As a follow up to my last blog Improving ease of movement within non-free zone companies, I’d like to examine the UAE Labour Reform Directive which came into effect 1 January 2011.

Benefits

The legislation presents various benefits, including:

1) Ministry of Labour (MOL) governed employers will have an unrestricted talent pool from which to source cheaper, local talent and can position themselves as employers of choice.

2) MOL governed employers will also be able to benchmark their current workforces against industry standards, both in the UAE and abroad.

3) Employees will have freedom of movement across the whole of Dubai.

4) Employees will no longer be ‘held to ransom’ by the threat of financial and/or workload bans.

5) Local businesses constitute the majority of MOL governed employers. If local SMEs are more enfranchised, it will stimulate crucial growth in the domestic economy.

In addition, part time, contractor and juvenile employees will all be subject to less bureaucratic processes and fewer barriers to entry in the employment market. It is hoped that this level playing field will lead to a more open, transparent and competitive employment market that will benefit recruiters, employers and candidates.

Ministerial Resolution No. (1186) of 2010 on the Rules and Conditions of Granting a New Work Permit to an Employee provides that once the labour relation has been terminated, the MOL can issue a permit to an employee which allows them to move to another employer without the application of the six month ban. Practically, this allows for the immediate transfer of sponsorship, provided that the termination was: consensual; and that the employee had worked for at least two years for the first employer.

The fine print

It is however, important to note that there are four exceptions to the consensual termination requirement above: i) the employer has breached any of its legal or contractual obligations; ii) the employee has filed a complaint with the MOL due to the establishment’s closure; iii) the employee has filed a labour claim with the Dubai Courts; or iv) the employer’s unilateral termination or non-renewal of employment.

Furthermore, the requirement for the employee to have spent at least two years at the first employer to avoid the six month ban can be avoided if: i) the employee joins the first skill level earning at least AED12,000, the second skill level earning at least AED7,000 or the third skill level earning at least AED5,000; ii) the employer is in violation of its legal obligations towards the employee or the employee is not the cause of the termination; and iii) the employee moves to an establishment which is owned by the first employer or if the employer is a shareholder in that establishment.

These legislative changes will significantly impact the movement of employees within the UAE. If you would like to discuss how they might affect you or your business, do not hesitate to contact me +971 (0)4 324 4094 or cdaniels@morganmckinley.ae.

Dubai recruitment agencies, Ministry of Labour, Morgan McKinley, UAE Labour Reform Directive