When the health of the regional construction industry dips, it is often the lowest paid workers that pay the price. Over the past decade, however, a steady trickle of negative news on the plight of the region’s lowest paid migrant workers has lead to steadily improving conditions. But have labour reforms gone far enough?
MEED’s construction industry survey polled opinion on labour welfare legislation, especially for migrant workers, and found that the majority of respondents were of the view that the law could go further. Some 22 per cent, however, were of the view that the existing laws are sufficient. As one participant wrote: “It’s a practical and fair compromise; what is missing is not that important.”
The main law that regulates the employment relationship in the UAE is Law No 8 of 1980 Regulating Labour Relations (as amended, the “Labour Law”). The law focuses on aspects such as Emiratisation, recruitment, place of work, contracts, medical insurance, wages, accommodation, and so forth.
“When recruiting migrant workers, once an employee enters the UAE on an entry permit, the employer must make an application for a residence visa to the immigration authorities,” says Ivor McGettigan, a partner at Al-Tamimi & Company. “Prior to this, the employee must pass a medical examination.”
It is illegal for an employer to pass recruitment or visa fees onto its employees. The circumstances in which an employer may deduct money from an employee’s salary are limited within the labour law.
Furthermore, before an employee enters the UAE for employment purposes, an employer (assuming it is not a free zone entity) must have the employee sign a standard form offer letter stating the basic terms of employment and file it with the Ministry of Labour.
The requirement to submit an offer letter was introduced in 2016 pursuant to a ministerial decree and only applies to foreign nationals.
The offer letter contains the key terms of the employment agreement and the standard offer letter is in Arabic and English, with further templates available in different languages if needed. The offer letter will often be signed by the employee in their home country prior to entering the UAE.
The intention behind this decree was to ensure minimal differentiation between the initial offer made to the employee and the ultimate employment contract, while the language requirement ensures that the employee understands the document. This was considered a move to protect more vulnerable workers in the region, especially blue-collar construction workers.
“A number of decrees came into law in early 2016 with the primary aim of protecting blue-collar workers,” says McGettigan.
“One decree introduced the requirement that a notice period (of between one to three months) be included in limited-term contracts; the previous position was that limited-term contracts simply ended upon expiry.”
The same 2016 ministerial decree also introduced the requirement that, in the event of termination of a limited-term contract, each party must indemnify the other to a level agreed by the parties (the agreed indemnity cannot exceed three months’ total wages). Under the labour law, an employer who terminates an employee’s limited-term contract before its expiry is liable to pay the employee three months’ pay as “early termination compensation”. It is unclear at present whether the agreed indemnity amount under the decree is intended to be in lieu of early termination compensation (as provided for by the labour law) or in addition to this.
Where an employer terminates a limited-term contract prior to its expiry, there is no defence to a termination claim other than if it was for gross misconduct.
A wage protection system (WPS) was introduced in the UAE in 2009, which requires employers to pay their employees’ salaries electronically via the WPS to enable the local authorities to monitor the salary payments.
The labour law does not specify a minimum wage, but there have been instances where countries have specified a minimum wage for their citizens who work in the UAE.
The labour law also defines regulations relating to medical insurance (mandatory for UAE employers to provide health insurance to their employees) and occupational injury; labour bans; workings hours and midday breaks; accommodation and gratuity.
“There are no trade unions in the UAE and employee representatives are not common,” notes McGettigan. “The labour law expressly prohibits strike action, and strike or union action can potentially amount to criminal behaviour under the UAE Penal Code.”
In practice, the penalty for employees who lead or take part in strikes generally amounts to temporary suspension from duty, adds McGettigan. For more serious or repeated offences, there is a risk of deportation to the employee’s home country.
“Where a minimum of 100 employees are involved in a dispute with an employer, the recently instated Ministerial Resolution No (749) of 2018 recognises such collective agreements and stipulates the process that must be followed to resolve the dispute.”
According to the resolution, employers and employees should settle their collective disputes firstly through direct negotiation, followed by mediation, conciliation and arbitration. This is relevant to the construction sector, as collective disputes have historically involved blue-collar construction workers.
Kareem Farah, CEO of Engineering Contracting Company, says there has been increased focus on labour welfare in the UAE and elsewhere in the region in recent years. “The situation has improved greatly across the board for labourers, from how they are recruited and paid to how they are accommodated and transported, and what happens to them if their employer gets into financial difficulty.” Farah adds that mental health is another important and often neglected area for worker welfare.
The UAE’s Emiratisation policy has set recruitment targets for the private sector, however McGettigan points out that for construction companies, “there is little or no observance of the quotas among the blue-collar workers”. However, the Emiratisation policy does state that health and safety officers of construction companies must be nationals.
Expo 2020 Dubai
Expo officials revealed in October 2018 that nearly 40,000 workers—both manual and non-manual—are expected on the expo site, including employees of third-party stakeholders and participating countries, during the first half of 2019 when construction peaks.
The scale of Expo 2020 requires that best possible practices are followed in all areas, including worker welfare. A survey respondent says: “The UAE should work towards mandating the Expo 2020’s worker welfare requirements. This may add costs in the short term, but will contribute to raising the UAE’s human rights profile, which may contribute to the further attraction [of investment].”
The event is also acting as a testing ground for innovation. Expo Live is a partnership grant programme launched by Expo 2020, to support novel solutions. With Expo Live’s backing, UAE-based Smart Labour has developed a mobile app that helps blue-collar workers to improve their reading and writing skills, while offering rewards such as mobile calling credit. As of July 2018, more than 40,000 workers are registered on the app.
Smart Labour has partnered with the UAE Ministry of Human Resources & Emiratisation to implement the app across the country and develop it further, even adding Dubai Smart Government’s happiness voting meter. The goal of the app is to promote happiness and a feeling of wellbeing, which the government believes ultimately leads to a more productive workforce.
This article is extracted from a report produced by MEED and Mashreq titled Regulating Construction: Adapting to New Standards. Click here to download the report
To know more about the MEED Mashreq Partnership, get in touch with us at MEEDMashreqPartnership@meed.com or find more info on www.meedmashreqconstructionhub.com