Emirates ID card must for bank loans, other service

Central Bank circular to make ID card mandatory document for all transactions

The Emirates Identity Card could soon be one of the must-have documents when applying for a loan or to get other bank services and facilities as well.

According to a report in Emarat Al Youm, citing, a UAE Central Bank circular, all banks and finance companies and houses operating in the country are to request the Emiartes ID of a customer applying for banking facilities.

The report says the circular, issued by Saeed Al Hamiz, Assistant Governor, UAE Central Bank, specifies loans will not be granted without the national identity card.

The newspaper adds that the circular was issued at the request of Obaid Humaid Al Tayer, Minister of State for Financial Affairs and Chairman of the Federal Credit Bureau.

A central bank official who asked not to be named said that under this circular individuals will not be able to get any loans or financing without providing the national ID card.

The official clarified that the customer’s passport is no longer sufficient to accomplish bank transactions.

The Emirates Identity Authority (Eida) has tied up with a local bank to experiment the use of ID cards in banking transactions.

According to a report in the Arabic daily ‘Emarat Al Youm’, the authority helped a client open an account with a local bank.

The transaction was quicker by at least 20 minutes, said Dr Ali Mohammed Al Khouri, General-Director, Eida.

The bank staff was able to quickly download all necessary client information from his ID card, thereby saving time. The process is also safer and more accurate, he added.

It is now up to the UAE Central Bank and individual banks to decide how to use ID cards to enhance their services, he said.

Dr Al Khouri said ID cards could also be used to deposit and withdraw money in future.

At present, Eida is also in the process of linking up with all government institutions.

Free zone firms need DED licence to operate in Dubai

Alternatively they can open branches in compliance with Law No. 13 of 2011

No free zone company across the UAE can conduct business within Dubai unless it has a Department of Economic Development (DED) licence or opens a branch in Dubai in accordance with the conditions stated in Law No. 13 of 2011 on business registration and licensing in the Emirate, DED restated on Monday.

Issued by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, the Law No.13 of 2011 is meant to enable Free Zone companies to open branches in Dubai while maintaining their presence in the Free Zone.
“Under no circumstances can a free zone company in Dubai operate outside its jurisdiction unless it has a branch licensed by DED. The same applies to companies in any free zone in the UAE. Alternatively, such companies may appoint an intermediary to sell their products or services in Dubai, but the intermediary should have a DED licence,” said Mohammed Shael Al Saadi, Chief Executive Officer of Business Registration & Licensing (BRL) Sector, DED.
Al Saadi issued the clarification after reports in certain online media and subsequent enquiries on a Free Zone company in another emirate claiming to be a “virtual free zone” providing cheaper means of enabling “international entrepreneurs operate their businesses from a home or office anywhere in the UAE”.
“Recently, we have been receiving complaints from various Free Zone companies, most of them operating outside Dubai, that their licensors had promised they can do business in Dubai under the free zone license. We have clarified to them that there is an established route to doing business in Dubai,” Al Saadi stated.
“Through Law No.13 of 2011, Dubai has acknowledged the role of Free Zone companies in economic activity in the UAE and the leadership wants to allow such companies to contribute further to overall development. DED’s role is to enable businesses that choose Dubai as their base to benefit from a competitive environment and best practices.”
A free zone company can operate a branch in Dubai as long as it is active within the free zone but any termination of the Free Zone activity will reflect in the Dubai license as well.
The Law No. 13 also allows free zone companies that have no local partners to open branches in Dubai, provided such branch has a local service agent on board. A local service agent is a UAE national or UAE company who will sponsor employees for the Dubai branch of a free zone company at the Ministry of Labour. The local service agent will have no rights of voting or decision-making in the company.

Two-month amnesty to illegal residents

A two-month amnesty has been granted to illegal residents, allowing them to leave the country without penalty or regularise their visas, a senior official said on Tuesday.

 Major General Nasser Awadi Al Menhali, Assistant Undersecretary for Naturalisation, Residency and Ports Affairs, told a news conference: “Illegal residents who overstayed their visas can visit residency departments across the UAE to obtain outpasses and leave the country without penalties, or regularise their visas, after payment of fines between December 4 and February 3.”

Al Menhali stressed the amnesty, approved by the Cabinet of Ministers in April, covers only those who overstayed their visit or resident visas, but not infiltrators, who he said will be treated like criminals.

He encouraged illegal residents to come forward and take advantage of the amnesty as soon as possible and not to wait for the deadline or miss it, “because there will be no extension or exception whatsoever of the amnesty scheme”.

