How to overcome the six-month labour ban in UAE

Employees who have been slapped with a six-month labour ban for breaking their contracts before the expiry of two years can work for a new company, provided they hold at least a high school diploma and have been offered a good position and salary by the new company, employers were told by the Ministry of Labour .

To lift the ban, an employee should have been offered a minimum salary of Dh5,000 for high school graduates, Dh7,000 for diploma holders and Dh12,000 for bachelor's degree holders.The salary must be mentioned in the labour contract.

No fee will be imposed for lifting the ban when these conditions are met, Ali Al Shehi, Senior Administrator at the ministry, said in a seminar held to inform employers about their rights and duties as well as recent ministerial decisions.

"We are still imposing the six-month labour ban on employees who quit their jobs before completing two years of service, but the ban can be lifted if the new employer offers the candidate a good position and an appropriate salary," he said.

The new employer needs to submit the employee's educational certificate, which does not need to be attested at this stage. It will be scanned and entered into the Tas'heel system, and a new labour permit will be issued accordingly.

Al Shehi told employers that as of January 2012, company categories will have a different scale when it comes to labour permit applications.

"When a new company is registered, it will be charged Dh1,500 for each of the first four work permits to be issued to the company, which corresponds with category B2," he said.

Afterwards, the company can move up or down categories B1, B2 or B3, or C depending on its activity, the number of employees it hires, their qualifications and diversification in the nationalities of workers.

Companies in B1 category pay Dh600 per work permit, while B2 companies pay Dh1,500 and B3 companies pay Dh2,000 for each permit.

Diversification

"This step aims to encourage diversification and hiring employees from various nationalities, so companies who hire workers from one nationality will not be upgraded, while those that hire from more nationalities will move up to categories B3, B2 and so on," Al Shehi said, adding that companies will also upgrade their categories by hiring skilled workers.

He advised people who want to start new companies to check their sponsor's record at the Department of Economic Development to ensure that their record is clear and they have no other companies facing problems, which will hinder their application.

"The sponsor of a company has to clear any outstanding dues or labour issues before he can sponsor another one, so we advise those who want to open a new business to look for a sponsor who has no other companies registered under his name," Al Shehi said.

Oqood Registration or Pre-registration law for Dubai Real Estate

Dubai's Land Department in conjunction with the Real Estate Regulatory Authority (Rera), introduced new online application 'Oqood' Law No. 13 of 2008 will enable the effective implementation of  for regulating the interim real estate register in Dubai.

This Law aims to create further consumer comfort and protection within the Dubai real estate market by introducing a mandatory system of pre-registration for “off-plan” sales contracts for real estate units at the Land Department. ‘Off-plan sales’ refers to the sale of real estate units based on an architectural plan of the property before the structure is built and the property finished

Under the new Law, any off-plan sales that are not registered will be invalid. Where the Land Department finds that any developer is not complying with the provisions of the new Law (or any other applicable law) it will prepare a case report and refer the case to the relevant authorities for investigation.

It appears that this pre-registration system will work alongside the existing project registration system established at RERA as a consequence of the introduction of the Escrow law. It also provides the basis for the implementation of some of the provisions of Dubai’s new mortgage law (Law no. 14 of 2008) and the ability to register a mortgage against an off-plan unit.

In relation to pre-registration fees, developers will continue to bear a cost per off-plan unit contract in the region of AED 370 when registering the site plan.  

Liquidated damages and procedure on default

If a buyer breaches an off-plan sale contract with a developer, under the new Law the onus will be on the developer to advise the Land Department of the breach.  The Department will then issue a notice to the buyer granting a 30 day grace period for the buyer to comply with its contractual obligations (or rectify its breach). If the breach is not rectified within the 30 day period, the developer may terminate the contract and return all amounts paid by the buyer except for 30% of monies paid, which the developer is entitled to retain. Note the reference is to retaining a percentage of monies paid by a buyer rather than percentage of the purchase price.

Variations to units

Developers are no longer entitled to claim additional money from a buyer where a unit turns out to be larger on completion than the measurement set out in the off-plan sale contract. However, where the unit turns out to be smaller, unless the difference is minor, the developer must compensate the purchaser for the difference.

What amounts to a ‘minor’ or ‘insignificant decrease’ is not defined in the new Law, although from our discussions with the Land Department we are anticipating a tolerance of somewhere between 3 and 5%. It is unclear whether it will be possible for developers to define such terms in off-plan sale contracts to protect themselves in case of any unforeseen variations in the completed development

The introduction of Law No. 13 of 2008 ("Law 13"), which came into force on 31 August 2008, aimed to create, amongst other measures, a mandatory system of pre-registration for off-plan sales contracts at the Land Department.  The purpose of this system was to give purchasers reassurance that a note of their interest would be recorded at the Land Department and, assuming all obligations under the contract were performed, that title to the property purchased would be transferred to them upon completion.  

