Business Legal

Amendments Made to the Employment Law

The parliament has enacted several changes to the Employment Act. The amendment bill passed on Sunday, 6 September 2020 was initially submitted by the government in June 2019. However, the parliament’s version is a bit different from the one submitted by the government. The parliamentary review of the bill was largely carried out by a joint committee of parliament that combined the members of the Social and Economic Affairs Committees.

Key policy highlights of the bill are summarized here.

Copy of Employment Agreement

Every employer is to sign an employment agreement with its employees. Every employer is also to provide a copy of the employment agreement to all its employees. If an employer has not already provided a copy, it is advised to do so within 3 months.

Failure to sign an employment agreement or provide a copy of it can invite penalties between MVR 2,000.00 to MVR 20,000.00 depending on the size of the employer’s business.

Probation Period

A period not exceeding 3 months may be provided as probation for every new employee. The employer or employee may terminate the employment agreement without notice during the probation period. However, rights available to employees under sections 32 through 57 of the Employment Act will continue to apply to employees on probation as well.

Job Description

The current requirement to include certain details by virtue of section 15 (c) of the Employment Act has been removed.

Redundancy

Bringing an employee’s employment to an earlier end in three circumstances is considered reasonable on the occurrence of three events: discontinuance of business; restructuring; and financial hardship.

However, termination of the employment must be carried out in accordance with regulations to be made by the minister under the law which would outline the circumstances that would qualify within those three grounds; and the manner in which the termination must be brought about.

In an event of a dispute, the burden of proof would lie on the employer to prove that the termination was carried out in good faith and was not targeted at removal of a specific employee or select group of employees.

Severance Package

The concept of a severance package has been introduced.

If the period of service is less than one year, the employer is to give one month’s notice or pay a month’s salary.

If the employee has served for a period between 1 and 4 years, the requirement is to give 2 months’ notice or pay two months’ salary.

If an employee has been in employment for a period exceeding 4 years, the employer has to provide 3 months’ notice or pay 3 months’ salary.

Reasons for termination

Where an employee files a complaint over wrongful dismissal, the onus is on the employer to prove that the reasons for dismissal were reasonable. If it cannot be established by the employer, the presumption would be that the dismissal was unreasonable, and therefore wrongful.

Record keeping

The employer must keep and maintain records of working days and hours of work including overtime and overtime pay. The Labor Relations Authority may ask for these details. Failure to comply with the request may invite a fine not exceeding MVR 5000.00.

Permission to leave after work

An employee working on a specific worksite, island or vessel has the freedom to leave that site island or vessel (after work) and report back at the scheduled time (for work). Where a vessel is used by an employee to depart from the place of work or return there, the employer may not deny or restrict access to such vessel.

Holiday pay in advance

If the employment agreement allows it, all employees (except public sector employees) may ask for salary due over the period of annual leave to be paid in advance (before going on leave). If requested, the employer is to provide such pay.

Sick leave

An employee is entitled to sick leave up to 30 days every year. The employer may not grant sick leave unless a medical certificate issued by a registered medical practitioner is produced in evidence of a medical condition that would prevent the employee from work. There is one exception. The employee may up to a total of 15 days a year opt for sick leave without producing a medical certificate if on every occasion the sick leave does not exceed 2 consecutive days.

Service Charge

Service charge is made mandatory for the tourism sector. The sector is asked to levy a service charge at an amount not less than 10%.

It is optional for all other sectors. Unlike the tourism sector, there is no figure, floor, cap or rate mentioned for the service charge that any other sector or industry may levy.

Service charge collected for the previous month is to be distributed before the end of the current month. An admin fee equivalent to 1% of the total collection may be retained by the employer. All employees involved in the provision of a service on behalf of the business must all be treated alike and shall not be discriminated in the distribution of the collection. The reference to all staff includes all those staffs who by reason of their work directly or indirectly contribute to the provision of the service by that business.

The employer is also asked to maintain records of amounts collected as service charge including those that are entitled to it, amounts to which they are entitled to, and amounts that are paid to each of the employees.

The employer is also to provide these details twice each year to Labor Relations Authority and Maldives Inland Revenue Authority. Additionally, each employer is to provide these details as and when the Labor Relations Authority may ask for it. The authority may fine any defaulting party by an amount not exceeding MVR 50,000.00.

If it is established that a business operating in the tourism sector does not levy service charge or does not distribute it in the manner provided in the law, that business may attract a fine not exceeding MVR 100,000.00. The Labor Relations Authority may also take further action as may be permitted in the regulations to be made by that Authority.

Locals at SMT level

The head of human resources / human capital department of every business (with over 50 staff) must be a Maldivian.

Additionally, 60% of positions that comprise the senior management of businesses (which employ over 50 staff) should be held by Maldivians.

Who shall constitute the senior management is to be described in the regulations to be made under the law.

There is a caveat for this specific provision. These two requirements are given a maximum of 5 years (from the date of the amendment) to award compliance.

Minimum wage

The minister is to decide the minimum wage for all categories of employees in the Maldives. After assigning the responsibility to the minister, the amendment goes onto provide an entire framework over the actors and processes involved in the determination of minimum wage. It creates a minimum wage board, specifies its composition and demarcates its functions.

Employment Tribunal

Employment disputes occurring in islands (and outside Male) may be submitted to the Employment Tribunal via magistrate courts on those islands. Those islands (magistrate) courts may hear disputes on behalf of the tribunal. The decision will still be made by the tribunal.

The tribunal is also asked to follow up on enforcement of its awards, out of its own volition, and submit to local courts for enforcement (of its awards).

Conclusion

Containing the above revisions and more, the Employment (Sixth Amendment) Bill will now travel to the president for ratification. The parliament is to submit the bill to the president within 7 days of its enactment. On receipt of the bill, the president would have 15 days to sign the bill into law or return it to parliament for reconsideration. If he does not do either, the bill becomes law on its own.

About the AuthorNasheed & Co Law Firm is one of the leading corporate and commercial law firm in the Maldives, established in 1997. They are an efficient, convenient, and responsive firm of professionals providing a client-centric legal concierge service offering the full spectrum of corporate and commercial law advice assistance and support.

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Source URL: Corporate Maldives

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