Major General Al Menhali added a resident who overstayed his or her visa can come forward with their passports and air tickets to obtain an outpass, get their fines waived, and leave the country.

 Passports withheld by residency department in absconding cases, will be handed over to their holders, he said.

He said those who wish to regularise their visas have to pay all fines accumulated as a result of their overstay of their visas, warning illegal residents who fail to make use of this amnesty that from February 4 they will face the full force of the law.

 “This is the fourth amnesty scheme and we are hopeful, illegal residents who did not avail of the previous schemes will do so this time.”

 As many as 342,000 illegal immigrants took advantage of the last amnesty declared in 2007.

Official statistics showed that 341,958 illegal residents availed of the amnesty by either legalising their stay or by leaving the country.

While 95,000 illegal workers legalised their status, nearly 175,000 left the country.
Around 300,000 illegal immigrants left the country under the second amnesty which ran between January and April, 2002.

In 1996, about 200,000 illegal residents left the country under a six-month long amnesty.

The move to allow passage to illegal foreigners stuck in the UAE for violation of various immigration rules and regulations is meant to clear the country of thousands of them but Major General Al Menhali declined to say how many illegals were expected to make use of this amnesty or the statistics of those already arrested since the last amnesty.

Major General Al Menhali said that illegal foreigners arrested are also granted this amnesty and allowed to leave the country as long as they do not have any pending cases.

“Illegal foreigners will be issued outpasses after any pending cases or dues are settled,” Major General Al Menhali said.

Al Menhali said residency departments across the country will be organising several awareness campaigns and press briefings to educate the public about the amnesty and the need for illegal residents to take advantage of this gesture.

For any information about the amnesty, people can call toll free telephone number 8005111. It will be a 24/7 service in Arabic and English. (Gulf News Daily)

Ministry warns employers who force workers to sign settlements

The Ministry of Labour will not issue new work permits to companies if there are cases pending against owners who force workers to sign documents stating they received all financial dues.

According to an ‘Al Khaleej’ report, the ministry will also not allow such owners to open new facilities. However, it will renew labour cards that already exist.

The move aims to ensure the rights of labourers and help them abide by work contracts signed.

The ministry has called on workers to file complaints about employers who force them to sign on financial-receipt documents.

[Proof of final settlement mandatory…read more]

However, the complaints must be filed within 12 months of the documents being signed. Once they receive a complaint, ministry officials will study the case, hear out the employers’ version and initiate appropriate legal action only if an amicable settlement is not found.

The Ministry stated that labour cards can be cancelled only if the employer submits documents to prove that all financial dues have been setlled with the respective employee.

All dues even if employee dies outside UAE

If UAE employees happen to die outside the country, then their families are entitled to receive financial dues including gratuity, according to the Ministry of Labour.

In the weekly session, while addressing labour issues, Khalil Khouri, Director of Work Permits, Labour Ministry, said: “If any person were to die outside the UAE, while being legally employed in the country, the financial dues of the deceased as per the employment contract should be handed over to the family.”

“Similarly, the labour card of the deceased will be cancelled once the death certificate – duly attested by both the embassy of the country where the person died as well as the Ministry of Foreign Affairs – is presented.

Alternatively, the labour card will be automatically cancelled after six months as per labour laws,” Khouri was quoted by ‘Al Khaleej’ newspaper.

Answering a labour transfer query, Khouri said employees can be transferred to another facility, if the company they were working for is closed. But in  such cases, the ministry should be notified of the closure of the company within two months. Following which, the Inspection Department will study the complaint and, if need be, punishment procedures would be initiated against the owner.

End-of-service benefits… time to set up a gratuity fund in UAE

A legal expert has suggested that the UAE should set up a Gratuity Fund to meet the end-of-service benefits requirements in the country.

He also suggested that gratuity payments should be based on gross pay or at least a set minimum percentage of total remuneration (such as 75 per cent).

Shoeb Saher, Senior Associate with Habib Al Mulla & Company, said there are a number of things that need to be considered by the UAE lawmakers to address areas in which the current Labour Law may not be in keeping with the increasingly sophisticated demands of both employers and employees.

He recommended that employers should be obliged by law to keep gratuity funds in a separate account that is independently administrated for the benefit of the employees. Payments into this fund should be made by the employer annually (similar to pension schemes available in other jurisdictions). These funds could be invested in government-backed securities or fixed deposit accounts with local banks, both low-risk options with immediate and ongoing benefits for the local economy.

“There are a number of benefits in making such changes to the law,” says Saher. “If the calculation of end-of-service gratuity was more clearly defined in the labour law, this would create more certainty amongst both employers and employees. It would also reduce the amount of litigation in this area, reducing the judicial workload for routine matters.”

