Saqr Ghobash explains the new labour rules during an interview with Gulf News at the Ministry of Labour office in Abu Dhabi. Image Credit: Abdul Rahman/Gulf News

Abu Dhabi: Saqr Ghobash, Minister of Labour, has issued three ministerial decrees in an effort to enhance UAE labour market conditions and consolidate the contractual nature of labour relations.

The new rules, described by the minister as “a major milestone”, also seek to “close certain gaps pertaining to the enforcement and monitoring of labour relations, and provide for increased labour mobility in accordance with the provisions of our labour law”.

“I trust that these new decrees, together with the hard work ahead of us to improve our implementation and enforcement capacities, will translate into a qualitative leap in our quest to improve labour conditions in the UAE,” Ghobash said.

In an interview with Gulf News, Ghobash explained the new decrees, which come into affect in January 2016, and the impact they are expected to have on labour market conditions in the UAE.

Here is the transcript of the interview:

Gulf News: Over the last few years, you issued a number of decrees, understandably at varying intervals. Can you explain what motivates the Ministry of Labour (MoL) to introduce changes in the way it regulates the labour market?

Ghobash: Improving the administration of our labour market is a constant task. At times, it may only require enhancing our enforcement capacity or upgrading the arsenal of regulatory tools that are available to us; at other times, it may require the initiation and application of new policy initiatives that empower us to achieve newly-identified strategic objectives or, more broadly, improve labour market outcomes.

Less frequently, of course, we are called upon to amend our labour legislation, whether in response to key changes in labour market conditions or in order to align our legislation with international conventions that the UAE has ratified.

Policy making, in particular, is a cyclical process. It begins by identifying the key objectives of the proposed new policy, assessing our capacity to apply it, formulating it and then applying it once satisfied of the chances of its successful application. This is followed by monitoring its impact and adjusting it, if and when it becomes necessary.

One such policy initiative that we launched in early 2011 dealt with the rules and conditions for granting a new work permit to a foreign worker whose relation with a current employer has ended — commonly referred to as labour mobility rules. In our view, this had been a major policy initiative, the impact of which stood to significantly alter certain of our labour market’s outcomes.

The desired impact was two-fold: A positive change in key labour market indicators such as labour productivity, skill mix and access to skilled workers, and the enhancement of the protection that is extended to workers under the law.

Studies that we commissioned indicate that in the four years since this policy was introduced, tens of thousands of workers benefited from the new rules, increasing their earning potential by an average of 10 per cent.

Likewise, employers benefited from the new rules by way of increased access to more qualified workers at lesser administrative and recruitment costs.

Another impact had to do with the nature of labour relations: As employers were empowered to compete for skilled and qualified workers, and workers became more easily eligible to seek alternative employment that offers better conditions, the relation between employer and worker took a new dynamic; that of a contractual relation that is consensual and governed by the terms of the employment contract.

This is consistent with the provisions of our labour code.

The new ministerial decrees I am announcing today — three in all — are intended to build on the 2011 decree on mobility by seeking to further consolidate the contractual nature of labour relations, close certain gaps pertaining to the enforcement and monitoring of labour relations, and provide for increased labour mobility in accordance with the provisions of our labour law. They are concurrent and inter-related.

I am confident that these new decrees will prove to be a major milestone and have a significant impact here in the UAE and beyond. 

You say these three new decrees are interrelated. Can you elaborate on that and explain the objectives they are intended to collectively achieve?

The underlying objective of these new decrees is, as I mentioned, to ascertain the contractual nature of the relation between employer and worker; one that is governed by the terms and conditions of employment that were freely agreed to by the two parties, is consummated and, eventually, terminated in accordance with the provisions of our labour code and regulation.

To do so, we needed to address several issues that are relevant to the contracting process and its transparency, to the sustenance of the relation after it is entered into, and to the manner it is lawfully terminated.

Upon termination, the conditions that govern the granting of a new work permit to the worker by the competent authorities needed to be made more flexible, building on the positive impact of the 2011 decree.

Let me begin with a set of guiding principles that influenced the drafting of these new decrees. The first principle is that an agreement to enter into an employment relation must be predicated on mutual, informed consent.

The second is that the duly registered contract is the ultimate reference in terms of the rights and obligations of each party.

