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Managing your workforce in the GCC: a review of 2012 and a look forward into 2013
The past year has been an eventful one for employers in the Middle East with the introduction of new legislation and a number of developments in practice and procedure. This pace of change is set to continue in 2013, with an increasing focus on the employment of nationals and the implementation of best practice. In this bulletin we summarise the key developments of 2012 and consider the further developments employers can expect in 2013.
New Labour Law in the Kingdom of Bahrain
A new labour law for the private sector, Law No. 36 of 2012, Promulgating Labour Law for the Private Sector (the Labour Law) took effect on 1 September 2012, and replaced the previous law which was issued more than 36 years ago.
The new Labour Law contains a number of far reaching provisions, including:
Nitaqat: focus on Saudization
This system introduced in August 2011 has been further developed in 2012. The Kingdom of Saudi Arabia (KSA) Ministry of Labour credits the system with the creation of 250,000 jobs for KSA nationals (including 50,000 jobs for women). In 2012, Ministry of Labour regulations have provided for:
Clarification of the benefits of the premium and green category employers including the grant of new visas, ability to amend employees professional titles, and the ability to recruit from lower category employers without the requirement for a no objection certificate.
The award of greater points under Nitaqat for the employment of students and the disabled.
A minimum salary of SAR 3,000 for KSA national employees to be counted as part of the Nitaqat system.
A system called Hafiz whereby all roles must be advertised with the Human Resources Development Fund for KSA nationals to apply.
We will be examining the development of Nitaqat in more depth in a future bulletin.
DIFC: an amended DIFC Employment Law
Following public consultation in mid 2012, the DIFC Authority announced on 16 December 2012 that the draft amended employment law had been approved. The amended DIFC Employment Law became effective on 23 December 2012 and clarifies a number of key provisions, including:
Removing the requirement to issue an employee with a general summary of the employment law.
Replacing the requirement to issue a written statement of particulars with a requirement to issue a written employment contract.
Enabling an employee to carry forward 20 working days of accrued leave into the next leave year for a maximum period of 12 months following which the unused leave would expire.
Reducing paid sick leave entitlement from 90 days to 60 days; with the clarification that this entitlement is to 60 working days.
Clarification that maternity leave is to 65 working days; 33 on full pay and 32 days on half pay.
Clarification of the antidiscrimination provisions.
Clarification that end of service gratuity is based on an employees basic wage excluding all allowances, commission and bonus, with the daily rate being based on calendar days.
Clarification that an employee who is a GCC national is not entitled to an end of service gratuity payment but to enrolment with the applicable state pension scheme and appropriate employer contributions into this scheme.
Provision of specific statutory compensation for certain work place injuries.
Elimination of the role of Director of Employment Standards.
Employers in the DIFC will need to review their contracts/policies in accordance with these amendments with immediate effect, if you require assistance in reviewing or drafting employment contracts or would like to discuss any issues these amendments raise please contact the authors of this legal update.
Extension of the Wages Protection System (WPS) into Jebel Ali Free Zone
Until recently the WPS has been administered by the Ministry of Labour in coordination with the UAE Central Bank and as such only applied to employers registered with the Ministry of Labour. However, during the course of 2012 the Jebel Ali Free Zone Authority has required all employers registered with it and operating within its jurisdiction to apply the WPS in addition to the monthly submission of salary certificates signed by the employee confirming receipt of salary.
There were no material amendments to the laws and regulations governing immigration and employment in Qatar in 2012. In particular no amendments were made in relation to sponsorship transfer and/or the exit permits requirements for nonGCC residents. There is a general expectation that amendments will be put in place in the run up to 2022 when Qatar hosts the FIFA World cup, but if and when and the form these will take is uncertain.
The Qatar Financial Centre (QFC) issued new Employment Regulations in April 2012 replacing those which were previously issued in November 2011. Amendments to the Employment Regulations included, but were not limited to, the insertion of two new applicable public holidays for Qatar Financial Centre Authority (QFCA) and QFC Regulatory Authority (QFCRA) employees and the employees of entities licensed by the QFCA, being the National Sports Day and the Bank Holiday, and reference to the Civil and Commercial Court and the Regulatory Tribunal both established under the QFC Law.
2013: what to expect?
It is anticipated that the Ministry of Labour and free zone authorities (other than the DIFC) will increasingly coordinate practice and procedure with regard to labour matters. The UAE has for some time proposed a review of Law No 8 of 1980, the federal labour law for the private sector and following revised labour laws in Kuwait (in 2010), and Bahrain (in 2012), 2013 may be the year the UAE effects a revised labour law.
Across the GCC, especially in KSA, it is likely that legislation encouraging the employment of nationals will be further developed and linked to an employers ability to sponsor foreign nationals for work and residency purposes. Generally, a number of GCC countries (including Kuwait, Qatar and KSA) have expressed an intention to rationalise the sponsorship system in accordance with international best practice; one potential step being the sponsorship and registration of all foreign nationals through a central government authority.
If you would like further information on any issue raised in this update please contact Sara Khoja.