ADGM issues new employment regulations

Changes at the financial free zone include overtime compensation, reduced sick pay and a repatriation flight ticket allowance

Abu Dhabi Global Markets. A $5bn bond issuance finalised on Wednesday was 4.8 times' oversubscribed. Alamy

Abu Dhabi Global Market, the financial free zone that opened for business in 2015, issued new employment regulations on Monday as it looks to align more employee entitlements with onshore allowances.

Among the changes are the introduction of overtime compensation and a repatriation flight ticket allowance, however, there was a reduction in sick pay. The free zone also shortened the required minimum termination notice period and introduced protective provisions for youth between 15 and 18 years old. The new measures follow a public consultation undertaken earlier this year.

“ADGM has been listening to employers and employees and working closely with stakeholders as well as market experts to improve the ADGM’s employment framework,” Dhaher bin Dhaher Al Mheiri, chief executive of the ADGM Registration Authority, said in a statement.

“The new changes, together with the existing world-class legislative and regulatory framework, is part of ADGM's ongoing commitment to international best practices, and will support ADGM entities to attract and retain the best talent available."

ADGM's updates to the 2015 regulations and 2016 compensation limits rules come as Dubai International Financial Centre revamped its employment law in June. DIFC added five days of paternity leave (which ADGM already offered its employees in 2015) to its rules, as well as reduced sick pay and greater protection for employees’ gratuity payment.

ADGM’s new overtime provisions for employees who work more than an average of 48 hours over a seven-day period stipulate that compensation can be either monetary or by time in lieu, or a combination of both, as decided by the employer. If it is monetary, compensation is in addition to the daily wage and payable at a rate of 25 per cent of the hourly rate. For overtime between 9pm and 4am, the rate goes up to 50 per cent.

The caveat is that “employees in managerial or supervisory positions, as well as those in positions where it is reasonably expected within that industry internationally that overtime compensation is not payable, are exempted from overtime compensation”, according to the Employment Regulations 2019.

Although sick leave remains the same at a “maximum of 60 business days in aggregate in any 12-month period”, sick pay is now full pay for the first 10 days, half pay for the next 20 and unpaid for the remaining 30. DIFC made the same change in its employment law.

ADGM said it reduced sick leave and introduced a repatriation ticket allowance to align “certain employees’ entitlements with those onshore”. The 2019 update requires an employer to provide an employee with a one-way repatriation flight to the employee’s country of origin on termination. However, this does not apply if the employee obtains alternative employment or visa sponsorship in the UAE within 30 days or has been “dismissed for cause”.

The notice period to terminate employment used to be seven days for those employed for one to three months, 30 days after a three-month to five-year period and 90 days for employees working for the company for at least five years. The new update has removed the 90-day minimum period.

ADGM said this will “allow more flexibility in negotiating notice periods”. The regulations state that an employer or employee can still agree to a longer period of notice, waive notice or accept a payment in lieu of notice.

The 2015 regulations set the minimum employment age at 15, while the update has included protective provisions for youth aged between 15 and 18 years old. The 2019 update states: “An employer shall take all appropriate measures to ensure that conditions for the youth’s employment are safe, reasonable and appropriate for their age and well-being.”

The new regulations are set to come into effect on January 1.