The third is that an employment relation is strictly voluntary, that it can only continue on the basis of the free consent of each of the parties and can, thus, be terminated at any time by either party subject to mutually-agreed to conditions for termination.

Once an employment relation ends, the decision to grant or decline a new permit to the worker is confined to the relevant public authorities.

Accordingly, the first of the new decrees mandates that the worker be presented with a unified, standard, employment offer that contains clear and enforceable terms and conditions of employment, prior to the worker’s entry in the UAE.

The signed offer is to be filed with the MoL, then retrieved from MoL upon the worker’s arrival in the UAE and signed into a standard legal contract without substituting or altering the terms of the initial offer, unless the proposed alterations are accepted by the worker and MoL as enhancing the benefits to the worker.

The unified contract shall contain a termination clause that sets out mutually agreed-to conditions for early termination and asserts that neither party can be made to remain in the employment relation against their individual free will.

The second decree defines how a labour relation may be ended. It ends automatically at the end of the term of a limited-term contract if the contract is not renewed; it also ends by mutual consent or by one party acting to terminate it during the term of a limited-term contractor and in the case an unlimited open contract.

The key objective of this decree is to anticipate the various instances of termination and indicate if and what associated measures must be taken to ensure that termination is lawful.

Accordingly, a non-term contract may be ended by either party at any time subject to an agreed-to requirement of notification. The maximum term for limited-term contracts — and their renewal — is now set at two years; a relation that is subject to a fixed-term contract is automatically terminated at the end of the term of the contract unless it is renewed by mutual consent.

It may be terminated during the term of the contract, either by the mutual consent of both parties without further obligation by either of the two parties, or by one party acting unilaterally to terminate the relation subject to agreed-to requirements of notification and indemnification.

The third decree seeks to make mobility rules more flexible within the bounds of our labour legislation. A worker is eligible to obtain a new work permit in many instances of termination. Hence the worker is eligible when a term contract ends and is not renewed, and when a term contract is terminated early by the employer provided the worker is in compliance with the contract and has completed at least the first six months with the employer.

This six-month minimum period is waived for workers that are classified in skill levels 1, 2 and 3 in accordance with MoL classification.

A worker is also eligible to obtain a new work permit when the worker follows due process in terminating a renewed fixed-term contract, or a non-term contract, provided, in the latter case, the worker has completed the six-month minimum period of employment.

A worker is eligible to obtain a new work permit, irrespective of the time spent with the employer, when termination is caused by the employer’s failure to meet contractual obligations.

Thus, in effect, a worker is denied a new work permit when the said worker acts to unilaterally terminate the employment relation with a compliant employer during the term of the contract and when the worker fails to otherwise terminate the employment relation without following due process. 

How does the Kafala (sponsorship) system come into play in all of this?

Kafala is an admission policy that controls the admission of and the granting of residency in the UAE to foreign nationals.

It mandates that foreigners who seek gainful employment in the UAE should first secure an employment contract with a UAE national entity or person, for the most part a UAE-registered business entity, as a precondition for obtaining an entry visa and becoming eligible for lawful residency in the UAE.

As such, Kafala is not unique to the UAE, or the GCC [Gulf Cooperation Council] countries for that matter.

What may distinguish the UAE and fellow GCC countries in this regard is that, unlike other countries that administer similar employment-related temporary residence programmes in parallel with other admission schemes, including permanent residency schemes or programmes that offer paths to permanent residency, the UAE immigration code does not provide for such alternative programs.

It is worth noting here that the formulation of a state’s admission policy is the sovereign prerogative of its national government.

Having said this, once a foreign national secures residency in the UAE for the purpose of employment, the relation that he or she enters into with the sponsoring UAE employer is an employment (labour) relation that is regulated by the UAE Federal Labour Law.

This de-linkage of the sponsoring relation, that secures lawful entry and residency in the country, and the labour relation, that is governed by labour legislation and the terms of the employment contract, is essential to the promotion of healthy and productive relations between employer and worker that are predicated on voluntary engagement, trust and the right of either party to opt out of the relation.

The new decrees seek to accomplish this very purpose of ensuring that, as per the provisions of our laws, labour performed by the worker under the contract begins, and continues to be strictly voluntary and consensual throughout the employment relation. 

How do you see the impact of the new regulation in terms of extending protection to foreign workers in the UAE?

The new decrees extend further protection in a number of ways.

