Hannah Gutang, Author at LexisNexis Middle East

Lexis Middle East HR Alert – January 2025 Edition

25/02/202524/03/2025
by Hannah Gutang

Welcome to the January 2025 edition of Lexis Middle East HR Alert, your essential resource for navigating the evolving legal and business landscape impacting HR in the Middle East. As the region progresses and aligns with global standards, HR professionals, legal experts, and business leaders must stay updated on the changes and trends affecting the workforce.

This issue highlights significant amendments to Saudi and UAE labour laws, emphasising enhanced worker protection and strict compliance measures. In Saudi Arabia, updates to Cabinet Decision No. 219/1426 clarify the roles of the Ministry of Human Resources and Social Development and the Ministry of Interior in enforcing labour law penalties, with increased fines for unauthorised employment ranging from 200,000 to 500,000 Riyals. The UAE’s Federal Decree-Law No. 9/2024 introduces amendments aimed at improving employer compliance, notably imposing fines of up to one million AED for employing workers fictitiously, with potential multiplication based on the number of workers involved.

Additionally, Oman has implemented a new scheme requiring monthly employer contributions to the Social Insurance Organisation, ensuring expatriate employees receive their end-of-service gratuity dues more efficiently.

Stay informed with our in-depth analysis of these changes and their implications for HR practices in the region.

Happy reading!

This edition features a diverse range of content, including:

Feature: New Rules and Bigger Penalties

The amendments to Articles 54 and 60 of the UAE Labour Law, introduced by Federal Decree-Law No. 9/2024, may appear minor but are expected to have a substantial impact, as explained by Sara Khoja, Ben Brown, and Sarit Thomas from Clyde & Co.

Trend Setter: Succession Planning

Ali Al Assaad from Dentons examines how the new Dubai Executive Council Decision No. 81/2024 is positioning the Dubai government as a leader in effective succession planning practices.

News Round-up: Covering Recent Key Developments – Region-Wide

Stay informed on the latest regional updates, including changes to residency visa laws announced by the Federal Authority for Identity, Citizenship, Customs and Port Security UAE, which now allow working mothers to sponsor their children’s residency if the family head violates residency laws.

Immigration Focus

Enhance your understanding of the evolving immigration and visa regulations across the Gulf Cooperation Council (GCC) countries, with a focus on the United Arab Emirates’ visa extensions for GCC residents and dependents of GCC nationals.

Immigration Focus: Nationalisation in Qatar

Antoine Salloum from Vialto Partners discusses the recent updates to Qatar’s nationalisation policies.

Law Changes: New and Proposed MENA Laws

Mohsin Khan and Hayat Rafique from Al Tamimi explore significant changes to the Saudi Labour Law and anticipate further details in upcoming Executive Regulations.

Case Focus: DIFC Case No. 044/2021 on 1 October 2024

Highlighted by Hamdan Al Shamsi Lawyers & Legal Consultants, this case addresses racial discrimination and is the first to consider victimisation since the DIFC employment law was strengthened in this area.

Enrich your understanding of the HR landscape and stay up-to-date with the latest trends, cases, and policies through the newest issue of Lexis Middle East – HR Alert.

For all the latest industry updates and developments, opt for a free HR Alert subscription!

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Lexis Middle East HR Alert_January 2025

Have you read the Lexis® Middle East HR Alert – previous 2024 editions? Click the links below to access and read these editions.

Lexis Middle East HR Alert_January 2024

Lexis Middle East HR Alert_May 2024

Lexis Middle East HR Alert_July 2024

Lexis Middle East HR Alert_October 2024

HR Profile: HR Leadership in Law

Vera Vadakkumpatt, HR Manager at Stephenson Harwood LLP, shares insights on promoting employee wellbeing, diversity, and organisational growth.

In-House Profile: Practitioner Perspective

Dhana Pillai from Cygal Attorneys discusses the UAE’s pioneering requirements for female representation on the boards of all public and private Joint Stock Companies.

Policy Pointers: Anti-discrimination

Rachel Mannam, Associate at Hamdan Al Shamsi Lawyers, provides expertise on the UAE’s Federal Decree-Law No. 34/2023, enacted in September 2023, which criminalises all forms of discrimination, hate speech, and blasphemy, although it does not specifically address workplace discrimination in the private sector.

Moves and Changes

Keep up with the latest business developments, major appointments, and promotions throughout the region to stay current with the influential figures in the market.

News developments

UAE: MoHRE Unveils New Guidelines for Optional Saving System for Employees

25/02/202525/02/2025
by Hannah Gutang

Gulf News, 24 February 2025: The Ministry of Human Resources and Emiratisation (MOHRE) has introduced an innovative optional savings system designed to replace the traditional end-of-service gratuity.

This system empowers employees to enhance their financial well-being by growing their savings through premier investment opportunities, thereby increasing the attractiveness of the UAE labour market.

The initiative, which includes the approval of four investment funds, aims to bolster employee financial security, attract global talent, and stimulate investment activity within the UAE.

