Significant changes have been brought to Law no. 2/2008 (Employment Act) (“EA”) by the recent sixth amendment to the EA (“Sixth Amendment”), which came into force on 22 September 2020.
Regulations to be made following the Sixth Amendment are to be published in the Gazette 6 months of it coming into force.
In this overview we provide brief details of the Sixth Amendment.
Employment Agreement
(1) Employment Agreement
The new provision, s.13 (j) obligates an employer to handover a copy of the executed
employment agreement to the employee.
Furthermore, within 3 (three) months from the date the Sixth Amendment comes into
force, employers need to handover the executed employment agreements to
employees where they have not done so.
Failure to do so may result in a fine of a sum between MVR 2000/- (Maldivian Rufiyaa
two thousand) and MVR 20,000/- (Maldivian Rufiyaa twenty thousand) being imposed.
(2) Probationary Period
An amendment has been brought to s.14 of the EA, whereby employees who are under
probation are now entitled to all the rights guaranteed to permanent employees.
Furthermore, the amendment obligates employers to pay the minimum wage set
pursuant to s.59 of the EA to the employees under probation.
(3) Job Description
The following information that was mandated to be provided in the job description
pursuant to s.15 (c) of the EA is no longer obligated to be provided:
o date of commencement of the Employment Agreement;
o methods and guidelines for calculations of wages;
o period for which wages will be paid;
o leave provisions; and
o policy on disciplinary measures that may be taken against an employee.
However, s.15(c)(6) has now been amended to obligate the employer to explicitly state
the particulars of the tasks or work which the employee will be undertaking pursuant to
the capacity and job title in which they are being employed.
Redundancy
(1) Redundancy
For the first time the principles of redundancy have been recognised and incorporated into the EA. Prior to the Sixth Amendment, redundancy was only recognised by case law.
s. 21(c) now provides that the following reasons are reasonable causes for dismissal
under redundancy:-
o closure of the business and services of the employer;
o restructure of the business of the employer; and
o the employer being forced to reduce staff due to financial distress.
The onus is on the employer to prove that the decision to dismiss the employee was
taken in good faith and was not targeted towards a specific employee.
The regulation made under the EA will specify the circumstances in which an employee
may be dismissed on the grounds of redundancy, and the procedures to be followed by
the employer in those circumstances.
Notice period for dismissal under redundancy:
• Duration of Employment: Less than 1 (one) year - 1 (one) month
• Duration of Employment: Between 1 (one) year and 4 (four) years - Minimum 2
(two) months
• Duration of Employment: More than 4 (four) years - Minimum 3 (three) months
Resignation & Dismissal
(1) Resignation
Prior to the Sixth Amendment, s.26(a) required an employer to provide an opportunity
for the employee to submit a complaint to the employer, where the employer has
breached the employment agreement.
However, s.26(a) has now been amended to ensure that every employee has the right
to submit any objections or grievance where the employer has breached the
employment agreement.
• If the employer does not rectify the breach(es) during the specified period, the
employee has the right to resign after giving the required notice under the
employment agreement.
Working Hours
(1) Working Hours
The employer is now obligated to keep the following records relating to employees as
prescribed in the regulation issued under the EA (s. 32 (e)): -
• working hours;
• the duration for which the employee works;
• the duration of overtime work;
• remuneration provided for overtime work.
All the information records kept pursuant to s. 32 (e) must be provided to the Labour
Relations Authority if they request or order for such information (S. 32 (f)).
S.32 (g) provides that a fine of no more than MVR 5000/- (Maldivian Rufiyaa five
thousand) can be imposed for failure to comply with s. 32 (f) of the EA.
(2) Exempted Employees
Where previously persons working in emergency situations, crew of sea going vessels or aircraft, imams and other employees at mosques, persons on on-call duty during the hours of duty and persons in senior management posts were exempt from all the provisions of Chapter 4 of the EA, the new amendment now only grants such employees exemptions from s.32 (maximum number of working hours per week), s.37 (over-time) and s.38 (working on a public holiday).
