The new ADGM Employment Regulations 2019 (the New Regulations) will come into force on 1 January 2020. The New Regulations follow a public consultation that was implemented earlier this year and repeal the old ADGM Employment Regulations 2015, as amended (the Old Regulations). This article sets out five key changes that ADGM employers should be aware of.
One of the key changes is the introduction of statutory overtime for eligible employees. The Old Regulations provide that working time shall not exceed 48 hours for each seven day period unless the employee has first given written consent. The New Regulations provide that:
- Working time shall not exceed 48 hours for each seven day period and unlike the Old Regulations, an employee can no longer opt out by giving written consent and instead the below overtime provisions apply.
- Save for where the employee is in a managerial or supervisory position or positions reasonably expected within that industry internationally not to be entitled to overtime, employees are entitled to overtime for time worked in excess of 832 hours over a four month period (the Threshold). This appears to provide that no overtime is payable for hours worked over the 48 hour week but falling below the Threshold.
- The overtime calculation can either be monetary, time in lieu or a combination of both as decided by the employer. Monetary overtime compensation is in addition to the Daily Wage and is payable as follows:
- 25% of the Hourly Rate for daytime work;
- 50% of the Hourly Rate for overtime worked between 9pm to 4am.
- Overtime payments must be paid within one month of the four month period which they relate to.
- The overtime calculation for a period of less than four months will be done on a pro rata basis.
- The employer is obliged to keep time records for such employees likely to work hours close to or in excess of the Threshold.
The new overtime provisions are more aligned with the position under Federal Law No. 8 of 1980, as amended (the Federal Labour Law) with some differences (for example, timing for payment of overtime and applicable exclusions).
2. Sick pay
The Old Regulations provided for 60 business days sick leave at full pay. The New Regulations still provide for 60 business days of sick leave, however, sick leave pay is now broken down into:
- 10 business days on full pay;
- 20 business days on half pay; and
- 30 business days on no pay.
The above breakdown is more closely aligned with the position in the Federal Labour Law and also mirrors the position under DIFC Law No. 2 of 2019 (the DIFC Employment Law), which came into force on 28 August 2019.
In addition, the New Regulations provide that the employer may terminate an employee who has exceeded 60 business days sick leave in any 12 month period, save where the employee has taken sick leave due to a Disability.
Given that the Ministry of Human Resources and Emiratisation allows for one and three month notice periods, and the DIFC Employment Law has a three month notice period for those with five or more years of service, this is an interesting breakaway from the new status quo.
3. Minimum notice period
The New Regulations require notice to be in writing and removes the 90 calendar day minimum notice period for continuous employment of five years or more. The minimum notice is now therefore:
- Seven calendar days if the period of continuous employment is less than three months; and
- 30 calendar days if the period of continuous employment is three months or more.
4. Fines and potential compensation
The Employment Regulations 2019 (Compensation Awards and Limits) Rules 2019 (the Rules) prescribe the fines and potential compensation that can be sought for breach of the New Regulations. By way of example, if an employer fails to pay all Wages and any other amounts owing to an employee within 14 calendar days of such sums becoming due, the court may order compensation as it considers just and equitable up to a maximum sum equal to the last Daily Wage for each calendar day during which the employer failed to comply.
The anti-discrimination provisions are expanded to include colour as a protected class. In addition, the Rules provide that where there is a breach of the section 54 discrimination provisions, the court:
- Can elect to order compensation subject to a cap of three years Basic Wages; and
- Has the power to make recommendations to the employer to take specific steps within a specified period and if the employer fails; to comply, a fine not exceeding USD 20,000 can be imposed.
Getting ready for the New Regulations
ADGM employers should:
- Assess whether any employees will be subject to statutory overtime. It is unclear how the exclusion to overtime will be interpreted as it is quite wide and therefore has the potential to lead to dispute. If there is potential uncertainty regarding a particular role, the safest approach is to provide statutory overtime.
- Update template employment contracts to ensure compliance with the New Regulations.
- Review existing employment contracts and policies to assess whether they need to be amended.
- Pay particular attention to any existing discrimination policy and consider providing updated training given the potential new discrimination penalties.