Employers begin the registration process by selecting an approved investment fund and signing a subscription agreement.

They then appoint an administrative services intermediary to manage the necessary administrative tasks.

The intermediary is responsible for enrolling employees in the system and opening individual savings accounts.

Employers contribute both basic and any additional voluntary monthly savings, while employees have the option to make lump-sum contributions.

Upon termination of employment, the disbursement of employee savings is straightforward.

Employers notify MOHRE, and employees can choose to either receive their entitlements or continue investing in the system.

Employees also have the option to withdraw their funds, subject to the system’s payout periods, and for voluntary contributions, they may opt for partial or full withdrawal through the administrative intermediary.

Operating on a defined contribution basis, the system ensures that monthly contributions made by the employer are disbursed to the employee at the end of their service.

This initiative not only strengthens the UAE’s economic framework but also provides employees with the opportunity to grow their retirement savings through investment returns.

Skilled workers, in particular, can benefit from higher payouts by selecting high-yield investment options.

The system is accessible to private sector employers, free zone entities, and specific groups such as self-employed individuals, freelancers, non-citizen government employees, and UAE nationals working in both the public and private sectors.

Employers are required to calculate monthly contributions based on an employee’s continuous service period, starting from the date of employment rather than the registration date in the savings system.

Voluntary contributions are capped at 25% of an employee’s total salary.

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News developments

UAE: Announces Cabinet Decision on Introduction of Top-Up tax for Multinational Enterprises

13/02/202513/02/2025
by Hannah Gutang

The Finance Ministry has introduced Cabinet Decision No. 142/2024, detailing the new Top-up Tax for Multinational Enterprises, specifically the UAE Domestic Minimum Top-up Tax (UAE DMTT).

This follows a previous announcement made on 9 December 2024.

The UAE DMTT aligns with the GloBE Model Rules from the Organisation for Economic Co-operation and Development (OECD).

It targets entities within Multinational Enterprises (MNEs) operating in the UAE, with annual global revenues of €750 million or more, as reflected in the Consolidated Financial Statements of the Ultimate Parent Entity for at least two of the four financial years preceding the applicable financial year.

The tax offers relief through a Substance-based Income Exclusion, which reduces the net Pillar Two income subject to the UAE DMTT.

This is calculated based on payroll and the carrying value of tangible assets to determine Excess Profit for tax computation.

In line with the GloBE Model Rules, the UAE DMTT includes a de minimis exclusion, allowing an entity’s UAE DMTT to be zero if specific criteria are met.

To enhance the UAE’s appeal as an investment hub, Investment Entities, as defined by these rules, are excluded from the UAE DMTT.

As a transitional measure to foster economic growth, the UAE DMTT will not be applied during the initial phase of an MNE Group’s international activity, provided no ownership interests in UAE entities are held by a parent entity subject to a Qualified Income Inclusion Rule in another jurisdiction.

The UAE DMTT should be interpreted according to the OECD’s Commentary and Administrative Guidance.

Cabinet Decision No. 142/2024 can be accessed on the UAE Legislation’s website: www.uaelegislation.gov.ae/en.

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News developments

Saudi Arabia: Government Entities Exempted From Fines on Violations

13/02/202513/02/2025
by Hannah Gutang

Agraam, 8 February 2025: A royal decree has been issued in Saudi Arabia, exempting government entities from penalties and fines associated with violations of municipal licensing regulations.

These entities are required to address and rectify the violations within one year from the date of the decree.

The decree also authorises the Municipalities and Housing Minister to extend the exemption period for an additional year.

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News developments

Qatar: Central Bank Introduces Real Estate Development Escrow Account Guidelines

13/02/202513/02/2025
by Hannah Gutang

The Peninsula, 10 February 2025: Qatar Central Bank (QCB), in collaboration with the Real Estate Regulatory Authority – Aqarat, has announced new guidelines for the creation and management of real estate development escrow accounts.

This initiative is part of QCB’s ongoing efforts to regulate banks’ interactions with escrow accounts specifically for real estate development, ensuring a structured and supervised approach.

The guidelines aim to streamline the operation of escrow accounts, facilitate necessary approvals, and manage off-plan sales effectively.

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News developments

Oman: Shura Council Approves Draft Telecommunications and IT Regulatory Law

13/02/202513/02/2025
by Hannah Gutang

Oman Observer, 10 February 2025: The Majlis Ash’shura has given its approval to the draft telecommunications and information technology regulatory law, which was submitted by the government.

This draft law, comprising 10 chapters and 56 articles, is designed to regulate the telecommunications sector and its related services.

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News developments

Kuwait: Tightens Money Transfer Regulations to Combat Financial Crimes

13/02/202513/02/2025
by Hannah Gutang

Arab Times, 10 February 2025: Kuwait has recently implemented stricter regulations on money transfers, raising concerns for individuals and companies involved in regular financial transactions.

Those who frequently assist friends with money transfers or act as intermediaries for businesses with employees abroad may find their transactions under increased scrutiny.

The Central Bank of Kuwait is enforcing more rigorous measures to verify the actual beneficiaries of financial transfers, even for amounts under 50 dinars.