If separate gratuity funds were established, this money would be protected in the event that the employer runs into financial difficulty or becomes insolvent. The financial sector in the UAE would also receive a boost due to the extra liquidity generated by such funds, Saher pointed out.

Areas of concern

The law expert said there are concerns about the current legislation governing the payment of termination gratuity. He listed them as follows: In cases where the employer is in financial difficulties i.e. they become insolvent, the chances of the employee ever recovering their end-of-service gratuity are limited leaving them with little or no recourse even within the judicial system as there are no funds to make this payment.

The current laws might arguably incentivise employers financially to find ways to terminate an employee for a specific cause and without notice under Article 120 of the Labour Law. Termination under Article 120 bars an employee from claiming any gratuity payment.

Employees with low income do not have the financial means to fight a court case in instances where an employer fails to fulfill its end of service gratuity obligations.

It remains common practice for UAE companies to deliberately allocate an artificially modest basic salary to employees and increase the total salary with additional benefits such as travel and housing, etc., as gratuity is based solely on the basic salary.

Saher pointed out that according to recent reports the combined liabilities of companies in the UAE for end-of-service benefits currently amount to more than Dh14.6 billion.

These figures are believed to be growing rapidly as employees stay in their jobs longer in the wake of the global financial crisis and because gratuities are paid on the basis of an employee’s final salary and salaries have generally been on the rise.

“As the UAE continues to progress towards global standards in many areas, it is very important to ensure that laws governing employment are adequate to handle the increasing sophistication of the economy and the UAE business environment, especially if the UAE wishes to continue to attract and retain foreign inward investment and some of the world’s best talent,” the law expert added.

Gratuity explained

As the name implies, end-of-service gratuity is an amount of money that every employee is entitled to receive, and every employer is liable to pay, upon termination of an employment relationship in the UAE, provided that the employee meets the conditions set out in the Labour Law (UAE Federal Law No. 8 of 1980). End-of-service gratuity forms part of the benefits an employee is entitled to upon termination of their employment contract.

Under the Labour Law employees in the UAE are entitled to the following benefits upon termination:  A notice period or payment due in lieu of the notice period where the contract for an unlimited period;

Payments equivalent to accrued but unutilised leave or any part thereof;

Payments for overtime or any wages due and not yet paid;

End of service gratuity calculated on duration of employment;

Where the contract of employment is for an unlimited period, compensation for unreasonable dismissal if the contract was terminated by the employer for unreasonable cause (generally to a maximum of three months);

Where the contract is limited,  compensation equivalent to the period until the end of the contract, or three month’s salary whichever is less; and

Repatriation expenses to the employee’s country of domicile as per the Labour Law or as stipulated in the contract.

Calculation of gratuity

End of service gratuity is a sum of money payable by an employer to an employee where the employee has completed one or more years in continuous service. Gratuity is calculated as follows:

21 day’s wages for each year of service for the first five years 30 day’s wages for each additional year beyond 5 years on the condition that the total gratuity shall not exceed the aggregate of two years’ wages.

Gratuity is calculated on an annual basis if the employee has completed at least one year of continuous employment with the employer. A day of absence from work without pay shall not be included in calculating the length of service. However, if an employee has completed one year and more in continuous service they are entitled to gratuity as a percentage of the year proportional to the duration of their service.

So for example, if an employee has worked for one year and three months they are entitled to end of service gratuity calculated on the period of 15 months. If they have not worked for the minimum period of one year, they are not entitled to end of service gratuity.

Gratuity is calculated on the basic wage last paid to the employee prior to termination of the employment contract and this wage is the basis for calculating the gratuity for each year of employment.

Determination of basic wage

The Labour Law stipulates that basic wage means anything received by the employee as a wage excluding housing, transport, travel allowances, overtime, family allowances, entertainment allowances or any other allowances or bonuses. According to a recent judgment in the UAE courts, any amount payable to an employee which is classed as their wage (other than allowances or bonuses), and for these purposes wage includes, amounts paid as a percentage, commission or performance-based pay, and therefore are taken into consideration for the calculation of gratuity.

Reduced gratuity

Reduced gratuity payments are calculated in accordance with the employee’s length of continued service in instances where the employee resigns.

An employee with a contract for an unlimited period who resigns after continuous service of no less than a year but no more than three years is entitled to one third of the gratuity provided above.  If the period of continuous service is more than three years but less than five they are entitled to two thirds of the gratuity. If continuous service is more than five years, the employee is entitled to the full gratuity payment.

