Business integrity in the time of pandemic: what can businesses in the UAE do to protect their people and business?

April 26, 2020

During these uniquely challenging times, businesses are poised to react to sudden changes in the market. As businesses navigate through new waters, it is best to seek guidance from the authorities and methodically deal with issues that arise. The Ministry of Human Resources & Emiratization (MOHRE) has issued Ministerial Resolution No. (279) of 2020 on Employment Stability in Private Sector during the Application of Precautionary Measures to Curb the Spread of Novel Coronavirus (the “Resolution 279”). Resolution 279 came into effect on 26 March 2020, its date of issuance, and shall remain effective during the period of application of precautionary measures to curb the spread of COVID-19. It seeks to promote employment stability and to protect the interests of both employers and non-national workers. Article 2 of the Resolution 279 provides that establishments affected by the precautionary measures and wishing to reorganize shall progressively proceed, in agreement with the non-national employees, as follows: Implement remote working system; Grant paid leave; Grant unpaid leave; Temporary salary deduction during the referenced period; Permanent salary deduction Questions about the progressive application of the above-listed actions have arisen. Being a recent issuance, interpretations may vary. However, the overarching requirement in the implementation of any of these actions is mutual agreement or consent. The first two actions on the list are not controversial. MOHRE Ministerial Resolution No. (281) of 2020 Regulating the Remote Work in Private Establishments during the Period of Application of Precautionary Measures to Curb the Spread of Novel Coronavirus with the annexed Temporary Guide has been issued on 29 March 2020. Article 76 of Federal Law No. (8) of 1980 or the UAE Labour Law already gives the right to employers to fix the date of annual leave. For the last three actions, businesses must be careful not to overstep the protected rights of employees by faithfully complying with requirements set by the authorities. It cannot be overemphasized that consent from employees must be given knowingly and voluntarily. For the temporary salary deduction, MOHRE has provided a template for a temporary supplement to the employment contract. Such a temporary supplement to an employment contract shall be effective for the agreed effectivity period or for as long as Resolution 279 is in effect, whichever is earlier. Also, employers must provide the employee with an executed copy of the temporary supplement and must provide a copy to MOHRE when requested. For permanent salary deduction, employment contract details may be amended with MOHRE’s approval. The procedures are in the process of being updated, but if the existing data modification service for employers will apply, the minimum condition requires that the establishment status is private, the establishment license is valid and updated, and the original e-signature card of an authorized partner/owner is available. The establishment number, number of work card, the details of change in salary, allowances, and conditions, employee’s valid passport and residence visa, photo of the employee, and copy of the old contract should also be kept on hand. We will be monitoring updates on the procedures. Article 3 of Resolution 279 recognizes surplus in non-national workers or redundancy brought about by the implementation […]

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Focus: Commercial Property: Does the current pandemic give rise to claims for the non-payment of commercial rent?

April 5, 2020

The impact of the Coronavirus has been felt across all sectors, and on a global scale.  Life has been interrupted on a social and economic level.  The virus’s reinfection rate has given cause to governments and world leaders to make fast decisions on how to deal with the pandemic to avoid further contamination and spread of the disease. This has had a knock-on and profound impact on commercial businesses that rely on consumer trade. The United Arab Emirates has taken extensive measures on both a sociological and economic level. Precautionary measures to protect society include the closing of all restaurants, coffee shops and outlets providing food and drink, as well as other shops and commercial centers. Such decisions may seem extreme, however, were necessary to protect the health and safety of residents. Naturally, by forcing businesses to cease trade, business owners may find themselves still liable for rent payments, but without the necessary revenue generated from commercial activity. The solution The solution lies in the provisions of articles contained in the Civil Transactions Law of the United Arab Emirates which confirms that the rental entitlement is linked to the payment of the benefit from the leased property. Whereas, Article 750 of the same law stipulates that “the rent shall be due upon the enjoyment of use being derived, or when it becomes capable of being derived”. Furthermore, Article 781 stipulates that “the complete loss of enjoyment of the leased property shall release the lessee from paying the rent as of the occurrence of such loss.” Additionally, Article 782 stipulates that “where the full enjoyment of the leased property is prevented due to an act of the competent authorities, without cause attributed to the lessee, the lease shall be rescinded, and the rent forfeited as of the date of such prevention”. Such articles furnish tenants with rights to revoke, reduce and even not pay rent, for the duration of which commercial activities have been prevented. Therefore, where authorities have issued a temporary suspension of commercial activities across the UAE, the role of the judiciary (in the event of disputes between the lessors and tenants), is to balance the revocation or reduction or non-payment of the rent during that temporary period. Whereof, the decisions issued are temporary in nature, we find that judges may more likely allow for tenants to pay a reduced rent or zero rent during the commercial suspension period. It is less likely they will allow the revocation of lease contracts in its entirety. In conclusion, in light of the impact the coronavirus is having across all businesses, we recommend that landlords/lessors take into consideration the exceptional circumstances businesses find themselves in, and refrain from making stringent rent demands. This will safeguard the lessee – lessor relationship and such good-will would not only avoid unnecessary conflict and potential losses but will contribute to generating stronger relationships between landlord and tenant with a long-term view. Should you have any inquiries related to force majeure or the impact of COVID19 on your commercial leases, please get in touch with Wael Deyab on +971 4321 1000 or by email at wael.deyab@alsuwaidi.ae

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