March 5, 2022

P&O Ferries – In Light of the UAE’s Employment Legislation

P&O Ferries – in light of the UAE’s employment legislation. 

Sarah Malik and Saher Khan

March 2022

P&O Ferries, one of UK’s primary ferry companies, sparked outrage across the UK after firing 800 employees in order to replace them with cheaper agency workers. The employees were informed of their termination by way of a three-minute video, following which some employees showed their protest by refusing to leave their ships and had to be escorted off their ships.  

P&O stated that their reason for the mass termination was to save costs and considered it a necessary reason in order to keep the business afloat. However, it is being said P&O undertook this extreme action to exploit a loophole in the UK’s national minimum wage legislation, as this legislation does not apply to international waters. Following termination, trade unions in the UK have threatened legal action and suggested they were to bring unfair dismissal claims against P&O.

Looking at this in the prism of the current employment legislation in the UAE, namely the UAE Labour Law (Federal Decree Law No. 33 of 2021) (“Decree Law”), which is to be read in conjunction with the Executive Regulations issued pursuant to Cabinet Resolution No. 1 of 2022 (“Implementing Regulations”), employers are not permitted to lay off employees without valid reason and upon termination, all employees are entitled to their end of service dues. There is no existing concept of trade unions in the UAE, and these are not recognised under any existing legislation.

However, in the event a situation was to arise whereby an employer terminates a number of employees for reasons beyond what is stipulated under Article 42 of the Decree Law (unless such reason falls under Article 44 of the Decree Law), the employees can collectively bring a class action against the employer under Article 56 of the Decree Law and Article 32 of the Implementing Regulations. The valid reasons include mutual agreement by the parties to terminate the employment contract, expiry of the employment contract term unless renewed, if the employee dies or is permanently incapacitated, a prison sentence for the employee for over 3 months, closure of the business, if the employer declares insolvency, or failure of the employee to renew their work permit. 

Measures have been taken by the UAE to prevent class actions and protect the interest of employees. In the event employees are terminated due to closure of the company, where the employer has not undertaken the requisite procedures under the law for settling employees’ final entitlements, under Article 60 (4) of the Decree Law, the employer can face fines of not less than AED 50,000, and not more than AED 200,000.

Furthermore, Article 54(4) of the Decree Law states in the event of an employment dispute, the Minister may issue a decision imposing administrative measures on the employer to avoid the individual dispute turning into a collective labour dispute that could potentially harm the public interest. 

If there is a collective labour dispute and the parties fail to reach an amicable settlement, either party may file a complaint with the MOHRE, who may levy administrative measures on the company to ensure the existing collective dispute does not go against the public interest. If the collective labour dispute is not resolved, then based on the MOHRE’s recommendation, the Cabinet may form one or more committees known as the Collective Labour Disputes Committee to consider the dispute. The decision issued by the Committee will provide details about the formation, duties and procedure of the Committee, the process utilized for issuing and implementing the decision, and any other details regarding the workflow of the Committee. Any decision by the Committee will be final and sealed by the competent Court. 

This is supplemented by Article 32 of the Implementing Regulations, which sets out the controls and procedures for when a collective labour dispute is not settled amicably between an employer and employees. A complaint should be filed via the channels specified by the MOHRE which should state the claim type and amount. This complaint should be filed within two weeks from the date of dispute. MOHRE may contact the authorities to impose a seizure on the company to protect the employees’ rights. In the event the employees are successful in their claim against the employer, the MOHRE may liquidate the bank guarantee without the employer’s approval and may take any other action it warrants in order to settle the employees’ final entitlements. 

It is interesting to note the scenarios in which an employee’s employment may be terminated include the permanent closure of the employer, employer’s insolvency, and the failure of the employee to satisfy the requisite immigration requirements. This assists employers as a defence against collective labour disputes wherein they can show genuine reason for terminating their employees.

During the recent COVID-19 pandemic, a number of businesses were forced to shut shop temporarily or had to downscale production considerably. This resulted in mass reductions in employee salaries and employee lay-offs. 

Companies were forced to terminate a number of employees’, and this led to arbitrary dismissal claims in the Courts. The Courts took a sympathetic view of the employers but reiterated arbitrary dismissal will not be tolerated and employees and employers were encouraged to negotiated temporary reduction in salaries and unpaid leave. 

Given the recent rehaul in the employment law legislation in the UAE, much needed clarity has been provided in respect of class actions. Although trade unions do not exist and do not seem to be a concept that would be introduced in the UAE in the near future, recognising class actions against employers is a welcome step towards security and fair entitlements of employees. 

This publication is not intended to offer legal advice and is solely for informational purposes.