ADGM: Amendments to Employment Regulations

ADGM: Amendments to Employment Regulations

The ADGM Employment Regulations 2019 imposes certain obligations on employers operating in free zones; it also lays down essential provisions related to policies and practices, recruitment, wages, leaves etc.

Some significant changes have taken place in the ADGM Employment Law on 1st January 2020. The changes are as follows;

1. Payment of dues upon termination

As per the previous regulation, employers were required to clear dues within 14 days of employee termination. Failure to do so would result in a penalty that would be equal to the employees' daily wages, for each day, the employers fail to honour payment. Consequently, in practice, this accrued large penalties that were often disproportionate to the employer's outstanding unpaid amount payable.

While the payment period within 14 days prevails, the ADGM court has the discretion to decide on the quantum of penalty imposed in any given case to ensure that the fine is just and equitable.

2. Notice periods

Parties terminating employment were required to serve a 90-day termination notice if they have served for a period exceeding five years as per the previous regulation, this requirement has now been removed. The amendment increases flexibility for employees and employers to agree upon notice periods other than those prescribed in the regulations.

The law, however, prescribes a minimum notice period in the following cases;

1. Seven days' notice period, served in writing for employment term extending between one to three months
2. For a term extending beyond three months, a 30 days' written notice period is required to be served.

3. Overtime

Employees are now entitled to overtime compensation, which can either be monetary or in the form of time off. These overtime payments shall be made at the rate of 25% of the standard hourly rate applicable to the employee; this can be increased to 50% if the employee works between 9 pm to 4 am.

The benefit applies to employees except for managers, supervisors or any other such person who is required to work overtime as per international industry standards for which compensation is not payable.

4. Sick days

In comparison with the old regulation, sick pay has been reduced to complement onshore labour laws. The new law suggests that employees are entitled to sick leave with sick pay, payable at different rates that shall be determined depending upon their daily wages, length of time spent off work and whether such leave is taken consecutively over a period of twelve months or not; the paid sick leave period shall extend for the first ten working days off on sick leave, thereafter, they are entitled to receive half-pay for the next 20 days off.

The regulations further, empower employers to terminate an employee if their sick days exceed 60 days in total over a period of 12 months, unless except such period exceeds due to disability.

5. Anti-discrimination

The law expressly prohibits discrimination on race, nationality, colour, religion, age, disability, marital status and gender. It is imperative to note that these regulations do not include maternity and pregnancy, as protected under DIFC employment laws.

In cases of discrimination, the court may; award compensation to which shall not exceed three years' basic wages of the concerned personnel, or make recommendations to the employer to take steps to rectify the same, failure of which shall attract a fine not exceeding USD 20,000.

6. Recognition of non-employee status

Non-employees are those employees that do not benefit from all the statutory entitlements as provided under ADGM; the regulations recognize three categories of persons under the non-employee status; interns, temporary freelancers and secondees.

7. Fines

The Employment Regulations 2019 (Compensation Awards and Limits) Rules 2019 align with the regulations and provide for penalties in case of breach of provisions regarding termination, hiring, discrimination, wages, work timings etc.