Article

Labour Regulations in Free Trade Zones like ADGM

Labour Regulations in Free Trade Zones like ADGM
Vidur Dhawan
5 months ago
133
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Introduction:

Labour laws are an important body of law that regulates matters such as working conditions at the workplace, employment, labour unions, remittances, social security for the employees, and protection of the employees if they are subjected to any kind of exploitation. The history of labour laws in UAE can be traced back to 1980, when the Federal Law was ratified on 20th April 1980, which defined the minimum standards of rights, and benefits of the employees and the employers must adhere to such rights and the employees have to fulfill their duties while working within UAE. In case of non-fulfillment of any obligation by any of the parties, they can go to the court of law.

ADGM

Abu Dhabi Global Market (ADGM) is opened for business on 21st October 2015 which is an international financial free zone dealing with such regulations that are independent of the general law. These regulations are independent regulations and the UAE Labour Law does not apply to it. To diversify its economy by attracting the FDI and to promote ease of doing business in UAE, the government has established free trade zones and ADGM is one such trade zone which is playing an important role in positioning Abu Dhabi in the competitive market by changing its image from an Oil-Dependent Nation to a knowledge-based economy and in terms of fulfilling the local needs of the general public.

The employment market in the UAE is divided into two parts based on citizenship. Thus most of the nationals are majorly employed in the public sector while the private sector of the UAE is dominated by foreign nationals. It is a well-known fact too that UAE is dominated by foreign nationals as their population accounts for approximately 80% of emigrants. The UAE Labour Laws are not applied to the private sector and thus to regulate this lot, the origination of ADGM Regulations took place which provides for the rights and benefits to the employees working under any employer.

Since the nationals require only a labour card to work in UAE, the foreign nationals are faced with a problem of sponsorship from a locally registered employer in the UAE. These Regulations provided for the solution to such problems of the employees related to work permits and residency visa purposes.

The formation of ADGM has attracted a lot of sectors in the UAE which includes Banking (especially private), Investment Advisory Services, Professional & Business Services, setting up of various Corporate Headquarters, various Conglomerates (E.g. NMC Healthcare), Family Offices and Industry, and Professional Associations. Currently, ADGM has more than 85 registered and licensed organizations which include legal firms, corporate offices, retail establishments, and real estate companies.

Employment Regulations in ADGM

As discussed above, the Abu Dhabi Global Market (ADGM) is a free trade zone providing opportunities to foreign investors to work in the UAE and helping the UAE nationals to meet their local needs. These trade zones are not governed by the UAE Labour Laws and thus Employment Regulations are formed in 2019.

These Employment Regulations provide for certain employment standards for employees and establishes a balance between the duties and rights of the employer and employees respectively. It also promotes employment practices and ensures the elimination of the exploitation and contributing to the expansion of Abu Dhabi Global Market. The Employment Regulations of ADGM is divided into 10 parts relating to aspects such as:

  • The Hiring of Employees
  • Protection of Wages
  • Working Time and Leave
  • Maternity and Paternity Rights
  • Employer’s Obligations
  • Time-Off Work
  • Employee’s Obligations
  • Non-Discrimination
  • Termination of Employment
  • General Rules

Earlier Employment Regulation of 2015 and Employment (Amendment) Regulations, 2015 were in existence which is now repealed. The employment regulations apply to-

  • An employer who is a licensed person in Abu Dhabi Global Market governed by the ADGM founding law.
  • An employee working in the Abu Dhabi Global Market.

Blend of Rights and Duties

These regulations provide for both the rights and duties of the employer and employees. Thus it provides that the employer and employee shall enter into a settlement agreement under which both agree to enforce their rights under these regulations and for that purpose they have to agree in writing and signed by both the parties. Further, the requirements provided under these Regulations are the minimum requirements and no employer can waive off these requirements. Also, it is the responsibility of the employer that he helps the employee in obtaining a work permit, residency visa, and identity card and incurs the costs related to it.

Employee’s Duties

These regulations are not only about the obligations of the employer only but also provides for certain duties to be fulfilled by the employees working under an employer registered in ADGM. They should perform their duties with proper care and without any negligence, obey the instructions given by the employer, and take care of the property in possession of the employee of the employer and not to disclose any information which can be injurious to the employer.

