Comparing the UAE, DIFC, and USA Laws

Introduction:

We hear people everyday complaining about government, laws, and regulations because what concerns us the most as citizens and human being is our rights. We usually want to have good living conditions, salary, and job. Therefore, I conducted this research to compare the UAE, DIFC, and USA laws regarding three important issues: the minimum wage, the labor law, and employment discrimination. I will compare each matter separately for UAE, DIFC, and USA. I will give separate overview for each issue, as the following:

The minimum wage is the “lowest hourly rate an employer can pay an employee”, according to the business dictionary. The creation of minimum wages law was a way to control the excess of sweat shops, where a huge number of children and women were employed to work in a very bad environment with unfair paid rate. In a way, the minimum wage laws forced the sweatshop employers to pay the employees a fair rate. Now, the minimum wage law covers all low paid fields of work. This issue will be discussed in detail for each country/organization.

The Labor Law or Employment Law is the leading law that administrates the legal rights of employers and employees. It makes sure to present all the rights and restrictions that concerns organizations and workers at the same time. For instance, the labor law presents everything about the maternity leave, sick leaves, wages, probation laws, and a lot more.

Employment discrimination exists mostly everywhere. Countries may have some laws that prohibit any kind of discrimination, but most employers don’t follow these rules. You will see in this paper how employees are scared to report any kind of discrimination. That’s why no company was charged for such an act. Discrimination could be by preferring one nationality over another, one religion than another, or majority over minority groups. Add to that, employers usually differentiate wages between one employee and another, although they have the same skills and experiences.

Now, I will present each point/ issue in detail as the following:

The minimum wages in UAE:

UAE is one of the countries that don’t have a minimum wage until now, although many attempts were done to state a certain minimum wage. In 2008, The UAE ministry of labor Alex Zalami has said that, “there will not be a minimum wage in the larger sense; I don’t expect that in the immediate future there will be one”, according to Stewart (2008). In the near future, the minimum wages will not be instituted for the construction workers. In November 2006, The HRW report (New York based Human Rights Watch) had 11 recommendations to the UAE federal government, but none of them had been acted upon. Some of these 11 recommendations were:

The implementation of the minimum wages among the workers.

The placement of the domestic workers under the Ministry of labor instead of the Interior.

The creation of an independent fee to look into and report any situation of migrant workers.

The punishment of employers who violate the minimum wage laws (the labor laws).

Joy Stork, the deputy director of HRW, has stated that “when we were here two plus years ago we couldn’t find a single instance where there had been a serious enforcement – the kind that would actually penalize a violator and would send an actual message of deterrence”, according to Stewart (2008). The UAE should make a lot of changing regarding this matter, if they want to be removed from the observation of United Nations, said by Walid Hamdan –the International Labor organization representative.

In 2009, the Ministry of Labor, Dr Ali Bin Abdullah Al Ka’abi, has stated that the ministry will submit a recommendation to the Council of Ministry about preparing a framework or an outline to adopt the minimum wage laws soon. Dr Ali Bin Abdullah Al Ka’abi said that: “This will apply initially to the construction sector, in which many hundreds of thousands of people work, and will then be expanded to cover the entire workforce.” According to the Gulf News’s report (2009), the new labor law in the UAE will help in developing the minimum wage outline faster by requiring a proposal from the Ministry of Labor only, and then get the acceptance from the Prime Minister.

The minimum wage in DIFC:

The government of Dubai created the DIFC (Dubai International Financial Center) to benefit the UAE in general and the UAE market specifically. The DIFC offers investors standards and laws, where they guarantee efficiency, integrity and simplicity. DIFC usually offers its investors a great investment environment, such as: offering investors a 100% foreign ownership, and giving the dollar a dominant power in the area. (Silkenat, Aresty, and Klosek, 2009)

Although DIFC follow the UK laws that have a minimum wage rate, the DIFC didn’t follow the UK regarding this matter. Instead, it followed the UAE Labor law which doesn’t have any clear rule about minimum wages. The UAE and DIFC don’t care enough about the workers work conditions, they always care about the profit they get from employing workers by very low wages. They are using the Asian worker’s need for work and money to raise their Investment’s revenue during the years. The UAE in general won’t have this wonderful establishment, if it wasn’t for the Asian workers.

