Saturday, April 30, 2005

Where current UAE labor law does not apply - Gulf News - SpecialReports
Employees in private sector establishments which are governed by the current labour law that was issued in 1980 say if such a generous work relations can be enforced in free zones and be good for both employees and employers, why not broaden the practice to cover the whole country?

As the UAE attracts international talent for its many diverse projects, employees are beginning to question the archaic rule of the six-month employment ban if you quit your job.
Long article: Read the whole thing.

UPDATE: Be sure to read the informative
comments (follow link and then scroll down) added by SecretDubai. SD gave the article a close reading, and adds valuable added information. Sign me "your mere theorist, JC."

One important point of clarification. The article states
The reasoning behind the ban was to protect the businessman or investor so that his workers would not steal secrets or clients and use them for the benefit of a competing company.
I disagree. The logic for the ban - other than as an inefficient barrier trade - is to protect businesses against opportunistic behavior by workers. In particular, the employer pays your move to the UAE so without the ban an employee could change jobs after arriving.

Of course there is no requirement that the employer pay the moving costs to begin with, although there may be good reason why they do (either employee liquidity constraints or that employees are averse to moving to region that is uncertain or only partly known to them).

Further, it is not so much specific knowledge of the company - its trade secrets - which makes an employee attractive to another employer in the UAE. It is the general local knowledge the employee picks up by working in UAE which makes them valuable. (As the article points out, in the developed world employers use private contracts to protect themselves against employees going to work for the competition. They rely upon the court system to enforce these contracts. Enforcement may not perfect, but private contracting appears preferable to one size fits all government regulation of labor relations.)

As long as employers are paying workers the value of their contribution to the output of the firm the employer will the same time be protecting itself against a raid on it employees. Because if pay matches contribution then the employee's wage rises as the value to the employer who brought her here rises as she gains general knowledge. The internal wage of the employee stays in line with her external market value.

See: general human capital.

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Blogger secretdubai said...

I am not sure this article is correct. As I understand it, in Internet City/Media City at least, the only way they fudge the Federal law is by acting as the sponsor of each employee in the zone. So while you have a nominated employer, DIC/Tecom is your sponsor. And they still require no-objection certificates when changing employers, even though technically it's not necessary, as you're not changing sponsors.

She said one way of ensuring your workers do not spill out your company secrets would be to put a clause in the contract, as is done in the United Kingdom, which stops you from working for the competition for a certain period of time.

Clauses like this have been struck down again and again in UK and European courts, as unfair restrictions on trade.

While the minimum basic salary in the free zones and outside is the same: Dh500 for labour, with accommodation and food; the working conditions are better.

Workers are also not crammed into their accommodation as they are in the labour camps outside, and they get paid on time. "Do you see any protest marches in the free zones?" asks one recruitment consultant.

This also is ludicrous. Firstly there are no manual labourers in the Free Zones, the lowest level would be lower clerical workers. And believe me, plenty of those are ten-to-a-room bachelors living in extremely basic (appalling by western standards) conditions.

Secondly, Jebel Ali excepted, there is hardly any accommodation in the free zones - everyone lives outside.

He said other safeguards for free zone workers is that the employees are asked to sign a receipt every month to show that they have received their salaries.

This is spot on - with two provisos. Firstly DIC's motivation is rent: if workers aren't paid, they know the company is in dire straights, and get ready to evict. Secondly, there is no such protection for freelancers and contractors. (Particularly those that are technically working illegally/moonlighting).

1:47 AM  
Blogger secretdubai said...

This also is ludicrous. Firstly there are no manual labourers in the Free Zones

Ooops - by this I meant DIC/DMC.

1:48 AM  
Blogger John B. Chilton said...

Brilliant comments. Much appreciated. -JC

10:38 AM  

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