(3) interpretation
The definition of the term “persons in senior management posts” has been amended, and is now defined as a person appointed or declared by the employer as a person holding a senior management post from among the persons engaged in the senior management, subject to the person meeting the criteria to be set by the regulation to be issued under the EA.
(4) Employee’s Right to Leave the Work Site or Premises
S.34-1(a) now provides the employees the right to leave their place of work, after the
designated working hours. The employer/owner of the property shall not obstruct in
any manner or form, the employees from leaving the workplace after their working
hours or return to the workplace to start their work for the day.
Furthermore, s.34-1(b), obligates the employer to allow any vessel or vehicle into the
work site, which the employee would require to leave the worksite or premises.
Leave
(1) Annual Leave
Whereas, the employer was previously required to pay the employee wages for the
annual leave period prior to the commencement of their annual leave, the new
amendment only requires the employer to pay to the employee wages for the period
on which the employee would be on annual leave, prior to the commencement of their
annual leave, if the employee requests to do so as prescribed under the employment
agreement.
However, where the wages of the employee are being paid by the Government, such
wages can be paid pursuant to the general policy which the Government follows.
(2) Sick Leave
Pursuant to the new amendment to s.42 of the EA, it is not mandatory for the employer
to grant sick leave to an employee, unless a medical certificate issued by a registered
medical practioner is submitted by the employee on the day the employee returns to
work.
However, the employees have the right to two consecutive days of sick leave without
the need to submit medical certificate to the employer for 15 days out of the 30 days of
sick leave which every employee is entitled to per year.
Employee Accommodation
(1) Standard of Employee Accommodation
The Ministry of Economic Development is required to set, by way of a regulation, the
minimum standards as well as the basic necessities to be included in employee’s
accommodation, where employers provide one. It is mandatory for the employers to
adhere to these standards.
The regulation on standards of accommodation are to be published within 30 days of
the Sixth Amendment coming into force and employers are granted a period of 6
months to ensure compliance with the standards set by the Ministry.
Prioritising Maldivian Employees
(1) Training and Prioritising Maldivians
The EA now requires the Ministry of Economic Development to conduct training
programs for Maldivians to improve the skills of the Maldivian labour force. Furthermore,
the Ministry is also tasked with keeping track of industries/sectors in which fewer
Maldivians are employed in and analyse and conduct trainings in such
industries/sectors.
o In offices where more than 50 people are employed, the law now mandates that: -
o a Maldivian shall be in charge of all matters relating to employees. (s.74-1 (b)); and
o that 60% of the senior management positions are filled by Maldivians. (s.74-1 (c)).
Definition of senior management and positions considered as senior management will
be specified in the regulations made by the Ministry of Economic Development.
o The goals specified above shall come into force latest within 5 years from the date
the Sixth Amendment comes into force.
o Additionally, employers are required to submit annual reports to the Labour
Relations Authority on how the goals set in prioritising Maldivians in this section of
the law are being achieved. The submission dates and the manner and form in
which the reports that need to be submitted will be detailed in a regulation
published by the Labour Relations Authority.
o Where employers fail to ensure compliance with the provisions of this section, the
Labour Relations Authority has the discretion to penalise the employer with a fine
not exceeding MVR 100,000/-.
Furthermore, to ensure the financial stability of Maldivians aged between 55 – 65, the Ministry is required to ensure that people of that age group who are able, educated and competent, be provided with employment opportunities.
Service Charge
(1) Service Charge
Substantial changes have been brought to s.52, whereby employers from the tourism
industry are now obligated to impose a minimum service charge of 10% on every
service given. Employers in other industries may impose a service charge at their
discretion.
s.52(b) now obligations the employers are obligated to distribute all monies collected
as service charge, the previous month, among all their employees (employees who are
directly and indirectly involved in granting the services of the employer) equally, before
the end of the following month.
Furthermore, employers are obligated to keep detailed records of the following (s.52
(e)): -
o all income received by the employer as service charge;
o the number of employees paid from the monies collected as service charges;
o the amount of service charges each employee is entitled to;
o details of the amount paid as service charge.
The employer is now obligated to submit the details prescribed above to the Maldives
Inland Revenue Authority and the Labour Relations Authority twice a year in accordance
with the dates specified by the Labour Relations Authority in their regulation.
