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UAE Labor Law Issues: Ministry of Labor v. Free Zone v. Government Corporation

Posted on 10th August 2010 by Camille Paldi,

 

Resolving a labor dispute can be quite confusing in the United Arab Emirates as some may work for private companies while others may work for a free zone or a government corporation.  The first thing to do when a dispute arises and you wish to file a complaint is to look at your labor card and check what entity is the issuing authority.  If it is a private company, then the correct venue for filing a complaint is the Ministry of Labor.  If it is free zone company, than the correct venue may be the free zone authority as long as the company is not a free zone company created by the government of the UAE such as Nakheel or Dubai World.  If the issuing authority on the labor card is a government corporation (corporation formed by government decree), then in order to file a complaint, one must file a case directly with the Dubai Courts after obtaining the permission of the Ruler’s Court. 

The Ministry of Labor Process is explained in the following blog post.  http://ilovetheuae.com/2009/12/30/guide-to-handling-disputes-at-the-ministry-of-labor-dubai/

Each Free Zone has its own regulations regulating activities within the free zone, however, complicating matters even more, the UAE Labor Law still applies within the Free Zone.  http://gulfnews.com/uaessentials/ask-the-law/compensation-for-losing-job-1.665789

In addition, some free zones, such as the TECOM free zones, have made special arrangements with the Ministry of Labor so that disputes arising between employers and employees within these free zones are filed directly with the Ministry of Labor. 

The TECOM Free Zones have issued their own employment regulations, particularly, the Dubai Technology and Media Free Zone Employment Regulations 2004 and Decision No. 3 of 2008 Concerning Penalties for Breach of the Dubai Technology and Media Free Zone Employment Regulations 2004.  In Section 9: Resolution of Labor Disputes, Clause 16: Resolution of Labor Disputes Between Employers and Employees states:

16.1: The authority shall not be responsible for the resolution of any labor disputes arising between a licensee and an employee.

16.2: In the event of a labor dispute arising between a licensee and an employee, the authority will, on the application of either the licensee or the employee, issue a letter on behalf of the authority referring the dispute to the Ministry of Labor and Social Affairs.  The Ministry of Labor and Social Affairs may, in turn, refer the matter to the Dubai Courts. 

16.3: No labor dispute may proceed direct to either the Ministry of Labor and Social Affairs or the Dubai Courts without being referred thereto by the authority under the provisions of Regulation 16.2.

16.4: The authority will not refer a labor dispute under the provisions of Regulation 16.2 where Regulation 7.2 applies.

16.5: The authority shall implement any decision or order of the Ministry of Labor and Social Affairs or the Dubai Courts with respect to a labor dispute. 

However, if the issuing authority of the labor card was the Jebel Ali Free Zone Authority for instance, one may first have to file the complaint with the JAFZA labor office.  “Where the Department is unable to amicably resolve the matter, a committee of departmental officers will be convened in order to hear the dispute.  The Rules of the Free Zone provide that the decision of the committee shall be “binding”.   (Abdulla Luqman, Managing Partner, Yemen Office, Al Suwaidi and Company)

Common Issues:

NOC LETTER:

Within the realm of the private sector, generally, if one has not completed three years of employment with their former employer, it is necessary to obtain an NOC letter from the employer  in order to transfer to the sponsorship of another employer.  http://ilovetheuae.com/2010/03/29/how-do-i-transfer-my-visa-if-i-find-a-new-job-in-the-uae/

Even within the free zones, in some instances, it may be necessary to obtain an NOC letter when transferring sponsorship from a free zone company to another company. 

For example, Article 4.7 of the Dubai Technology and Media Free Zone Employment Regulations 2004 states:

A licensee shall not recruit, employ or otherwise make use of an employee who is already employed by another licensee, unless and until the authority permits a transfer of that employee. 

Furthermore, it is required that both licensees consent to the transfer of the employee’s sponsorship in writing, that the receiving licensee has a valid employee sponsorship agreement with the free zone authority, and that the former employee confirms that he or she has received all end of service benefits under the UAE Labor Law.

Article 4.8 of the Dubai Technology and Media Free Zone Employment Regulations 2004 states:

Subject to Regulation 4.9, the authority will accept a request for a transfer of an employee provided:-

4.8.1: both licensees consent to the transfer in writing;

4.8.2: the receiving licensee has a valid employee sponsorship agreement with the authority; and

4.8.3: the employee confirms in writing that he has received from the transferring licensee, the employee’s end of service benefits and entitlements as set out in the UAE Labor Law. 

However, the free zone authority may waive this requirement at its sole discretion.

Article 4.9 of the Dubai Technology and Media Free Zone Employment Regulations 2004 states:

Where the consents stated in Regulation 4.8.1 and the confirmation stated in Regulation 4.8.2 have not been obtained, the authority may still approve a transfer if the authority determines, in its absolute discretion, that it is reasonable in all the circumstances to approve a transfer. 

If the free zone authority does not approve the transfer of sponsorship, the free zone authority shall cancel the sponsorship of the employee and the employee shall not be permitted to work for a new employer unless a valid entry permit and residence visa have been obtained. This may require exiting and re-entering the country.

Article 4.10 of the Dubai Technology and Media Free Zone Employment Regulations 2004 states:

Where the authority does not approve a transfer, the authority shall cancel its sponsorship of the employee and the employee shall not be permitted to work for a new employer unless a valid entry permit and residence visa have been obtained. 

VISA CANCELLATION:

http://ilovetheuae.com/2010/01/13/employment-immigration-guide-to-the-uae/

In all termination situations, it is important not to sign visa cancellation papers and handover your passport to your employer until receiving all of your end-of-service entitlements.  Signing such a paper and having your visa cancelled may imply that you have received all entitlements owed to you by your former employer.   In fact, don’t sign anything upon termination under the pressure of Human Resources staff without first consulting a lawyer.  Remember that you never have to sign a termination notice.   The employer must cancel your visa after termination in a certain time period under UAE law or face penalties. 

For example, under the Dubai Technology and Media Free Zone Employment Regulations 2004, Article 18.5 states:

Where a licensee fails to cancel a Residence Visa within thirty (30) days of an employee having left the employment of the employer or thirty (30) days of the employee’s residency visa expiring, whichever occurs first, the authority may impose a fine of AED 2,500.00 per person.  Where the period of failing to cancel the Residence Visa is greater than ninety (90) days after an employee has left the employment of the employer, or ninety (90) days after the Residency  Visa expired, whichever occurs first, the fine may be increased to AED 5,000.00 per person.

BANS:

http://ilovetheuae.com/2010/05/27/uae-employment-legal-questions/

“In the Free Zones in general, an employer may make a recommendation to the Free Zone Authority to impose a ban on the employee, but it is at the sole discretion of the Free Zone Authority to issue the ban or not.” 

“The position remains unclear in respect of employees wishing to transfer from private companies outside the free zones into the sponsorship of the Free Zone Authorities.  Theoretically, ex-employers may impose such bans, prohibiting the employees from obtaining new employment visas with the Free Zones for some period of time.”  (Abdulla Luqman, Managing Partner, Yemen Office, Al Suwaidi and Company)

Employers cannot impose double bans on former employees.

http://www.emirates247.com/news/emirates/firms-cannot-slap-new-entry-ban-after-first-expires-2010-07-22-1.269337


Posted on 10th August 2010 by Camille Paldi


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