Employers must familiarise themselves with new ADGM regulations

It follows the new Employment Regulations Rulebook recently announced by the ADGM, which follows on from a consultation, which closed in August 2024, to which Pinsent Masons contributed. The new law is highly important for businesses operating in the ADGM, and employers should familiarise themselves with it before its implementation on 1 April.

It is clear that the objectives of the authority are to enhance employee protection, to reflect global changes in work practices and to clarify parts of the law that were previously more ambiguous.

Hiring employees and employment contracts

Employment contracts must continue to be in writing and provided to the employee within one month of employment commencing. However, the new law stipulates new criteria which must form part of the employment contract as a minimum – including stating whether the employee is a remote employee, which is an entirely new concept introduced by the regulations.

If an employer wants to make a change to an employment contract, it must be agreed in writing by both the employer and the employee, unless the change is administrative in nature only. If the change is administrative only, the employer must still provide written notice to the employee of the change.

The new law also goes into more detail around entitlements for part-time employees and expressly provides that part-time working is permitted.

Vicarious liability

The new law provides that an employer may be vicariously liable for the acts or omissions of employees which are done in the course of their employment.

In particular, employers may be held liable for any act, attempted act, or omission by an employee that breaches the regulations, provided it occurs in the course of their employment. The act must be sufficiently connected to the employee’s employment such that it would be “fair and just” to hold the employer vicariously liable. There is a wide discretion available to any judge as to what constitutes “fair and just”. The employer must be unable to show that they took all reasonable steps to prevent the employee from carrying out the act for liability to attach.

Employers will need to take preventative measures to mitigate risks and avoid potential liability for the actions of their employees.

Discrimination and victimisation

Employers are specifically liable for acts of discrimination, harassment or victimisation by their employees if they cannot demonstrate that they took all reasonable steps to prevent such conduct. Under the new law, remedies are now available to employees who experience discrimination in the workplace, including compensation of a maximum of three years’ salary.

Under the new regulations, the protected characteristic “sex” has been replaced with the word “gender” and “pregnancy and maternity” have been explicitly added, while the ground “colour” has been removed.

The concept of “victimisation” has been introduced. An employer victimises an employee if they subject the employee to a detriment, which could include their dismissal, because the employee has engaged in a “protected act”. A protected act is similarly defined in the new regulations as the definition in DIFC law, here being someone who either brings a claim alleging discrimination, harassment or victimisation in contravention of Part 9 of the new law; someone who gives evidence in support of such a claim; or someone who alleges to their employer that they have been discriminated against. Giving false evidence or making false allegations is not protected if done in bad faith.

Employees who are victimised can apply to the court for a declaration and compensation of up to three years’ salary.

Probationary period

The probationary period remains capped at six months. If the employee is employed on a fixed-term contract which is less than six months, the probation period cannot be longer than half the length of the term of the employment contract. The new law provides that employees can take sick leave but with no entitlement to sick pay during the probationary period.

There are wider circumstances under which the contract can be terminated during the probationary period.

Under the new regulations, employers must provide a terminated employee with a repatriation flight within 30 days of termination unless they are a remote employee who does not reside in and does not perform work in the UAE; they find another role in the UAE within 30 days; or they have been terminated for cause

Certain family and other rights continue to not apply during the probationary period.

Working hours and leave

Under the regulations, the maximum weekly working hours remain at 48 in a 7-day period.

The new law requires the employer to obtain the employee’s written consent to work overtime prior to that overtime being worked. As with the previous law, there are no provisions for payment of overtime, but ADGM may issue rules or guidance on this separately.

The reduction of working hours during Ramadan is now explicitly set at 25% for Muslim employees, while employees are entitled to five paid days of bereavement leave on the death of certain family members.

Employees can carry forward at least five days of leave into the next year for a period of 12 months.

Maternity leave remains at 65 working days, but the new law extends maternity rights to employees adopting children under the age of five years old and for those who give birth to a stillborn baby or suffer a miscarriage after the start of the 24^th week of pregnancy. Where working more than six hours in a day, mothers are entitled to at least one nursing break of not less than one hour in aggregate during the working day for the period of nine months after the child’s date of birth.

Termination

The notice period for termination remains seven days where the employee has been employed for less than three months, and 30 days where employed for 30 days or more. However, the definition of termination for cause has been amended slightly under the new law.

Employers now have 21 days to pay all dues to employees after termination of employment. The law operates similarly to the DIFC Employment Law in that a penalty will be payable if employers fail to do so. This penalty is only waivable in certain circumstances.

All employees, regardless of length of service, are now entitled to receive a written statement setting out the reason for termination of employment and the employer must provide it within 21 days of receipt of request. Additionally, all employees have the right to request a written reference from their employer and the employer must provide it within 21 days of receipt of request.

End of service and settlement agreements

The end of service gratuity calculation remains unchanged however the new law provides that the basic salary should be no less than 50% of total salary. End of service gratuity is is now payable in all cases where the employee has more than one year’s service. However, employees still have the option to participate in a pension or savings scheme as an alternative to gratuity.

Settlement agreements continue to need to be in writing; signed by both parties; only waiving claims or potential claims which arise out of facts which pre-date or exist at the date the agreement is signed; and valid consideration must be provided. However, employee must now confirm that they have had an opportunity to receive legal advice.

It is really important, particularly in light of the new fines and penalties, that employers remain compliant with the law and implement any necessary changes ahead of time so that they can avoid any potential claims in the labour courts and avoid the reputational impact of allegations of non-compliance.

Employers should review policies and procedures to ensure compliance with the new laws; update settlement agreements to record in there that the individual has had the opportunity to receive legal advice; and ensure that managers are properly trained in identifying behaviour that could be perceived as discriminatory or harassment and feel empowered to prevent this from happening. Preventative, rather than reactive, measures to harassment and discrimination is a major feature of the changes in the new laws and as such should be a priority for employers.