This scrutiny applies to recurring transactions, requiring individuals to justify the reasons for their transfers, regardless of their relationship with the exchange company.

These regulatory changes aim to strengthen efforts against money laundering and terrorist financing, aligning with the Financial Action Task Force (FATF) guidelines.

The new rules enhance the Central Bank’s oversight, ensuring that financial transfers comply with FATF standards.

Exchange companies must verify customer information and beneficiary data throughout the transaction process, keeping this information updated and confirming its validity.

Due diligence measures include assessing the effectiveness of automated systems that monitor and prevent illicit activities.

Customer and transaction records must be retained for at least five years after a transaction, with data accuracy verified for transactions exceeding 3,000 dinars in one day.

Exchange companies are also required to report suspicious transactions potentially linked to crime or terrorism financing.

The Central Bank emphasises the importance of effective procedures for reporting suspicious activities.

In cases of suspected illicit transactions, thorough investigations and documentation are required, identifying all parties involved and exploring any potential connections to money laundering or terrorism financing.

To ensure compliance, exchange companies must implement customer due diligence measures based on assessed risk levels.

This includes reviewing customer files and transactions, with additional scrutiny for high-risk customers.

Furthermore, exchange companies must engage an audit office, preferably linked to an international entity, to evaluate compliance with Kuwait Law No. 106/2013.

This audit focuses on unusual transactions lacking clear economic justification, with reports required semi-annually.

Ongoing due diligence requires exchange companies to implement an automated system to verify names against lists of individuals and entities subject to freezing orders, ensuring compliance with international sanctions related to terrorism and weapons proliferation.

Under the new framework, exchange companies are prohibited from providing financial services to individuals or entities listed in freezing decisions, reinforcing Kuwait’s commitment to global security efforts.

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News developments

Fujairah, UAE: 20% Salary Hike Announced for Government Employees

13/02/202513/02/2025
by Hannah Gutang

Khaleej Times, 6 February 2025: Fujairah has announced a 20% salary increase for government employees from 1 February 2025.

Furthermore, 72% of UAE nationals expect a salary increase in 2025.

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News developments

Dubai: Issues Law On Emblem

13/02/202513/02/2025
by Hannah Gutang

The Prime Minister of the UAE has enacted Dubai Law No. 1/2025, which governs the use of emblems associated with the Emirate and Government of Dubai.

This legislation establishes that Dubai will have a unique emblem symbolising its identity, heritage, values, principles, and vision.

The Law declares the Dubai Emblem as the property of the Emirate, while the Government Emblem belongs to the Government of Dubai.

Both are protected under this new Law and existing legislation.

The emblem described in Dubai Law No. 17/2023 is also protected, and unauthorised use is prohibited.

The Dubai emblem is restricted to specific locations, events, documents, and seals of entities authorised by the Chairman of Dubai’s Ruler’s Court.

Only Dubai Government departments, public agencies, corporations, government councils, authorities, and affiliated entities may use the emblem.

Any other use requires special permission from the Chairman or an authorised representative, complying with specified guidelines.

The emblems must be used according to a manual developed by the General Secretariat of The Executive Council and approved by the Chairman of The Executive Council of Dubai.

Unauthorised use of the emblem by individuals or entities, or for commercial purposes, advertising, or in a manner that distorts its value, is strictly prohibited.

Use in activities or events that contradict Dubai’s values or public order is also forbidden.

The Law mandates reporting of any violations to competent authorities, including the Department of Economy and Tourism in Dubai, authorities overseeing Special Development Zones and Free Zones, and relevant judicial bodies.

These entities are tasked with taking legal action against violators.

Penalties for prohibited acts include prison for up to five years, fines ranging from AED100,000 to AED500,000, or both, without affecting stricter penalties under other laws.

These penalties also apply to violations related to the emblem as per Dubai Law No. 17/2023.

Unauthorised users of the emblem must cease use and remove it within 30 days unless they obtain the necessary permission under the new Law.

Dubai Law No. 1/2025 supersedes Dubai Law No. 17/2023 and repeals conflicting provisions in other legislation.

It will be published in the Official Gazette and take effect upon publication.

The Chairman of The Executive Council of Dubai will issue resolutions for its implementation.

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News developments

Bahrain: MP Pushes For Law To Make Arabic Contracts Mandatory

13/02/202513/02/2025
by Hannah Gutang

The Daily Tribune, 7 February 2025: In Bahrain, the continued issuance of contracts in English, despite Arabic being the official language, has prompted a legislative push for change.

A member of parliament is advocating for a law that would mandate the use of Arabic in all contractual agreements.

This move aims to ensure that customers fully understand the terms they are agreeing to, as many currently sign documents they cannot read.

The proposed legislation would require companies to provide agreements in Arabic and supply official copies to clients.

This requirement aligns with Arabic’s status as the country’s official language, which should already dictate the language of legal documents.

Contracts written in English or other languages have led to numerous misunderstandings and court disputes, highlighting the need for clarity.

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