As the UAE scraps its no-objection letter for skilled employees moving jobs, Mark Atkinson examines the labour liberalisation movement in the region. By Mark Atkinson, February 2011
The no objection letter (NOC)has perhaps been the most poignant legacy in the labour law – and in the opinion of many, the one in most urgent need of reform. In a recent decision by the UAE government, employees with a minimum high school certificate qualification will be able to move jobs without a NOC from their current employer. Unskilled and semi-skilled workers are still subject to the NOC rule.

This new law is one in a series of initiatives towards labour reform. A number of new work permit categories have been introduced, including temporary permits for those on  short-term contacts, permits for part time workers and those on their spouse’s sponsorship.

Regarding this latest law, if an employee has served the full length of contract without breach, they will, in theory, not be liable to a ban. Labour contracts themselves have been reduced from three to two years. However, Samir Kantaria, partner and head of employment, Al Tamimi & Company, a UAE law firm, says the Ministry of Labour (MOL) is likely to come up with a new resolution in the next few weeks, detailing exact circumstances.

“Certainly there were inconsistencies in the previous law,” says Kantaria. “Certain categories could avoid a ban by paying Dhs5,000, plus if an employee complained to the MOL, the ban could be lifted anyway. Being employed in a free zone has been another way of avoiding a labour ban. Hence with the new law, a lot will depend on the conditions the MOL imposes.”

The new law has led to an outcry from many employers, concerned that they are disadvantaged against their labour force. There is, however, the counterargument that, apart from leaving employees at the mercy of unscrupulous employers, restricting labour movement is a sure-fire way to stranglehold the spread of knowledge.

“This new law has to be good for the economy,” says Mike Hynes, managing partner at UAE recruitment firm Kershaw Leonard. “If people are in a job because they’re scared to move, they can’t be motivated. Sooner or later there has to be equality across the labour force – wage parity across different nationalities for example.

“Let’s not underestimate that lifting the NOC law is a substantial step in the right direction. The next thing that needs to be addressed is centralising sponsorship through government – not through companies.”

The UAE is not alone in its labour reform efforts. Kuwait has called for an end to the sponsorship system. Saudi Arabia is also said to be considering moving sponsorship from the hands of employers to one centralised entity. Yet, so far, Bahrain has been the only GCC country to have moved to what it describes as its ‘freedom of transfer’ law.

Enacted in August 2009, expatriate workers in Bahrain can move freely without incurring a ban. The difference is that there are no exceptions – unskilled workers are also included. Neither do employees need to see out their existing contracts, although they are required to inform their employers in writing within an agreed period  of notice.

According to Bahrain’s Labour Market Regulatory Authority, the initiative has been successful. In only two per cent of cases, he alleges, have employers objected to a transfer. Certainly Bahrain appears to have propelled a momentum for change that now seems unstoppable. It remains to be seen how things will develop in the UAE.