UAE issues decree to regulate private sector job cuts, salary reductions during Covid-19

Private sector companies in the UAE have been allowed to restructure their existing contracts with employees in light of the Covid-19 crisis, according to a decree issued on Thursday, March 26 and with effect from the date on which it was issued, local daily Gulf News reported, citing the Ministry of Human Resources and Emiratisation.

However, the changes in the contracts are to be made in mutual agreement with the employees and through gradual steps.

The provisions of the new resolution are only applicable to expatriate employees, and will remain valid only during the time in which precautionary measures to prevent the spread of the Covid-19 virus are in effect.

Nasser Thani Al Hamli, minister of Human Resources and Emiratisation, has reportedly stated that affected businesses can implement a remote work system, grant employees both paid and unpaid leave, temporarily reduce salaries during the period in which their businesses are affected by the Covid-19 precautionary measures, and also permanently reduce salaries of its employees.

With regards to the temporary reduction in salary, Article 5 of the decree states that businesses must sign an additional annexure, the validity of which is limited to the mutually agreed time-frame or as long as this new resolution remains valid.

The annexure can be renewed by mutual agreement between the employer and employee. It shall be issued in two copies, with one copy for each of them. The employer must present it to the ministry whenever requested to do so.

As for the permanent reduction in salary, Article 6 of the new resolution states that “businesses seeking to permanently reduce the salary of an employee should first obtain the ministry’s approval to do so by applying for ‘change of a job contract’s data’.”

Those businesses which have an excess number of employees must first register those staff on the virtual labour market allowing them to be recruited by other businesses.

During this period the current employers must provide those employees with accommodation and other dues, except their salary, for as long as they are within the country or until they are hired by other businesses.

Under article 4 of the decree, those businesses which wish to hire from overseas must post their vacancies on the virtual labour market and select suitable candidates who meet the job criteria.

For new hires, businesses can apply for a work permit from the ministry, which will be provided through an online system. They can choose to transfer work permits of an employee, or issue temporary or even part-time work permits.

Meanwhile employees in the country looking for jobs should register with the virtual labour market and apply for jobs listed on it.

A few employers have taken proactive steps by announcing that they will not layoff staff during the Covid-19 crisis which has impacted businesses across the board.

On Monday, Abu Dhabi lender ADCB Group announced that no employee will be made redundant during 2020 as a result of the Covid-19 pandemic.

Read: Abu Dhabi bank ADCB says no layoffs in 2020 due to Covid-19 impact

Earlier this week, Ajman Bank also announced that it would not layoff any of its employees this year due to the crisis.

Read: Ajman Bank says it will not lay off any of its employees in 2020

The UAE has announced an economic stimulus of Dhs126bn to support businesses hit by the Covid-19 pandemic.

Read: UAE boosts stimulus to $34bn to fend off virus impact

Abu Dhabi and Dubai have also announced separate measures to help businesses to weather the financial impact of the crisis which has led to the closure of all international passenger air traffic, including transit passengers to the UAE, for a period of two weeks starting from March 26, besides the closure of a number of commercial establishments including malls and retail stores.