Reece Leggett discusses employee files and why keeping information is important.  In brief this article addresses the following points:

  • the obligations employers have to keep employee records; and

  • additional information that should be kept on file, in case the employment relationship turns sour.

You may know the fable of the grasshopper and the ant - in the summertime the grasshopper plays and relaxes, while the ant works quietly away storing food for the winter. When winter comes, the grasshopper has nothing to eat while the ant has plenty of food stored away. The moral is a simple one: a little work now makes all the difference later on.

The same applies to keeping information about employees on file. If your business has five or more employees, you have legal obligations that must be met. Furthermore, by keeping additional information on the "employee file", you can save your business time and money at the end of the employment relationship, especially if there is disagreement.

Article 53 of the Federal Law No.8 of 1980, as amended ("UAE Labour Law") requires businesses employing five or more employees to keep an employee file. The employee file must contain the employee's name, trade or occupation, age, nationality, place of residence, marital status, date of recruitment, remuneration, any penalties imposed, any employment injuries, occupational diseases, and when the employee's employment is terminated, the date and reason for termination.

Additionally, the employer must prepare a "leave card" which should be kept in the employee file. This is divided into three parts corresponding to annual leave, sick leave, and other leave.

Article 54 of the UAE Labour Law requires businesses employing 15 or more employees to also maintain a remuneration register, a register of employment injuries and occupational diseases, and a list of basic work rules.

These are the essential legal obligations, the observance of which is mandatory. Let us consider what should also be kept on the employee file, ready to hand in the event an employee's contract needs to be terminated.

Where an employer terminates an employee's services on notice (under an unlimited term contract), the employer must be able to show that there is a valid reason for termination. If the court determines that the employee was arbitrarily dismissed, the employee is entitled to compensation not exceeding three months remuneration, that is to say basic salary plus allowances (see Articles 122 and 123 of UAE Labour Law).

If the termination is contested (i.e. on the basis that the termination was "arbitrary" or "without valid grounds") and proceeds to court, the burden is on the employer to rebut a claim for "arbitrary" dismissal.  For the employer to have a good prospect of successfully defending a claim, clear documentary evidence will be required. Keeping the following information on the employee file can make all the difference in creating the necessary "document trail" to justify dismissal.

Documented Performance Reviews

Performance reviews are a great opportunity for an employer to review and discuss an employee's job performance. Keeping a record of what was said is just as important. This is particularly so for any feedback obtained from the employee, or if it was agreed that the employee should take any particular steps towards improving performance.

If your business has no formal procedure for documenting performance reviews, a good start is to send an email to the employee after their review setting out everything that was covered and agreed (in terms of remedial steps). The employee should be required to confirm the accuracy of the email (by signature on a hardcopy or by return email) which is then placed on the employee file. If the employee fails to improve, this exchange of emails will stand as evidence of previous discussions and the employee's agreement that the record was a true and accurate reflection of what was covered in the review.

Accurate Leave/Absenteeism records

Article 120(f) of the UAE Labour Law states that an employer may terminate an employee without notice if the employee is absent from his work without a valid reason for more than seven consecutive days or 20 non-consecutive days. 

With so many expatriates working in the UAE, situations do arise where an employee finds himself in a difficult financial position and, rather than facing it, decides to leave the country. As an employer, having clear documented evidence of absenteeism (indicating precisely when the "seven days" period expires) will allow you to terminate the employment as quickly as possible. 

Furthermore, if an employee consistently arrives late for work, having clear records showing the date and time of each late arrival will help the employer show grounds for termination for poor performance (or failing to follow a reasonable instruction to improve punctuality). 

Keeping written records of any incidents

If an employee causes a scene, for example by verbally abusing a colleague, keeping a written record (which may include witness statements) of the incident is important. Whether or not the employee is reprimanded (or apologises), a written record of the event should be made and placed on the employee file, even if it is simply an email to the employee. Having documentary evidence of the incident is important if an employee disputes the incident at a later stage. 

Employment Contracts

This may seem obvious but all too often the employment contracts are not easily accessible. In most instances there will be two employment contracts. The employee will have executed the standard form Ministry of Labour employment contract (or equivalent free zone contract) and a more detailed "private" contract drafted by the employer. Making sure the contracts are consistent and are easily accessible in the employee file will allow you to quickly and easily identify the relevant obligations, which the business must satisfy when the employment relationship comes to an end. 

Finally, consider who looks after the employee files. These files should be managed by the HR team or alternatively, if the business size does not warrant a HR team, a specific person. If only one person is assigned to manage these files, another person should be able to access the files if necessary in the event that the normal custodian is unavailable and the situation requires urgent access, or it is the custodian's employee file that needs to be checked.

Living in the UAE, every day seems like summertime, but that does not mean you should act like a grasshopper. A little extra work now in keeping an employee file up to date and containing the appropriate documents, will go a long way to saving your business time and money later on.

Author: Reece Leggett
r.leggett@hadefpartners.com

This article, including any advice, commentary or recommendation therein, is provided on a complimentary basis, without consideration of any specific objective, circumstance or need. It reflects views of the writer which may differ from those of the firm. Having read this article, any person taking action, or refraining from taking action, does so at their sole risk.

© Hadef & Partners 2014