have to complete only 6 months of service in order to negate the potential ban.
 
When implemented, HR professionals in the region will have a strong responsibility to regulate and enforce the decrees.
 
“HR professionals will need to be familiar with the new procedures,” Khodja said. “They will have to revise supplementary employment contracts to ensure they comply with the new provisions, such as minimum and maximum notice periods. The new procedures regarding notice and labour bans will also impact on employee retention and exit management, as well as the importance of post termination restrictions, and HR professionals will be at the forefront of managing these issues.”
 
Implementation of the decrees is expected in January 2015. The Ministry believes they will promote strong relationships between organisations and their employees. But as labour mobility increases and talent retention becomes critical, they will also move HR to a more central role inside businesses.
 
“As the laws develop and the economy develops, employers in the region will increase in sophistication and will want to adopt best practice,” Khoja said. “Globally, the role of HR professional has developed from often being seen as an administrative function to being a strategic business partner with board-level representation. This is also true in the Gulf region. I believe there will be a greater need for highly skilled HR professionals in the future.”