New ADGM employment law – top 10 changes

The Abu Dhabi Global Market (ADGM) issued its new employment law framework, the Employment Regulations 2019 (New Regulations), which will take effect on 1 January 2020 and will repeal the previous employment regulations. Although the ADGM Employment Regulations 2015 (2015 Regulations) were comprehensive when introduced, the New Regulations further aligns the ADGM with international best practices and promotes itself as a leader in the region and an attractive jurisdiction to both employers and employees.

Here are the top 10 changes of which ADGM employers should be mindful. The New Regulations:

1. Introduce significant statutory protections for employees with respect to overtime. Unlike the 2015 Regulations, eligible employees cannot opt-out of from receiving overtime benefits and such employees are entitled to either monetary payments, additional time off or a combination of both. Overtime compensation rates are either be 25% or 50% of an employee’s hourly rate and depends on the time of day overtime occurs. Employers must keep records of employees who are likely to work close to or in excess of the threshold.

2. Managerial or supervisory employees are exempted from overtime benefits “when it is reasonably expected within that industry internationally” to not provide overtime benefits. However, the language is vague and may be interpreted broadly creating uncertainty for employers with respect to these exempt roles.

3. Reduce an employer’s minimum liability associated with sick leave. Rather than being entitled to 60 business days of paid sick leave, the New Regulations introduce a tiered approach in which an employee is entitled to full pay for the first 10 business days, half-pay for the next 20 business days and the remaining 30 business days will be unpaid sick leave.

4. Remove entirely the 90 days’ notice period for termination for employees with continuous employment of five years of more, and now requires employers to provide 7 days of notice for employees with less than 3 months of continuous employment and 30 days of notice for employees employed for 3 months or more. However, employees and employers may agree to longer notice periods or payments in lieu of notice.

5. Broaden anti-discrimination protections and now include colour as a protected class. In addition, the New Regulations heavily penalise companies found in breach of the anti-discrimination provisions and such bad actors can be liable for up to 3 years of basic wages and the court may require the bad actor to take certain steps to cure its breach and impose a fine of no more than US$ 20,000 for not satisfying such steps.

6. Remove the comprehensive data protection provisions and incorporates the standalone ADGM Data Protection (Amendment) Regulations 2018.

7. Require employers to provide employees with a one-way repatriation flight upon termination of the employee’s employment unless the employee takes up new employment within 30 days or the employer has terminated for cause.

8. Provide additional protections for employees to the extent that an employer cannot terminate an employee for taking excessive sick leave on account of a mental or physical disability.

9. Require employers to provide a written contract within 30 days of an employee’s start date – reducing the limit from 2 months in the 2015 Regulations.

10. Incorporate the Employment Regulations 2019 (Compensation Awards and Limits) Rules 2019, which outlines potential fines, compensation and penalties that are available for any breaches of the New Regulations.

ADGM employers should aim to review and revise existing employment contracts and policies before 1 January 2020 to ensure compliance with the New Regulations. In addition, we would recommend employers to amend templates to reduce any future risk or liability associated with entering into outdated and non-compliant employment contracts.

For further information regarding the New Regulations, and how you can best prepare for its enactment, please contact David McDonald.