As we witness the evolution of the regulatory landscape across the MENA region, it was timely for us to investigate and lift the lid, on what is keeping the region’s legal decision-makers awake at night.
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Employees working across various sectors in the UAE have historically utilised much or all of their annual leave during the scorching summer months or whilst the academic term paused for the much anticipated school holidays. However, in 2020, standard practice on annual leave has been upended by the COVID-19 pandemic. When normal business operations were provisionally suspended (due to various UAE Government mandated lockdown and/or curfew measures), some employers required employees to utilise their annual leave (either in whole or in part). Others were able to continue working remotely or were deemed key or critical personnel, thereby inhibiting their ability to utilise their accrued untaken leave balances. As we approach the end of 2020, many companies are (or will be) struggling with their annual leave policies as a result of COVID-19 . According to the “COVID-19 Middle East Survey” from global insurance brokerage firm Willis Towers Watson, almost two-fifths of the UAE employers surveyed intended to allow staff to carry forward unused leave days as a result of COVID-19 into 2021. However, 36 per cent surveyed were unsure how to handle the excess leave days and 22 per cent said any unused days would be forfeited. This article briefly explores the leave framework in the UAE and some recommended solutions for employers to effectively and appropriately manage annual leave in the COVID-19 era.
The dilemma for most employers is ensuring that their employees do not accumulate high leave balances at year-end (or at termination) as this will invariably create an ongoing liability on their balance sheets. From a planning perspective, employers will want employees to take leave progressively in order to avoid employees building up significant leave balances and then wanting to take extended holidays as this will prove disruptive to business continuity. But what does the law in the UAE say? The UAE’s employment law regime operates under a dual legislative framework: for those employees working in the Dubai International Financial Centre (‘DIFC’) or Abu Dhabi Global Marketplace (‘ADGM’) free zones, the DIFC Law No. 2 of 2019 as amended (the ‘DIFC Employment Law’) and ADGM Employment Regulations 2019 as amended (the ‘ADGM Employment Regulations’), apply wholesale. For all other employees working in the UAE’s private sector (including the other UAE free zones), they are subject to the scope and remit of Federal Law No. 8 of 1980 as amended (the ‘UAE Labour Law’). Each employment regime offers differing provisions regarding annual leave utilisation and carry-over obligations and requirements.
DIFC Employment Law and ADGM Employment Regulations
In the DIFC, points to note regarding the minimum framework on annual leave include:
In the ADGM, the same framework as in the DIFC is adopted and applied in the ADGM Employment Regulations
UAE Labour Law
From a practical planning perspective, employers will need to manage excess leave carefully to ensure that they are appropriately balancing statutory obligations against the need to maintain sufficient employee coverage and business continuity through to year-end:
The employment regimes in the UAE, DIFC and ADGM contain various provisions governing and regulating annual leave and it is important that employers take steps now to appropriately manage any excess leave accruals and carry- over issues. Measures introduced by the UAE Government to date have focused primarily on various employment-specific cost-cutting measures including the implementation of forced leave initiatives at times determined by the employer. However, as the effects and impact of the pandemic continue to unravel, the issue of unused leave and the rules on carry-over are likely to become a pressing agenda item for many businesses and HR managers across the UAE.