Forfeiture of gratuity

The employee may be deprived of gratuity under the following circumstances:

They were dismissed for one of the reasons stated in Article 120 of the Labour Law or left work to avoid dismissal

They are employed under a contract for a specified limited period and resigned of their own free will before the end of the contract (only applicable where continuous services is less than five years)

They are employed under a contract of unlimited period and left the job voluntarily without notice, in cases other than those provided for in Article 121 of the Labour Law.

Note: This article is intended for general information only and should not be considered as legal advice.

What are the leave and holiday entitlements for UAE employees?

Full-time employees working in the UAE are entitled to leave and holidays as per laws in the country, which broadly include annual or recreation leave, sick and maternity leave. However, the structure of holidays and the range differ for public and the private sector as well as those working in the DIFC.

‘Emirates24|7’  spoke with Alexander McGeoch, Head/Employment & General legal services, at Hadef & Partners and Sara Khoja, Partner at Clyde & Co, specialising in employment and labour laws to find out what kind of leave are employees in the country entitled to.

The Hadef & Partner’s expert concentrates on private and public sector, whereas, the legal expert from Clyde & Co, covers UAE Federal Law No.8 of 1980, as amended (UAE Labour Law). (Broadly speaking, this law is applicable to employees who work ‘onshore’ in the UAE and in free zones other than the Dubai International Financial Centre (DIFC).

She states Dubai International Financial Centre Employment Law (No.4 of 2005) (the DIFC Employment Law) is applicable to individuals who are employed by companies in the DIFC.

Annual leave

McGeoch: For the private sector there is no annual leave accrual during probation, which can last for up to a maximum of six months.

Hence, during the probationary period the employee will not be entitled to any leave. Thereafter, for the first year of service annual leave accrues (with retrospective effect from the start date of employment) at the rate of two days per month. If the employee is thinking of leaving within the first 12 months of service, it is more sensible for them to ‘hold on’ until they are into their second year of service. The reason is that, as from the beginning of the second year of continuous employment, annual leave entitlement increases retrospectively (i.e. to the service commencement date) from 2 days per month to 30 calendar days per year, which works out at 2.5 days of leave per year.

If work circumstances so require (for example an important project has to be completed by a certain deadline), an employee can postpone annual leave to the following year or take cash payment in lieu of annual leave. However, accumulated annual leave cannot be carried over beyond the end of the second successive year.

So far as the public sector is concerned, senior officials are entitled to an annual leave allowance of 30 working days, which amounts to around 6 weeks. However, ordinary civil servants are only entitled to 22 working days.

Khoja: UAE Labour Law states 30 calendar days a year. If the employee’s period of service is more than six months and less than one year, the employee is entitled to annual leave of not less than two days for every calendar month of service. If the employee’s period of service exceeds one year, the entitlement is 30 calendar days’ annual leave.

DIFC Employment Law provides a minimum of 20 working days of annual leave, employees with at least 3 months of continuous service accrue pro-rata.

Sick leave

McGeoch: Employees in the private sector, who have completed probation plus a further six months of continuous service with the same employer, are entitled to an initial sick leave allowance of 15 days on full pay, which may be used altogether at one time or a few days at a time at intervals throughout the year. Once the employee has used up the first 15 days of sick leave on full pay, they are entitled to a further 30 days leave of absence on grounds of sickness on half pay.

Finally, if the employee still has not recovered form his (or her) illness after 45 days off work, the employee is permitted a further 45 days of sick leave without pay. There are two further important point to note: (1) any employee who is away from work for more than a day as a result of illness must produce a doctor’s certificate verifying the employee’s reasons for absence on medical grounds and (2) no employee can be terminated while on sick leave.

As regards public sector employees, the rules are somewhat complex.

Essentially, public servants are entitled, subject to an approved medical report from the Official medical Department, to a basic sick leave allowance of 15 working days per year, which (in contrast to the private sector rule) may only be taken in periods of 5 days at a time.

However, in cases of a persistent or chronic medical condition or the need for long-term treatment, an employee may apply for an extended sick leave of up to six months, which will be granted if authorised by the Civil Service Medical Committee, on the basis of an assessment conducted by the Committee itself. Thereafter, the six month period of sick leave can be extended for a further six months, on the same basis. Under applicable rules, civil servants are entitled to full pay while on sick leave.

Khoja: UAE Labour Law provides 90 calendar days’ sick leave; 15 days at full pay, 30 days at half pay and 45 days without pay.

DIFC Employment Law provides for employees to receive 90 days of paid sick leave.