I believe that even if there are no clear laws in DIFC regarding the minimum wage matter, the DIFC should rearrange its priorities and follow the UK laws correctly.

The minimum wages in the U.S.:

While UAE doesn’t have a minimum wage, the US has a different story. In 1923, The Supreme Court has rejected all the requests regarding the establishment of federal minimum wages, so the lack of regulations has lead people to keep working in factories and sweatshops for a very low wages. Therefore, in 1936, The U.S President Franklin D. Roosevelt, who was trying to reelect himself, has campaigned to improve the wages of workers, so that he can solve the problem of the very low salaries. He won the election, and he established and registered the Fair Labor Standards Act- 1938 into law, which helped in developing the federal minimum wage of 25 cents per hour. (Wolski, 2010)

In July 24, 2009 the U.S. has set a federal minimum wage of 7.25 per hour for most American workers who are covered by the FLSA (Fair Labor Standards Act-1938). All the states have the right, by law, to set their own regulations, and their own minimum wage. Therefore, if the federal minimum wage is higher than the state rate or vice versa, then workers will be paid by the higher rate. (Longley, 2009)

The minimum wage law in the U.S. has to be followed by any company that earn a minimum of $500,000 in one year, and by any small company that produce goods for commerce, or work in interstate commerce; for example, the workers who work in communications, or transportation. Add to that, schools, hospitals, and all sorts of government agencies (federal, local, or state) are obligated to follow the minimum wage law. (Longley, 2009) However, the federal minimum wage may differ under certain conditions, such as: the younger workers, students, employees who get tips, overtime pay, and child labor situations. According to Longley (2009), younger workers under 20 years old may get paid around $4.25/hour if they worked 90 days uninterrupted. Also, Longley (2009), has stated regarding the overtime pay situation that: “The Federal law requires payment of at least 1- and -1/2 times your regular rate of pay for all hours worked over 40 in a workweek.”

The Labor laws in UAE:

Any employee works in UAE is subject to the UAE Labor law. The UAE has four main forms of Labor laws: the Federal Labor Law, the Jebel Ali Free Zone, the DIFC Free Zone, and the Dubai Technology and Media Free Zone. The Federal Labor Law has the most influential power, and is considered to be the leading Labor Law in UAE; while, the Free Zones set their own regulations depend on their requirements. The Federal labor Law should be applied to all the workers in UAE including the foreigners and nationals, that’s according to Article 3 of the Law. However, the law excludes few categories from following its Laws, such as:

The police and armed forces members.

The Agricultural workers.

The employees employed by the local or federal government.

The workers in local or federal projects.

Finally, domestic servants.

It’s interesting to know that Article 2 of the UAE labor law states that all employment records and documents should be written in Arabic. The Arabic language must be used in internal and external communications in any institution. Article 2, also, states that in most cases the Arabic text will win over the foreign language texts in case of contract uncertainty. (Klebanoff, & Khasawneh, 2008)

The Federal Labor Law contains many sections regarding different conditions or situations. Therefore, I will be focusing on the laws that cover the overtime, the probation, and the sick leave issues. According to Khan (2008):

Overtime: Article 68 of the UAE Labor Law states that, “Where the circumstances of the work require a worker to work overtime between 9 p.m. and 4 a.m. he shall be entitled in respect of such overtime to the remuneration stipulated for his normal hours of work, plus a supplement of at least 50 percent of the remuneration.”

Sick leave: Article 83 of the UAE Labor Law states that: “First, the worker shall not be entitled to any paid sick leave during the probation period. Second, If the worker completed more than three months after the probation period in the continuous service of the employer and falls ill, he shall be entitled to sick leave not exceeding 90 days whether continuous or otherwise, in respect of every year of service.”

Probation: Article 37 of the UAE Labor Law states that: “A worker may be engaged on probation for a period not exceeding six months, during which his services may be terminated by the employer without notice or severance pay, etc.”

