Amendments of Employment Regulations in ADGM

17 Mar 2022

The Abu Dhabi Global Market (ADGM) is the international financial center, one of the free zones in the UAE. It is empowered by law to enact its own laws, rules, and regulations for the entities registered on its premises. The ADGM introduces new regulations time and again whenever required to regulate entities carrying out businesses in ADGM. It is responsible for protecting the rights and obligations of employees and employers working in ADGM. To govern matters regarding employment and relations between the employers and employees, ADGM has promulgated ADGM Employment Regulation 2019 (the Employment Regulations), which were enforced from 1 January 2020 by replacing the Regulations of 2015. These regulations follow changes introduced by the DIFC. These regulations contain various provisions regarding employment policies and practices such as recruitment of employees, payment of wages, work hours, sick leaves, termination, etc. The regulations aim to strengthen the employment framework in the ADGM and promote a fair balance of obligations and rights between employers and employees for a prosperous future of ADGM.

The Employment Regulations set forth rules to be followed at the time of an offer of employment contract by an employer to an employee, and the employment contract must be in conformity with laws laid down by these regulations. It should be a written contract in English with all terms and employment conditions in employment for more than thirty days. The employer should not influence any person to be an employee by misrepresenting any benefits and allowances to convince him to agree to the job offer. An employer is responsible for getting a work permit for the employee, residence visa, and UAE ID card if required and bearing the cost. According to the regulations, an employer is responsible for obtaining and maintaining health insurance coverage for his employees. Subject to the Registrar’s rule, an employer can employ youth between the age of 15 to 18 years. He should take into consideration the health conditions, safety, and well-being of the young employees. The employer shall keep an employee on probation for not more than six months, and he is liable to mention the probation period explicitly in the employment contract. The employer shall pay the wages of an employee in time. The Employment Regulations introduced overtime provisions. According to the regulations, for overtime work, an employee will be entitled to compensation for those extra working hours except the employees on managerial or supervisory positions or such employees within that industry internationally that overtime compensation is not payable and would not be entitled to overtime compensation. The overtime payments are in addition to the daily wage and are payable at a rate of 25% of the Hourly Rate of the employee’s total salary or time in lieu. For overtime worked between 9:00 p.m. and 4:00 a.m., the overtime compensation rate is 50% of the Hourly Rate of the employee’s total salary. Likewise, time in lieu accrues at 25% or 50% of the overtime worked, depending on the extra hours worked. In case of sick leaves, an employee is entitled to sixty days (Business Days) of leave from work; it states that for the first ten days of sick leave, an employee is entitled to 100% of his daily wage and for other twenty days of absence from work the employee is entitled to 50 % of his daily wage. For the remaining thirty days of absence due to sickness, the employee will not be paid for his sick leaves if any employee exceeds the limit of sixty days of sick leave. The employer can terminate him on this ground. The regulations protect disabled employees from this termination for taking sick leaves exceeding sixty days within twelve months; the employer cannot terminate such disabled employees in case of absence for more than sixty days in a year due to such disability. An employee on the birth of her child shall be entitled to maternity leaves of sixty-five Business Days and shall be entitled to 100% of her daily wage pay for the first thirty-three days and 50% for the following days. If an employee becomes a father, he is entitled to five Business Days' leave with pay. An employer is not allowed by the regulations to terminate or change his employment position when he/she is on maternity or paternity leave. An employee has the legal right to return to work at the end of maternity or paternity leave. The regulations have also reduced working hours by two hours each day for Muslim employees in Ramadan’s holy month, not affecting their daily wage compensation.

The regulations make employers oblige to ensure to a reasonable extent the health, safety, and welfare of employees at the workplace. He should maintain workplace harassment and be risk-free and safe for all employees. The Employment Regulations have reduced the minimum notice period from ninety days for an employer or an employee to terminate an employment contract. The minimum notice period is seven days if the duration of continuous employment is less than three months, and for employment duration of three months or more, the notice period is thirty days. The employer and employee can agree upon a more extended notice period or accept payment in the employment contract as per the regulations. On termination of an employee, the employer is liable to provide the employee with one air ticket to his country of origin. The employer is liable to pay the employee all wages due to him within fourteen days of his termination. If the employer fails to make payments, the employee can seek help from employment lawyers and the court can award compensation to the employee equal to the most recent daily wage for each day during which the employer failed to comply.