The new ADGM Employment Regulations 2019 – What changed?

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 revoke the old ADGM Employment Regulations 2015, as amended (the Old Regulations). This article highlights the five fundamental changes that ADGM employers need to know.

The Fundamental Changes under the New ADGM Employment Regulations 2019

Overtime

The New Regulations introduce a 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 given prior written consent. According with the New Regulations:

• Working time shall not exceed 48 hours for each seven day period and (contrary to the Old Regulations), an employee cannot opt out by giving written consent and instead the below overtime provisions are applicable.
• Unless the employee is in a managerial or supervisory position or (positions normally 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 seems to establish that no overtime is owed for hours worked over the 48 hour week but falling below the Threshold.
• The overtime calculation can 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 shall be paid as below:
  i. 25% of the Hourly Rate for daytime work;
  ii. 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 shall be done on a pro-rata basis.
• The employer must keep time records for the employees expected to work hours close to or in excess of the Threshold.
• The recent overtime provisions are more in line with the position under Federal Law No. 8 of 1980, as amended (the Federal Labour Law).

Sick pay

While the Old Regulations established 60 business days sick leave at full pay, the New Regulations, despite still providing for 60 business days of sick leave, its respective pay is now broken down into:

1. 10 business days on full pay;
2. 20 business days on half-pay; and
3. 30 business days on no pay.

Minimum Notice Period

The New Regulations provide notice to be in writing and eliminate the 90 calendar day minimum notice period for continuous employment of five years or more. The minimum notice is now, therefore:

• Seven calendar days, should the period of continuous employment is less than three months; and
• 30 calendar days, in case the period of continuous employment is three months or more.

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 pursued for non-compliance with the New Regulations.

For example, should an employer fail to pay all wages and any other amounts owing to an employee within 14 calendar days of said amounts becoming due, the Court may decide to award a compensation, as it considers just and reasonable up to a maximum corresponding to the last daily wage for each calendar day during which the employer failed to comply.

Discrimination

The anti-discrimination rules are expanded to include colour as a protected class. Moreover, the Rules establish that, in case of breach of the section 54 (discrimination provisions), the Court:

• May choose to order compensation subject to a cap of three years’ basic wages; and
• Has the power to issue recommendations to the employer to take specific measures within a determined period of time and if the employer fails to comply, a fine not exceeding USD 20,000 can be enforced.

Preparing for the New Regulations

ADGM employers should: Consider whether any employees will be subject to statutory overtime. It is uncertain how the omission regarding overtime will be interpreted, as it is quite wide and  therefore has the potential to lead to dispute. If there is probable uncertainty concerning a particular role/job, it will be advisable to provide statutory overtime.

The above breakdown is more in line with the position in the Federal Labour Law and also reflects the position under DIFC Law No. 2 of 2019 (the DIFC Employment Law), which came into force on 28 August 2019.

Moreover, 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.

Since the Ministry of Human Resources and Emiratisation agrees with one and three month notice periods, and the DIFC Employment Law has a three month notice period for employees with five or more years of service, this is an remarkable change.

For enquires related to employment law services, write to Enquiries.

James B. Berry

Managing Partner

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