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Unpaid leave guidelines in UAE amid Covid-19 crisis

 

DUBAI – To reduce the financial impact of the new coronavirus or Covid-19, many businesses are considering unpaid leave arrangements with their employees.

“The UAE Labour Law is silent on unpaid leave arrangements. As there is no legal mechanism for unpaid leave, the general view is that it is not permissible without the consent of the employee, which is to be given freely. In other words, an employer cannot unilaterally impose unpaid leave on an employee but they can request and seek the agreement of an employee to move to an unpaid leave arrangement,” Jessica Ashford, Deputy CEO of PRO Partner Group, told Expatmedia.net.

Under the UAE law, the only permissible unpaid leaves are those related to sick leave, maternity leave or pilgrimage leave. Any other type of unpaid leave is therefore considered unlawful.

 

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“In all instances, the key to any proposed or mandated change to an existing employment arrangement is communication and clearly documented agreement. Remaining transparent with employees, communicating measures implemented to safeguard their health and wellbeing in the workplace and regularly enquiring as to their welfare are all crucial measures to take at this time,” Ashford added.

She shares her knowledge and recommended guidelines on unpaid leave:

Can my employer ask me to go on unpaid leave?

An employer cannot unilaterally impose unpaid leave on an employee but they can request and seek the agreement of an employee to move to an unpaid leave arrangement.

Why do I need employee consent to unpaid leave?

Seeking an agreement with an employee on a voluntary basis and ensuring that there is no undue pressure or influence in the process of reaching an agreement may be important to avoid any claim arising for breach of the UAE Labour Law.

My staff has agreed to go on unpaid leave. What’s next?

Any agreement reached between an employer and an employee should be clearly documented and be unambiguous in its terms.

In particular, we recommend that the agreement clearly sets out:

• reasons for the request for unpaid leave;
• when unpaid leave will take effect;
• circumstances when unpaid leave will not apply;
• when the employee will return to normal paid employment;
• employee-employer expectations during unpaid leave

How can unpaid leave affect my business?

Unpaid leave may raise issues with the Wage Protection Scheme (WPS). In particular, failure to pay employees who have agreed to unpaid leave may trigger a WPS block resulting in penalties and an inability for the company to continue to employ staff.

How do I avoid a WPS issue over staff on unpaid leave?

From our discussions with the Ministry of Human Resources and Emiratisation (MOHRE), submitting a copy of the agreement in Arabic between the employer and the employee for the implementation of unpaid leave may prevent or lift a WPS block. In the current climate, it is likely (although not certain) that the MOHRE will be sympathetic to companies who have negotiated unpaid leave with employees in accordance with the prevailing interpretation of the UAE Labour Law and be willing to lift or not impose a WPS block.

What are other alternatives to cut costs?

Employers may also consider alternatives to unpaid leave to reduce the financial impact of Covid-19 on their business. These may include:

• reducing working hours;
• redeploying staff;
• reducing salary;
• requiring employees take remaining annual leave entitlements in advance

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