To begin with, ensuring the transparency of the contracting process shields the worker from the risk of accepting an employment offer without being fully informed of and consenting to its terms and conditions, on the one hand, and from the unscrupulous practice of contract substitution, on the other.

Ascertaining the contractual foundation of a labour relation and monitoring the relation on this basis ensures that, at any given time during the relation, it shall take the consent of both parties to continue the relation, but the decision of only one of the parties to terminate it; this mitigates against involuntary labour when the worker concludes.

Of course, there remain checks and balances in terms of what measures must be taken by the terminating party in order for the termination to be lawful, but the key point here is that a labour relation, any labour relation can be ended at any time.

Finally, more flexible mobility rules empower workers in the sense that a worker who accumulate skills and competencies on the job can aspire to transition into a more suitable employment opportunity either when the term of the contract expires or during the course of the contract term if certain conditions are met.

We believe that mobility is, in fact, empowering to both workers and employers. 

There are as you know some concerns raised by some international organisations with regard to labour market conditions in the UAE. Will the new decrees address those concerns?

Let me answer your question by first pointing out that what motivates us in our pursuit of a more rational, more equitable and more stable labour market is our commitment to our Constitution, to enforcing of our own laws and to meeting our obligations under international law.

Article (20) of the UAE Constitution stipulates that we “formulate labour legislation that upholds the rights of workers and the interests of employers by emulating advanced legislation elsewhere in the world”.

Article (40) of our Constitution goes on to assert that foreign nationals residing in the Union “shall enjoy the rights and freedoms that are contained in the applicable international instruments or in treaties and conventions that the Union is party to”.

Therefore, we strive to improve our labour conditions out of our own convictions and in fulfilment of our obligations under our own Constitution, in the first place.

This is why, when international organisations express concerns about labour conditions in the UAE, we can neither ignore them nor dismiss them. We are compelled, by our own Constitution, to listen to criticism, when such criticism is constructive, and be prepared to act when it points to factual gaps in our legal and regulatory systems.

I trust that these new decrees, together with the hard work ahead of us to improve our implementation and enforcement capacities, will translate into a qualitative leap in our quest to improve labour conditions in the UAE. 

When will these decrees enter into effect?

We elected to apply the provisions of these decrees starting on January 1 next year. This will give us time to update our systems and processes to align them with the requirements of the new decrees, on one hand, and time to raise the awareness of stakeholders about the decrees’ contents and implementation modalities.

I have instructed the relevant ministry departments to prepare and implement a wide ranging communication campaign to reach out to the various stakeholders, including briefings to employers, educational seminars for workers together with the distribution of information kits in several languages. 

In what way do you think these new decrees will help UAE attract talented, skilled workers and contribute to fulfilling Vision 2021?

Our mandate at MoL is to contribute to the realisation of that part of Vision 2021 that aspires to a national economy that is “competitive and knowledge-based”.

The new decrees contribute to realising this vision in by enhancing the stability and competitiveness of our labour market as a result of more stable and productive labour relations, by attracting skilled workers with the promise of balanced labour relations that allow them to develop and excel, and by leveraging more flexible mobility rules to gradually change the skill mix in our market and empower our businesses to access an expanded pool of skilled workers. 

Will there be consultations with governments of countries of origin aimed at cooperating in raising workers’ awareness about their rights and obligations?

Experience has taught us that unilateral policy initiatives in either country of origin or country of destination often fall short of realising their objectives unless there is a common interest and, therefore, willingness to cooperate in their implementation.

Reigning in labour recruitment malpractices, thus reducing if not eliminating costs borne by workers, is a case in point.

Likewise, implementing these new decrees requires close collaboration in many respects. For instance, a more efficient regulation of the contracting process requires that we align our respective systems of contract validation in a manner that serves congruent interests of both parties. Moreover, we will need to coordinate pre-departure and post-arrival awareness programs in order to make certain workers learn, in sufficient detail their rights and obligations.

Such cooperation is already in place in the context of the Abu Dhabi Dialogue consultative process. One of the programs being developed is an integrated worker orientation programme that can be administered in all member countries of origin to workers preparing to deploy to any GCC country.

We are also keen to work with one or more country of origin to align our respective contract validation and registration systems to ensure transparency, recognising that this will contribute immensely to the success of the worker’s employment cycle from that point forward.