Maternity leave

McGeoch: The private sector maternity leave allowance is 45 days on full pay, subject to a minimum period of continuous service of one year. Maternity leave may be taken during the entire period of confinement (that is to say, partly before and partly after delivery).

Thereafter the leave can, with the support of appropriate medical reports, be extended for a period of up to 100 consecutive or non-consecutive days without pay, if the mother is not in a fit enough condition to return to work, or to work continuously, for reasons connected with the birth.

The public sector initial maternity leave allowance is 60 days with full pay initially and with a further allowance of 100 days of unremunerated leave thereafter.

There is no paternity leave allowance for private sector employees.

However, public sector employees, who become fathers, are entitled to three consecutive working days of paternity leave.

Khoja: UAE Labour Law states female employees are entitled to 45 calendar days’ maternity leave with full pay provided they have served a minimum of one year’s continuous employment.  Employees who have served less than one year of continuous employment are entitled to 45 calendar days’ leave at half pay. In addition, female employees are entitled to a maximum of 100 (consecutive or non-consecutive) calendar days of unpaid leave if they are unable to return to work as a result of a pregnancy or childbirth related illness which has been certified by the relevant competent health authority.

DIFC Employment Law provides for female employees to receive 3 months of maternity leave provided that they have served a year’s continuous employment by the eighth week before the expected week of childbirth.

Pay during maternity leave is 45 days at full pay and 45 days at half pay.

Adoption leave

Khoja: As per UAE Labour Law there is no entitlement to adoption leave.

DIFC Employment Law provides that a female employee adopting a child younger than three months is entitled to the same leave as maternity leave.

Mourning leave

McGeoch: There is no concept of mourning leave under private sector rules, although, in practice, as a matter of convention and good manners, many companies do in fact grant their employees a few days of paid leave in the event of the death of a close relative.

In the case of civil servants, there is an allowance of five days mourning leave (on full pay) where the death of the employee’s father, mother, son daughter or wife occurs and three days if the event of the death of a more remote relative (grandmother, grandfather etc.) or of a brother or sister.

On the death of her husband, a Muslim woman, who is employed in the public sector, is entitled to a special mourning leave (ida’) of four months and 10 days on full pay. There is no such leave entitlement for married Muslim women employed in the private sector.

Hajj leave/special leave

McGeoch: Under Labour Law provisions, all Muslim employees in the private sector are entitled to 30 days of unpaid leave, once during their period of service, in order to perform the Hajj (pilgrimage).

For public sector employees, there is a Hajj leave allowance of just

15 days. However, in this case the leave is fully paid and will be granted twice during the employee’s civil servicer career, subject to a 10 year gap between the occasions on which Hajj leave is applied for.

Khoja: UAE Labour Law provides Hajj leave, which is unpaid leave for

30 days available once during the employment for a Muslim employee to perform Hajj.

As per DIFC Employment law, every Muslim employee is entitled to take up to 30 days of special leave, without pay, in order to perform Hajj.

Educational and exceptional leave

McGeoch: For the public sector there are other categories of leave such as ‘educational leave’ and ‘exceptional leave’. A civil servant who wishes to pursue a full-time course of study may be granted formal leave of absence (i.e. ‘educational leave’) by his or her Ministry or other government department.

Similarly, public sector employees may be granted ‘exceptional leave’ in order (for example) to represent the UAE at some international sporting event or participate in a government sponsored cultural exchange or to attend an international festival as an official UAE delegate. In both these cases, the employee is entitled to his or her full remuneration. There are no corresponding leave entitlements available under statute for private sector employees.

Box item

Information provided by Sara Khoja, Partner at Clyde & Co Employees of the public sector are subject to different leave entitlements depending on the particular government authority they work for and the Emirate in which they work. Different rules can apply to civil servants in different emirates.

Some of the types of leave applicable to employees of the federal government, who are governed by Civil Service Law, Federal Law No. 21 of 2001, are as follows:

•Sick leave

•Maternity leave

•Emergency leave

•Study leave

•Special leave

•Unpaid special leave

•Periodical leave

•Nurture leave

•Bereavement leave

Muharram 1 declared holiday for private sector

The private sector will get a one-day holiday on Muharram 1 (Thursday 15, 2012) to mark the Islamic New Year, according to a circular issued by the Ministry of Labour.

The circular said that private institutions and companies will remain closed on Muharram 1 to observe the new Hijri year, as stipulated in article No.74 of Federal Law No.8 of 1980 on regulation of labour relations.

Under this article, employees and workers in private establishments are entitled to a one-day paid holiday to celebrate the new Hijri year.

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