Welcome to the third blog of the continuing labour reform debate. I am writing this in a time of struggling global financial markets and disruption on the streets of London so would like to spread some positive news closer to home amidst the carnage!

We have come a long way since the turn of the year towards a genuinely open labour market where freedom of movement is achievable across nearly all levels of employment.

On Monday Gulf News attributed the following statement to Ali AlShehi, Senior Administrator at the Ministry of Labour:

“We are still imposing the six-month labour ban on employees who quit their jobs before completing two years of service, but the ban can be lifted if the new employer offers the candidate a good position and an appropriate salary.”

UAE Ministry of Labour

An appropriate salary is deemed to be a minimum of Dh5,000 per month for high school graduates, Dh7,000 for diploma holders and Dh12,000 for bachelors degree holders. What constitutes a “good position” is less clear but these directives often contain an element of subjectivity to allow for some equivocation in the event that the reform does not turn out as planned.

There is no mention of when exactly the changes will come into effect, but the statement would appear to lift many of the restrictions currently in place, notably that an employee has to complete a minimum of one year of their two year contract, and also that termination of the role needs to be consensual or at the very least that the parting of ways was deemed amicable.

It is of course worth sparing a thought for the sub Dh5,000 band of employees, thought to amount to nearly 70% of the UAE’s labour population, who will not be affected by the new directive. It remains though, an extremely brave positive move from the MoL in the context of an employment market that remains fragile at best. One of the things that has always driven positive market sentiment in the UAE is vibrant hiring activity. Let’s hope this becomes a call to action for companies to move ahead with their planned headcount growth in the second half of the year.

Ali AlShehi, Ministry of Labour, Morgan McKinley Dubai, recruitment, UAE, UAE jobs

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

The last few days have seen much speculation about the Ministry of Labour’s latest announcement. As reported in the national press, from January 1, 2011 the Ministry is set to allow ex-pat workers who finish their contracts to obtain new work permits without undergoing the six-month work ban, thus allowing them to move to other firms without the need for a No Objection Certificate (NOC) from their employer.

We all know that employees moving to and from free zone or public sector companies have long enjoyed freedom of movement and this latest announcement will go some way to appeasing the rest of the workforce, by creating an equitable system for everyone.

According to the new resolution issued by the Minister for Labour Saqr Gobash, an employee can obtain a new work permit and move to another employer without the passing of the currently legitimate six-month period PROVIDED that they have

a/ completed two years of service,

and

b/ ended their work relationship cordially.

It is this latter point that is most open to conjecture and misconstruction and begs the question about arbitration. In the absence of misconduct, it is to be hoped that employees will indeed be able to transfer with relative ease, thus paving the way for a transparent, meritocratic labour market. Even more enticingly, could this latest move improve our prospects of attracting the best talent to the region?

Wishing you all best wishes for the festive season and a successful 2011!

christmas, d, ex-pat workers, festive season, Minister for Labour, Ministry of Labour, No Objection Certificate, NOC, public sector companies, Saqr Gobash, work permits