Another interesting Labor regulation is that the UAE Labor Law doesn’t include any minimum wage, but the employee who earn less than 4000 AED a month, will not be able to provide a resident visa for his wife. Add to that, the UAE labor law stated that female employees have the right to take 45 days as maternity leave. They, also, should get paid the full salary during her maternity leave, if they worked in the company for minimum one year. In case of less employment duration, then they will be paid half of the salary during the maternity leave. (Kantatia, 2008)

The labor laws in DIFC:

The DIFC has introduced its own Labor law (employment law) No.4 in 2005. The reason behind this law was to ensure that their employees are getting the minimum conditions of work or employment. Both UAE labor law and the DIFC labor law have very similar laws; however, if we looked deep enough, we can see important and major differences. I will point out some of the different laws between the both as followed: (Kantatia, 2008)

Kantatia (2008) has stated regarding the probation issue that: “The DIFC Law does not specifically provide for a probation period and prescribes minimum notice provisions based on the length of service of an employee.” On the other hand, Kantatia (2008), also stated that the DIFC law allows the employee and an employer to decide whether to longer or shorter the notice period. This way, the law will allow the employer to settle in a longer probationary period, which will allow the employer to evaluate the employee’s position. The DIFC law gives the employers the flexibility to decide the time period which to do this evaluation.

Moreover, the DIFC Law is different when it comes to maternity leave. They give the female employee 90 days as maternity leave, where she gets full pay in the first 45 days, and half pay in the other 45 days. In case of not working in the company for 12 months or more continuously, the female employee will not get paid. As we can notice, the UAE Labor law state different regulations regarding this matter (as I have stated above). (Kantatia, 2008)

Additional matter that the DIFC Law has covered is the compensation in case of arbitrary dismissal. The law doesn’t require any compensation in case of arbitrary dismissal. However, according to Kantatia (2008), “the director of employment standards appointed under scope of the law, does have wide powers to award such compensation where he determines as employee has been unfairly dismissed.”

The labor laws in the U.S.:

The United States Labor Law consists of both federal and state laws. The federal law ignores most of the local and state laws that tries to control and regulate the worker’s rights; at the same time, it establishes all the necessary standards to protect workers’ rights. Moreover, the federal laws are not valid to the employees of the local and state governments, the local employees, or the agricultural workers; instead, they are valid to the federal government’s employees only. Although the federal law provides the workers with very limited rights, it created the overtime, and minimum wage rights for both the public and the privet sectors. On the other hand, the local and state laws offer wider rights.

Traditionally, the labor law in the U.S. has been regulated by the rule “at will employment” which means that either party of an employment relationship can terminate this relationship without any specific reason. This rule is still applied is the U.S. However, the new labor law had forbidden many discriminatory firings, such as the racial discriminatory firing.

The employment discrimination in UAE:

UAE is one of many countries that have a lot of employment discrimination. the most existed types of discrimination in the UAE are the racial and nationality discrimination, which affect the employee’s salary directly. According to Startford (2009), Dr. Zumfuli, a Human resources professor at Sharjah University, has stated that: “There is a lot of discrimination according to nationality and religion in the labor market, which affects the contribution of those who suffer from it. They feel dissatisfied and this reflects in their work and affects the lives of sometimes large families in the UAE and abroad.”

A recant case in Abu Dhabi 2009 has raised attention over employment discrimination in the UAE. It started when the Ministry of Labor has received few numbers of complaints regarding racial discrimination in work. However, most of these racism complaints can’t be proved by the employees. Even if the employees have a proof; they are mostly afraid to talk because of the risk of losing their jobs. What makes the problem worse is that employers in the private sectors are sure that their employees value their jobs a lot, therefore, they won’t issue a complain to the Ministry about any discrimination.

