Out-Law / Your Daily Need-To-Know

Global restructuring: support for businesses in the UAE

Out-Law News | 21 Jul 2020 | 3:43 pm |

Luke Tapp explains the government’s support for businesses in the UAE.

Pinsent Masons Video

We're sorry, this video is not available in your location.

  • Transcript

    In recent weeks we have been looking at the impact of Covid-19 on companies around the world and seeing how many of them are responding by carrying out a restructuring, often involving mass redundancy exercises. The different jurisdictions and employment laws that operate in the different countries means it is a challenge for multinational businesses with headquarters in the HQ but with a presence in one or more of those countries.  Last week, on Friday, we heard from Luke Tapp, who is based in in Dubai, explaining the system in the UAE which is markedly different to the UK and Europe because Labour Law over there doesn’t have a defined term for redundancy which means there is always an element of risk when international clients want to reduce their UAE workforce. However, as Luke explained, earlier this year on 26 March, as COVID-19 was taking hold, there was an important development which, effectively, introduced the concept of 'redundancy' into those Labour Laws for the first time. That is ministerial resolution 279 of 2020 which was introduced with the specific aim of assisting companies during the pandemic. Whilst that development is certainly helpful, that's as far as it goes because the UAE there is no equivalent to the UK’s furlough scheme. Luke Tapp again:

    Luke Tapp: “The approach from the UAE Government has been slightly different to the UK in terms of the way it manages COVID-19 and the impact on the private sector. There is no official furlough scheme in the UAE, so there's no scheme whereby if a company puts somebody on leave the government will contribute something towards their salary - that doesn't exist. That ministerial resolution 279 of 2020 did support business insofar as it set out legal measures that companies could take to manage their cash flow, manage their workforce, during the COVID-19 pandemic. So things like putting people onto unpaid leave, putting people onto part-time hours, part-time pay, and putting people on to mandatory periods of annual leave. Those types of measures were set out in ministerial resolution 279 and 2020 in a way which was supportive to business because it just gave them a bit more flexibility in terms of measures they could introduce to the workforce to manage their cash flow. But in terms of financial support, that's more along the lines of things like costs of renewing leases, some rental tenancy costs, some governmental fees, those types of things have been reduced or removed to support private business, but what the government are not doing is they're not paying an amount towards employees’ salaries.”

    Covid-19 advisory – health and safety at the office and at home  

    In contrast, the UK of course does have a furlough scheme, although it will be tapering down from the end of July and is set to end completely on 31 October. There has also been a marked shift in the Government's message on the lockdown with Boris Johnson telling the country to get back to work if possible, so going to the workplace if it is safe to do so or, alternatively, working from home. So therein lies the challenge for employers, not least from the health and safety point of view, because you'll have some staff working long term from home, setting up a home office as best they can, and others travelling into the workplace and expecting it to be safe. So it is a tricky position for employers to be in right now so what, if anything, should they be doing about it? It is a question I put to Katherine Metcalfe:

    Katherine Metcalfe: “Employers are really, I guess, trying to tread two paths at the moment. One is to get people back to work and into their normal working environment and put in place safe working procedures to achieve that. So the key thing there is to conduct a COVID-19 risk assessment and review the operating procedures that you're going to have at a very practical level in your premises to actually implement social distancing, safe cleaning procedures and those kind of things. The government has issued guidance suggesting that people should publish the results of their risk assessment on their website and you need to think quite carefully about what you are going to publish and how you convey that to the public and employees. It's really important to take employees with you on this journey. There will be a range of different attitudes about returning to the workplace and you need to consult from a legal perspective through your usual channels, whether that's a health and safety committee, it might be a survey, it might be one-on-one engagement with employees with particular issues, but really, consulting about what is going to be put in place, giving instruction and training on how to follow any new procedures in the workplace, and checking-in regularly to make sure those are working. So that's where people are returning to their normal workplace. There will still continue to be a significant number of people working from home and we know that a lot of our clients are now thinking about whether some of those arrangements should be made permanent. There are quite important health and safety considerations to think about too, particularly around IT equipment, and workstations. There are some thorny issues to grapple with about whether employers need to be providing employees with that equipment in a home environment and if they do then what the other health and safety implications that flow from that might be. For example, in relation to making sure that equipment is fit for purpose, maintaining it, conducting PAT testing and providing training on how to use it. So, a lot to think about there, whether employees are coming back to work or indeed staying at home.”

    In that interview Katherine went on to tell me that she is starting to see an increase in the number of regular inspections being carried out by the Health and Safety Executive. They are ramping up the number of inspections  in a concerted effort to make sure that employers are responding appropriately to managing the risk of COVID-19 in the workplace. In fact, we noticed, on the HSE’s website they are sending out that message themselves – they say “inspectors are out and about, putting employers on the spot and checking that they are complying with health and safety law.” So my question to Katherine is how strict are they likely be?

    Katherine Metcalfe: “I think at the beginning of lockdown we were seeing a lot of leniency and I think that will initially be the approach as people get back to work and are doing their best to implement control measures for COVID-19, but I think enforcement action will grow. I think the public appetite and pressure for it will grow as we start to see localised outbreaks of the type that we're seeing at the moment in Leicester or in particular settings such as care homes where there is a perception that not enough is being done to tackle the virus so I think we will see an uptick in enforcement activity in certain areas and you are absolutely right, record keeping is key here, documenting what you are doing to control the risk of the virus spreading in your workplace, checking how that's working, communicating with employees and really keeping on top of industry and government guidance. That's a full time job in itself just now as the law seems to change every week and so does their associated guidance.”

    FAQ – does “laying-off” staff mean the same as “making redundancies”?

    Finally to a phrase we hear all the time in the media – laying off staff. It is a term that is used by employees who are losing their jobs, by employers to describe job cuts, and by the media journalists to describe both individual and mass redundancies. The people who don’t use it in that context are lawyers and the reason for that is because it actually means something quite different. Matt McDonald explains:

    Matt McDonald: “Yes, you’re absolutely right, and you'll see in the media, layoff and redundancy sometimes used interchangeably, and you will hear colloquially, people will say I've been laid off to mean that they have been made redundant, but there's actually a very specific and very important difference. Redundancy, essentially, is permanent. Lay-off is temporary. The idea of lay-off is that you give yourself as an employer the contractual right to lay someone off and then for certain periods of time you say to the individuals, right, you are now laid off, but there's absolutely in those circumstances an expectation that they will come back to work once you bring the layoff period to an end and, depending on the length of the layoff period, it can ultimately lead to redundancies and the individuals might be able to effectively force those through but the whole purpose behind layoff is it's temporary and you're intention is to bring people back and so obviously that distinction is hugely important because it gives you that flexibility without worrying about how you're going to staff your operation when things pick up and you do need those people back in because, obviously, if you've just made them redundant, you don't necessarily want to bring them straight back in. The critical thing here is unlike redundancy, in order to be able to lay individuals off you need to have the express contractual right to do so. So it's critical if employers are thinking that they may need to do this in the future, that they look at the contracts and start making the changes needed to ensure that they can lay off because you only tend to see layoff clauses in contracts in those industries where historically lay off has been used on a fairly regular basis, which is very much the minority of industries out there. Most contracts will not have a lay off clause in them as standard so if you want the ability to do that going forward, you're going to have to revisit your contractual documentation and introduce those changes.”

    For now from me that’s the news. Good bye.