09 Apr 2018

New multi-employer part-time contracts. Is it open season for competitors?

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In March 2018, Minister of Human Resources and Emiratisation Nasser Al Hamli issued a new Ministerial Decision to "improve flexibility in the labour market, cut costs and reduce companies' dependence on workers imported from outside the country".

Who does the new system impact?

The new system impacts employers and employees who are subject to the UAE Labour Law (Federal Law no. 8 of 1980 as amended).

How does the new part-time system work?

The key points to note are as follows:

  • Skilled workers only - applies only part-time workers with jobs requiring a bachelor's degree or a diploma in a specific field.
     
  • No pre-approval required - part-time employees will no longer need a No Objection Certificate or the permission of their first (primary) employer to work for an additional employer, even if they start working for a competitor. The Ministry of Human Resources and Emiratisation will, however, inform all the other employers when a part-time employee has been issued a labour card in respect of a new part-time contract.
     
  • Working hours - whether agreed at the outset or changed subsequently, working hours must still be agreed in writing between employer and employee. The working hours contracted with the primary employer must be at least 20 hours/week and must not exceed 8 hours/day or 48 hours/week (60 hours/week in special circumstances) as an aggregate limit.
      
  • No non-compete restrictions -  any non-compete clause in the part-time contract of the primary or additional employer will be void.
     
  • Visa requirements - expatriate part-time employees will still need a visa to work for their primary employer, but will only need a labour card/work permit for every additional employer. Termination of the primary part-time contract automatically terminates all additional part-time employment contracts.
     
  • Benefits - The primary employer will be solely responsible for providing statutory paid annual leave and end of service gratuity (both on a pro rata basis), and medical insurance; additional employers are not required by law to provide any of these to the same employee.

What does this mean for employers in practice?

Injecting some increased flexibility into the labour market is a welcome development. However, it leaves open some questions and challenges for employers:

  • Will primary employers embrace the new two-tier system? The potential costs savings for additional employers are clear; the incentives for primary employers are likely to be less so. Will remaining an 'employer of choice' by offering more flexible working arrangements be a sufficient trade-off for the potential competition risks?

  • In the fight for talent, will additional employers be forced into agreeing contractually to give part-time employees pro-rated paid annual leave or termination payments akin to pro-rated gratuity?

  • Whilst statutory and/or contractual confidentiality obligations will stand, how do employers effectively police the protection of that information where a part-time employee is working simultaneously for the competitor?
     
  • Are additional employers prepared to step up and accept the extra liability as primary part-time employer or even a full time employer to mitigate the risk of losing their employees if the primary part-time contract is terminated?

What should employers do next?

Employers who are willing to offer part-time contracts to employees need to consider:
 

  • The extent to which the new part-time system is likely to be embraced in their particular industry or sector and how they can remain, or work towards being, an employer of choice.
     
  • Reviewing and amending employment documentation to accurately reflect employees' working arrangements. For example: stating whether the employment is full- or part-time; confirming whether the employer is the primary or additional employer; amending working hours provisions; and pro-rating allowances and other benefits.
     
  • Whether existing confidentiality obligations offer sufficient protection to their confidential and/or sensitive business information and consider what practical preventative measures to take. For example:
     
    • Enhancing contractual terms, such as obligations to report actual or suspected breaches;
       
    • Restricting access to confidential information to only that which is necessary for the performance of a particular role; or 
       
    • Implementing protocols for handling confidential information.
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