Impacts of the Middle East crisis on employment

The ongoing Middle East crisis has created significant operational, legal, and human challenges for employers in the United Arab Emirates. In response, UAE employers are increasingly adopting flexible workforce strategies while ensuring compliance with the country’s legal framework, particularly Federal Decree-Law No. 33 of 2021 on Labour Relations (UAE Labour Law).

In this article we examine the options available to employers under UAE law and some of the trends we are seeing.

Remote Working 

Remote work has emerged as a key strategy during the crisis. UAE labour law explicitly recognises flexible work models, including remote and part-time arrangements. Employers are leveraging these provisions to maintain productivity while accommodating employees affected by travel disruptions or safety concerns. Where remote work is feasible, employees are generally entitled to continue receiving their salaries.

Many employers have implemented work from home arrangements where possible.  While employees are working in the UAE, this is not problematic. However, there are circumstances where employees have been unable to return to the UAE due to travel restrictions, or have indeed elected to work abroad due to safety and security concerns.  In the latter case, employers need to be mindful of creating a “permanent establishment” in countries where they have no licensed presence which could result in tax liabilities for the employer.  Employees also need to be mindful of implications to their personal tax residence and social security.  Depending on how long the employee is abroad, this can give rise to unforeseen employment rights and obligations.  All of these factors need to be considered before allowing an employee to work remotely from another country.

Salary reductions

Some employers have implemented or are considering salary deductions in order to save costs and carry the business through this difficult time.  Under the UAE Labour Law employers cannot unilaterally impose salary reductions. Any pay cut requires the employee's explicit written consent and a formal contract amendment must be registered with the Ministry of Human Resources and Emiratisation (MoHRE). Unconsented reductions are illegal and can be reported.  It is our experience that in unprecedented times such as these, employees are generally willing to agree a salary reduction for a specified period of time in order to ensure their continued employment and the continued operation of the business of the employer.  This needs to be documented and reported appropriately in order to avoid future claims or issues.

Redundancy

Should an employer find itself in the unfortunate position of having to close its doors during this time, redundancy is recognized as a legitimate reason for contract termination, provided it is not used as a pretext for unfair dismissal. Employers must follow legal procedures, including providing a minimum of 30 days' notice, paying all accrued benefits, and filing for official cancellation of the labour contract with MOHRE within seven working days.

Employees who have subscribed to the mandatory Involuntary Loss of Employment insurance can claim up to 60% of their basic salary for up to three months after being made redundant.

Work place Safety

UAE law imposes a strict duty of care on employers to provide a safe and healthy working environment. During periods of geopolitical instability, this obligation extends beyond the physical workplace to include risk assessments related to security threats, emergency preparedness, and employee wellbeing. Employers should consider business continuity plans, increased security measures, and mental health support services to address anxiety and uncertainty among staff.

In conclusion, UAE employers are balancing legal compliance with practical flexibility in response to the Middle East crisis. By leveraging the provisions of the UAE Labour Law, businesses are striving to maintain business continuity while safeguarding employee rights. 

Our UAE based employment team would be pleased to discuss your unique position and explore possible strategies and outcomes with you.