Law 13 requires developers to register off-plan sale and purchase agreements on an Interim Real Estate Register maintained by the Land Department.  In practice a system known as "Oqood" is used to record such registrations.  Law 13 provides that sales or transfers will be void if not recorded on the Register.  Law 13 also required developers to register sale and purchase agreements entered into prior to Law 13 coming into force within a time limit of 60 days of the law coming into force.  

The provisions of Law 13 caused some confusion in the market.  For instance - what would happen if a sale and purchase agreement was registered outside the 60 day time limit? 

Article 3 of Law 13

Article 3 of Law 13 provides: 

The Interim Real Estate Register is used to record all disposals of Real Estate Units off plan.  Any sale or other disposition that transfers or restricts title or any ancillary rights shall be void if not recorded on that Register.

Any developer who made a sale or other disposition that transferred or restricted title prior to the coming into force of this Law should approach the Department to get it registered in the Real Estate Register or the Interim Real Estate Register, as applicable, within 60 days after the date on which this Law came into force.

At first glance, the provisions of Article 3 seem to be relatively clear.  Article 3(1) requires transactions to be recorded on the register, failing which they will be void. Article 3(2) states that transactions must be registered within 60 days of the law coming into force.  What is not clear, however, is what happens if a transaction is registered after the 60 day period.  While Article 3(1) provides that transactions will be void if they are not recorded on the register, it does not set out a time limit for registration. 

Six-hour a day work for private sector in UAE during Ramadan

The rule applies to all workers regardless of their religion, whether they are fasting or not.
"As per Article 65 from the Federal Labour Law, the working hours are reduced by two hours during the month of Ramadan to six hours (36 hours per week) from eight hours (48 hours per week). Based on this, the working hours for those working in commercial establishments, hotels and even security, are also reduced to six hours a day,"
However, a worker could be employed for more than six hours daily during Ramadan if the extra hours are considered as overtime and he or she is compensated for it by 25 per cent of the basic pay per hour during day, and 50 per cent during night, . Each company is allowed to organise its working hours to serve its best interests, but on the condition that workers are compensated for the overtime hours, which should not be more than two hours a day.
An official source at the Ministry of Labour, meanwhile, has said the company officials must place signboards or issue notices indicating the reduced working hours for all workers during Ramadan. Notices must be in all languages spoken by the employees or labourers at the particular establishment, and must be placed in such a way that they are visible to all staff.
He called on the workers to report the establishments to the ministry or labour offices across the emirates if they are forced to work for the regular working hours during the month.
He said the ministry would intensify inspections at the establishments during this period, and the violating firms would face penalties as per the labour law

Ramadan timings for public sector in UAE

DUBAI - Work at the UAE federal ministries and departments will be from 9am till 2pm during the holy month of Ramadan, the state news agency WAM said.

Meanwhile, the working hours of private sector companies will be reduced from eight to six hours during the Holy month of Ramadan, without affecting the salaries of employees, WAM reported.

Renowned UAE astronomer, Ebrahim al-Jarwan, has predicted that the holy month of Ramadan will start on August 1 and will last for 30 days.

According to the Sharjah-based astronomer, the Ramadan 'Hilal' (crescent moon) will rise on July 30.

"It will then take shape 21 hours and 23 minutes later. It will be difficult to sight the moon from the UAE, but Ramadan will start on August 1," Al Jarwan said.

"The dawn-to-dusk fasting month for Muslims, will last 30 days this year. This means Eid Al Fitr will be on August 31," he added.

During Ramadan, Muslims abstain from food, drink and sensual pleasures from sunrise to sunset and are required to focus on their relationship with god.

Non-competition clause in UAE Labour Law

A labour contract may contain a condition specifying that after the completion of the contract, the employee shall not work with a competitor of the employer. This is to protect the interests of the business of the employer.

The UAE Labour Law states that if the job allotted to the employee allows him to know the employer’s clients or to know the secrets of the job, the employer may stipulate that after the end of his contract, the employee shall not compete with him or share information in any competing project.

A non-competition agreement may be signed before or during the term of the employment, but as per the law, it will only come into effect on termination of the employment contract. The employers may include a clause in the labour contract or sign an additional agreement banning the employees from working for competitors for a certain period. In order to apply non-competition clause certain conditions have to be fulfilled. The employee has to be 21 years old or more at the time of signing the contract. The agreement shall be, as far as time, place and nature of work are concerned, limited to what is necessary to protect the legal interests of the employer. If the job assigned to the employee allows him to know the secrets and know-how of the employer’s business dealings, then the employer may impose non-competition clause.

In the event that the employee works in a company, where such secrecy nature does not apply then the non-competition clause cannot be used.

To impose a non-competition clause against an employee, the non-competition agreement signed between the parties is to be restricted as per the provisions mentioned in the UAE Civil Code and the Labour Law.

Such a stipulation shall not be valid unless it is clearly restricted to certain time, place and type of work, in a sufficiently determined manner so as to constitute a real protection of the legitimate employer’s interests.If the employer terminates the employee or the employee terminates the contract due to a reason that is ascribed to the employer’s fault, then the non-competition conditions shall not be applied against the employee.