As a result of the resolutions of the Ministry of Labour (MOL) (recently renamed Ministry of Human Resources and Emiratisation) passed in October 2015, which came into operation from 1 January 2016, the employment contract process has been transformed. The United Arab Emirates’ (UAE) Vision 2021 states that the UAE will “invest continually to build world-class healthcare infrastructure, expertise and services in order to fulfil citizens’ growing needs and expectations”. With human resources shortages a major road block in achieving this vision, will the new contracting arrangements be a positive step moving forward? This article sets out the impact of the changes from a practical perspective and considers a few notable consequences for healthcare employers as a result of the new contracts issued by the MOL.

New contracting process – practical perspective

Decree 764 of 2015 on Ministry of Labour Approved Standard Employment Contracts introduced a new process for engaging employees in the UAE.

Whilst the resolutions strictly only apply to those employers under the MOL’s jurisdiction, it will be interesting to see what impact the resolutions will have on free zones moving forward and the way in which the Labour Courts interpret and apply their provisions.

In addition, although the MOL’s October 2015 resolutions do not formally amend the UAE Labour Law (UAE Law No. 8 of 1980, as amended), the Labour Court has previously applied MOL orders / resolutions / decrees as being applicable in the free zones. An example of this is Ministerial Order No. 176 of 2009 which regulates the termination of employment of UAE nationals.

Offer letter

In accordance with the Ministry’s vision to "bring greater transparency, clarity and tighter monitoring of labour contract conditions", employers are now required to issue new employees with a prescribed form offer letter (the Offer Letter).

The prescribed form Offer Letter must be issued to prospective employees before the employer can seek MOL approval for the appointment. It must be signed and filed at the MOL and the subsequent MOL contract issued to the employee must reflect the terms of the Offer Letter (unless the changes are to the employee’s advantage and are approved).

MOL employment contract

The MOL standard form contract has also changed considerably. There are now three separate prescribed form contracts – one for an unlimited term, one for an initial limited term (two years) and one for a renewal of a limited term contract.

The new contracts are considerably more detailed than the previous two page MOL prescribed form contract. In addition to the substantive provisions, each contract contains a number of pages of supplementary notes in the form of an Annex (which are expressly incorporated into the contract) and which set out both the employer’s and the employee’s rights and obligations under the UAE Labour Law.

Recruitment Procedures in Labour Exporting Countries

A primary aim of the new employment documents is to ensure the protection of unskilled or semi-skilled workers who are potentially in vulnerable positions when recruited through overseas labour bureaus. Such measures would be complementary and not in replacement of existing procedures in home countries (such as the requirements applied in the Philippines through the Pilipino Overseas Labour Office which sets minimum terms and conditions of employment for its nationals working abroad and which requires an employment contract to be executed and registered in the Philippines).

Going forward, it is expected that further protections will be introduced in labour exporting countries.

Flexibility of remuneration packages#

Helpfully, the new MOL Offer Letter and contracts acknowledge that employers operate a range of different remuneration structures. There are more options for employers in the new prescribed form documents to express remuneration as an hourly, daily or monthly figure and commission and bonuses are expressly referred to. In addition, a number of optional allowances are also separated out, including, for example allowances for accommodation, transport, travel tickets, cost of living, phone, luggage transportation, schooling and the gym.

As it is market practice in the UAE to reward doctors based on commission incentive schemes, the enhanced flexibility in the prescribed form contract should be of assistance to employers. However, the increased flexibility with respect to commission and bonus arrangements is limited to the ability to list a prescribed bonus as a fixed amount and a prescribed rate of commission from profits / sales.

This may be of limited assistance to healthcare employers as doctor commission and bonus incentive schemes are often complex and involve a variety of different factors (including, for example, the doctor achieving particular key performance indicators and the healthcare company meeting overall profit targets).

Employment entitlements and Retention

The Annexes go into considerable detail in relation to the employer’s and the employee’s respective rights, responsibilities and obligations. The information provided seeks to strike a balance between both parties’ respective interests and there is an express statement in the contracts that the basis of the employment relationship must be mutual consent and agreement.

The issue of labour bans is also brought to the forefront with skilled employees being given freedom of mobility to a large extent in December 2010 and this has now been extended to unskilled employees provided they have completed at least 6 months service and they are not on an initial fixed term contract.

Employers in the healthcare industry will need to consider measures to retain employees such as retention bonuses, benefits tied into length of service, and also the right to claw back certain costs such as training if employees do not complete a specific period of service following their completion.

Company employment contract

As the MOL contract was previously only two pages long, companies often issued company employment contracts to employees to cover off matters not canvassed in the MOL contract. It is highly likely that healthcare employers will continue to issue company employment contracts for skilled employees.

In addition, company contracts are able to outline specific terms and conditions of the employee’s employment that are not otherwise covered off in the now longer MOL contract and can be tailored to the healthcare employer’s business. For example, specific reference to a company’s policies and procedures, protection of confidentiality and intellectual property provisions (which are of paramount importance in the healthcare sector) can be incorporated as well as post-employment restraint of trade provisions. In addition, healthcare sector specific issues can be integrated such as training and continuing education requirements, specific duties and responsibilities of doctors and internal reporting of malpractice issues.

Concluding remarks

The introduction of the new contracting process designed to enhance "transparency" may assist, to some extent, in recruiting unskilled employees contributing to the expansion of the healthcare sector in the UAE, however, difficulties remain.

The difficulties with recruiting and attracting healthcare professionals in the UAE are certainly not limited to the contractual relationships between employer and employee and extend beyond the scope of this article to licencing issues, differing public and private interests, and immigration and sponsorship requirements in the region.