Employer’s Duties

It is the duty of the employer that at the time of the making of a written Contract of Employment, he shall make the terms of the contract understandable to the employee before signing it if the employee is incompetent in understanding the English language and also should provide a copy of the same to the employee. Under these regulations, an employee working in ADGM shall be provided with a written Pay Statement by the Employer before he is paid any wages and that statement shall include the wages payable and deductions (if any) and the reason for such deductions.

The employer must ensure the health, safety, and welfare of all the employees working under him in the ADGM. All the basic requirements at the workplace such as health standards, sanitization, proper ventilation, cleanliness, and drinking water should be provided to the employees by the employer working in ADGM. The employer is under an obligation to obtain health insurance for its employees and also the compensation if the employee suffers an injury as a result of the employer’s negligence and in case of death of the employee, compensation equals that of 24 months’ wages.

Principle of Non-Discrimination

The principle of non-discrimination is the most important principle found in almost every labour law as it disables an employer to discriminate against an employee based on gender, religion, race, nationality, age, and disability. The term discrimination can be defined here as when an employee is treated less favorably as compared to others or where the employee is put under any disadvantage which is not faced by others or where he is subjected to humiliation and intimidation.

Thus it is also to be observed that an Employer’s discretion in the selection of any employee who according to him should be preferable for the job should not be barred by this principle. So, if the discretion of the employer is bonafide and he sets any particular standards for the recruitment of employees, then it shall be considered reasonable and not discrimination.

Termination

The employment can be terminated by both parties by giving sufficient notice in writing.  The employment can be terminated without serving notice if the employee’s conduct is inappropriate or if the employer has committed any crime or breach of the contract of employment. At the time of termination of employment, the employer shall provide a written statement stating the reasons for dismissal of the employee.

At the end-of-service and during the termination proceedings the employee is entitled to payment of gratuity if the employee is a foreign national. Where the employee belongs to UAE and GCC, the employer should register him under UAE Pension Scheme and he shall not receive gratuity from the employer. The employer shall also arrange for the one-way flight of the employee to his country of origin.

Amendments

According to the latest amendments of 27th May 2020, in the ADGM’s founding Law regarding the clarification in its role as a hub of litigation and arbitration, stated that the judgments or arbitral awards passed by the ADGM courts shall be enforced by the Abu Dhabi Courts without a re-examination but they cannot be used as ‘conduit jurisdiction’. Thus the amendment facilitated the parties in choosing ADGM as an original dispute resolution forum having exclusive jurisdiction in certain disputes and the arbitral award or judgment of the ADGM, having equivalent legal status with that of the Abu Dhabi Court judgments and arbitral awards.

Amendments were also made in the 2015 regulations by which the 2015 Regulations were replaced by 2019 (New Regulations) and some key changes were made related to Overtime, Sick Pay, Discrimination, and Termination.

Conclusion

ADGM created by the UAE government to attract Foreign Direct Investment and expand the market to meet the local needs of the nationals is a great step towards changing the image of UAE from an oil-dependent nation to a knowledge-based economy. But at the same time, certain rights and liabilities must be created to ensure the prohibition of exploitation and to provide benefits to the employees at the workplace. As the public sector has UAE Labour Laws but these laws do not apply to the private sector there was a need for regulations in this sector as well and ADGM Regulations provides for the same. Thus the protection of employees at the workplace is important whether it is a public sector or a free trade zone like ADGM and the Regulations helps the employees and employers to have a balance between their relationships.

Employees must enjoy every right and benefit that is written in the law, and anything less than the minimum standards set by the government is considered a crime. If you are being deprived of your rights and benefits, feel free to contact our lawyers.

About Author

Vidur Dhawan

Vidur has provided legal advice and support to dominant names in various industries in UAE, Asia, Europe, and across the globe. His passion towards the art of cross-examination and understanding human instinct made him a skillful defense attorney that plays crucial roles in maintaining the perfect balance between business and legal guidelines for various multinational organizations. Having received many appreciations for document drafting and the art of internal organizational investigations, Vidur has worked with high-profile clients obtaining favorable results.

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