A small country with ambitious plans, Qatar has seen unprecedented growth as it expands to meet its FIFA 2022 obligations and to fulfil its Qatar 2030 vision. With this growth comes international attention and the media spotlight has certainly been focused on Qatari labour relations more than ever. Significant allegations have been voiced by a range of critics including Amnesty International and the UN about the treatment of immigrant workers on the Gulf state’s numerous, large scale development projects.
Qatar currently operates a ‘kafala’ or sponsorship system whereby every expatriate must have an in-country sponsor. Except in very limited situation, an expatriate is only allowed to work for his or her sponsor. Expatriates need the permission of their sponsor to change jobs in Qatar and to leave the country, even temporarily.
Legislation such as the 2004 Labour Law provides adequate protection for employees including limitations on working hours, health and safety obligations and government oversight. The key issue that Qatar has faced recently is a lack of sufficient resources to enforce these laws in the face of unprecedented population growth – at the end of last year Qatar’s population exceeded 1.9 million for the first time, three years ahead of schedule. This is driven primarily by migrant labour.
The current kafala system means that employees working for companies that do not comply with the law often have little option but to accept this or begin expensive and lengthy employment disputes. The government has recognised this and has pledged additional resource to conduct spot checks on employers to ensure relevant regulations are being complied with.
This month Qatar has also announced substantial proposed changes to the kafala system – moving away from needing permission to a system based on the employment contract whereby an expatriate needs to work out his contract but is free to change jobs at the end of the contract. It is not clear how this will be different from the current system in practice and the timescale for introduction has yet to be determined.
However, in addition to government enforcement, self regulation is increasingly being used to assist with compliance. Qatar Foundation and Qatar 2022 (both significant employers on infrastructure projects) have adopted charters safeguarding labourers. Contractors on many prominent projects must comply with these.
What does this mean for international companies doing business in Qatar? Generally, an international company is not the sub-contractor providing blue-collar labour on an infrastructure contract and is not directly responsible for the treatment of migrant labour used on a project. However, the increase in focus on working conditions both in Qatar and in the foreign press has considerably increased the reputational risk for all companies no matter where they fall in the supply chain. Failure to comply with current regulation and put in place proper internal policies can result in both financial and reputational damage.
Project contracts in Qatar have always contained legal and health and safety compliance provisions but in the past these have rarely been enforced. It is standard for government contracts to include an obligation that the contract and its sub-contractors comply with Qatari labour laws.
Aside from potential reputational and humanitarian issues, companies will increasingly find they are held liable not only for their treatment of their own workers but also for sub-contractors treatment of their own workforce. With such increasing liability comes increasing legal risk and expenditure on resources, but also a safer, more productive workforce.