Navigating the ADGM’s Employment Law Amendments: Key Considerations

The Abu Dhabi Global Market (“ADGM”) has recently proposedamendments to its Employment Regulations 2019 (the “Proposed Amendments”),to update its legal framework in line with international best practices.

In July 2024, the ADGM Registration Authority issued ConsultationPaper No. 6 of 2024 outlining the Proposed Amendments, but has not yet enactedsuch Proposed Amendments to date. If enacted, these changes could havesignificant implications for firms operating within the ADGM, particularlythose with cross-border employees and compliance-driven operations.

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KeyAmendments and Their Implications

The Proposed Amendments to ADGM Employment Regulations touch on several critical areas, highlighted below, specifically for firms that rely on flexible employment arrangements, such as remote working and short-term contracts.

Probationary Period Changes: TheProposed Amendments clarify employee rights during probation, including the introduction of one (1) paid sick day per month, and the right to annual leave, if agreed by the employer. While this provides employees with greater protections, employers need to manage these entitlements carefully to avoid operational disruptions.

Repatriation Flight Provision: The ProposedAmendments explicitly require employers to provide repatriation flights upon termination, unless the employee is terminated for cause or joins another UAE-based employer. This could create financial challenges for firms that frequently hire international employees. Ensuring that employment contracts account for such scenarios is essential to avoid future disputes.

Remote Employees and Cross-Border Work:With many firms adopting hybrid or remote work models, the Proposed Amendments introduced three (3) categories of remote employees – those in the UAE, but working outside ADGM, those residing outside the UAE, and fully remote employees. As a result, employers must clearly highlight where disputes will be settled and the applicable legal framework in their employment contracts.

Compliance and Risk Management

Certain areas of the Proposed Amendments emphasis on compliance; for instance, employers are now required to retain copies of their employees' passports as part of their employment records. While this is a minor amendment, it paves the way for additional data protection responsibilities, particularly concerning sensitive personal data.

Therefore, employers must review their record-keeping procedures to ensure compliance, as failure to meet these new requirements could expose them to unnecessary legal risks.

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StrategicEmployment Contracts

Another key area for firms to consider is the structure of employment contracts. The Proposed Amendments require that all employment contracts explicitly state that they are governed by ADGM laws and subject to the ADGM Courts. Consequently, for firms with international staff or those frequently engaging consultants or contractors, updating contracts to reflect the jurisdictional implications of ADGM law is a proactive step toward minimising legal risks.

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Preparing for Change While Balancing Employee Rights and Employer Obligations

The Proposed Amendments aim to strike a balance between enhancing employee rights and protecting employers. Firms operating in ADGM must navigate these changes carefully, ensuring that their compliance frameworks are robust while maintaining operational flexibility.

By proactively addressing these amendments—updating employment contracts, reviewing compliance frameworks, and ensuring proper risk management strategies— firms can continue to operate smoothly while adhering to the highest standards of legal and regulatory compliance.

Our firm is available to assist in navigating these changes, should you require further information, do not hesitate to contact us.

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