The Gulf News reporter presented this case which was a story of a Philippine worker (Maria), who waitresses in a hotel in Abu Dhabi. Maria said that she get much less money from her new Romanian colleagues, although she has much more years of experience. Maria gets 900 AED a month, while the new worker gets 1,300 AED. Maria believes that the hotel management gave her colleague much more money because of her white skin. She thinks that the hotel prefers a white girl to serve the clients rather than a dark skin girl. Maria couldn’t do anything about it because she was scared to lose her job; therefore, she preferred to keep quiet. (Startford, 2009)

One of cases that happened in the UAE in 1994 regarding the employment discrimination matter is the O’Loughlin v. Pritchard Corp. O’Loughlin’s was relocated from the U.S. to UAE, where he was working by visitor visa. He renewed his visas regularly; however, in the UAE Law, any foreign nationals should have a work visa and a visitor visa. Not only that, but also, UAE doesn’t issue a work visa for an employee over 60 years old. Therefore, Pritchard Corporation sent many requests to UAE government and ruling families to permit the work visa issuance. However, the UAE government refused every time and O’Loughin had to leave UAE, and return to the U.S. where he lost his job because the company couldn’t wait for him much longer. We can conclude from this example, that if the UAE was not discriminated against 60 years old workers, O’Loughin wouldn’t lose his job. (Campion, Roehling, & Posthuma, 2004)

Most of the time, we believe that the Ministry of labor is not and will not do anything about this employment discrimination, however, the Ministry’s legal researcher ( Umr Khouri) has stated the opposite to the Gulf news in 2009. According to him, “anyone found committing racial discrimination in the predominately UAE national-staffed public sector is immediately fired.” He encourages workers to be brave enough to issue complain about their employers, so that by time, the Ministry can eliminate all types of discrimination. (Startford, 2009)

The employment discrimination in DIFC:

Actually, the DIFC has a clear law for ‘Non-discrimination’ of any kind. The DIFC Law defined discrimination as a distinction of a person for his sex, religion, race, marital status, or disability upon other people, who have more advantages and opportunities.

The first DIFC law regarding discrimination: requires the employer to not refuse any employee because of his/her race, marital status, sex, physical disability, religion, and nationality. The DIFC law No. 4 (2005) states that: “an employer discriminates against a disabled person if the employer fails for make reasonable adjustments to any physical feature of the workplace or practices that would, of made, enable the disabled person to otherwise meet the bona fide occupational requirements.”

The employment discrimination in the U.S.:

The employment discrimination in the United States is not allowed by either the federal or the state laws. The U.S. federal law forbids discrimination in certain departments such as: job evaluations, and recruiting departments. Add to that, employers should not treat or employ the employees based on their nationality, race, age, religion, sex, disability, military service, and pregnancy.

The U.S. has three main employment discrimination statutes that are being used the most in claim discrimination: the Title VII of the Civil Rights Acts of 1964 (VII), the Age Discrimination in Employment Act of 1967 (ADEA), and the Americans with Disabilities Act of 1990 (ADA). For instance, the ADEA statute ban employers from discriminating employees based on their ages. Employees should not be discriminated because they turn in 40 years old or over. (Campion, Roehling, & Posthuma, 2004)

The U.S. code: Title 29, section 206 (d) includes that ‘prohibition of sex discrimination’ laws. Here, the employers should not discriminate or differently treat the opposite sex in any way. For example, the employer should not pay more wages amount for male workers with the same job duties as the female worker. They should get both equal treatment and equal payments especially if they both put the same level of skills, and responsibility.

‘Labor organization’ is any kind of organization or committee that represents the employee concerns. The main purpose of this organization is to help the employees deal with their employers, and to discuss their concerns regarding wages, hours of work, and employer treatment.

Conclusion:

To conclude, this paper presented most of the aspects of minimum wage, labor law, and employment discrimination. It included many examples and detailed explanation. Although I might not find a direct source for some laws, I was able to conclude from several facts the right conclusion. What we have to remember is that the UAE is still not applying a minimum wage law, and despite the fact that they have a law regarding employment discrimination, many employers still abuse their employees. Therefore, the right solution for UAE is to start implementing very strict laws regarding wages and to observe carefully the employment relationships.

Although the DIFC was created by Dubai government, it still has different laws than the UAE laws. However, they don’t have a minimum wage rate as similar to UAE. DIFC has a clear law regarding discrimination, and as we noticed in this paper, there were no clear cases against DIFC in this matter.

We concluded, also, that the U.S. has a minimum wage rate of $7.25 per hour, which is better that the UAE and DIFC. Having a minimum wage creates balanced living conditions, and an almost equal income distribution among society. Despite the strict laws regarding employment discrimination, we might find some hidden discrimination cases.