During these unprecedented times when the global economy is facing severe crisis, the future financial conditions still remain vague. The financial situation of UAE is the same as most people belonging to salaried class are facing salary cuts and making both ends meet for them is quite challenging. Because of this, many people have turned to their attorney in Dubai, for discussing a way out of this financial quagmire.
However, in the current financial situation, the government of UAE has introduced different relief packages for helping their residents. One such relief is the rental relief formed to provide relief to the renters. The government is going to give this relief on a case to case basis i.e. after evaluating the tenant’s financial situation. As per the Article 249 of the UAE’s Civil Code, during uncertain times parties can activate force majeure. Using which they can reduce the discretion of a contract to a reasonable level.
Rental Relief & Force Majeure:
If you are facing a salary cut due to Covid-19 but your landlord is not providing you with fair solidarity, you can file for relief in the court. The UAE’s law allows renters to enjoy this right. In the case your income is dropping to an extent where you can no longer afford your rent, then you can terminate the contract. You wouldn’t be required to pay any termination fee. You will only have to bear pro-rata until the day you vacate. But if your landlord disagrees, he has the right to take the matter to court where the court will decide. Likewise, the tenant can also take the matter to court for evaluation of force majeure in the current scenario.
In such cases, you can use the thumb rule i.e. there is a reduction in the income of the tenant to a level where they are unable to pay the rent because of the ongoing covid-19 conditions. As a result, they can terminate the tenancy contract immediately without paying any penalty.
Ground Reality:
In simple words, the best way-out in such situations for both tenants and landlords is that they should agree on a fair deal. This way, both the parties can get benefits without going to the court. It's better for the landlords to agree on a fair rent rather than keeping it vacant for a long duration.
Covid-19 & UAE’s Labour Law:
For the protection of the working class, the Ministry of Human Resources and Dubai International Finance Centre have laid down measures. Using these laws, the companies can manage employee headcount and expenses during this situation of pandemic crisis. Moreover, the employers cannot use the ongoing situation as a reason for termination as per Article 120 UAE labour law.
To deal with such situations the MOHRE & DIFC the new guidelines currently allows 30% employees to enter workplaces. Whereas, the work from home case is still applicable on the rest of the employees.
Salary Reductions:
As per the MOHRE Resolution, the employer can ask the employees for a salary reduction on a temporary basis. After the agreement of both parties, employers can apply salary reduction. As per the DIFC regulations the temporary period shall end on 31st July, 2020 unless further extension by the DIFC.
Employee Termination:
In order to terminate an employee, the management has to take tough decisions particularly in the current financial turmoil. Under the UAE’s labour law, the termination of an employee is only possible on valid grounds. But what is a valid ground is not clear in the law. It is the duty of the court to determine whether the reason is valid or not especially in the present circumstances.