However, where the Labour Relations Authority requests that such information be
provided, employers are obligated to provide all such information in the manner and
form which the Labour Relations Authority requires (s. 52 (f)).
S.52 (g) provides the fine that would be imposed for failure to comply with the above
provisions.
o where employers engaged in the tourism industry fail to charge and distribute all
income received as service charge as mandated under s.52(a) and (b), the Labour
Relations Authority has a discretionary right to penalise the employer with a fine
not exceeding MVR 100,000/-.
o where an employer fails to keep and file records pursuant to s.52(c) and where an
employer fails to provide records upon request, the Labour Relations Authority is
granted the right to impose a fine not exceeding MVR 50,000/-.
Additionally, Maldives Inland Revenue Authority is required to ensure that the
information provided by employers to the Labour Relations Authority is accurate in
order to determine who has failed to abide by the above obligations. However, such
assurances are to be provided by Maldives Inland Revenue Authority in relation to
employers who submit tax returns pursuant to Income Tax Act (Law Number 25/2019).
* The Sixth Amendment expressly states that the above amendments brought to the provisions related to service charge will come into force on 1 January 2021.
Expatriate Workers
(1) Quota and Work Parmit
The (relevant) Ministry, as specified in the Regulation made under the EA, has the right
to issue the following:
o Quota for expatriate workers;
o the permit for expatriates to work in Maldives; and
o work permit for the duration of their employment in Maldives.
The regulation made under the Sixth Amendment should specify the policy on how
quotas and work permits shall be granted as well as the date on which the annual quota
fee of MVR 2000.00 (Maldivian Rufiyaa Two Thousand) will commence.
Work permit for expatriate workers will be issued for a fee of MVR 350.00 (Maldivian
Rufiyaa Three Hundred and Fifty) per month.
The fees will be payable to the relevant authority designated by the (relevant) Minister.
The new amendment has limited the number of foreign workers, from each nationality,
which can be actively engaged or employed in the Maldives at any given time to
100,000 (one hundred thousand).
If the number of foreign workers from a specific country exceeds 100,000 (one hundred
thousand), the numbers should be complied within 3 years of the Sixth Amendment
coming into force.
(2) Payment of Wages to Foreign Workers
The section which details the manner and form in which wages are required to be paid to foreign workers has now been repealed by the Sixth Amendment.
Minimum Wage & Minimum Wage Advisory Board
(1) Minimum Wage
Under the Sixth Amendment, the Minister of Economic Development is obligated to declare a minimum wage to be given to workers in Maldives, pursuant to the EA.
(2) Minimum Wage Advisory Board
Establishment of the Minimum Wage Advisory Board
• The Sixth Amendment obligates the Government to establish a “Minimum Wage
Advisory Board” within 30 days from the date it comes into force and to appoint
members to the board as specified in section 60 of the EA.
Duties and Responsibilities of the Minimum Wage Advisory Board
• The Minimum Wage Advisory Board is required to collect data and conduct
research on the policy and manner which a minimum wage can be established and
submit their advice on the matter to the Minister of Economic Development.
• The Minimum Wage Advisory Board is required to ensure that specific industries
are addressed in their advice. These industries include: -
o fisheries and agriculture;
o tourism;
o construction;
o transport;
o health;
o education;
o small and medium sized businesses;
o information, communication and technology; and
o maritime industry.
• In establishing the policy for determination of the minimum wage, the Minimum
Wage Advisory Board is required to consider the expenses which the employee
will bear for the basic needs of the employee and his/her family, current living
standards and economic situation of the country, among other factors.
• The Minimum Wage Advisory Board is required to advise the Minister every 2 years
if a change to the minimum wage needs to be ordered. However, due to the
economic condition of the country, if the Minimum Wage Advisory Board deems it
necessary to revise the minimum wage, they are granted the right to advise the
Minister prior to the 2-year period.
Powers of the Minimum Wage Advisory Board
• The Minimum Wage Advisory Board and the Minister of Economic Development has
the power to require employers to submit information related to wages, based on
the policy contained in the regulation issued under the EA.
• A fine not exceeding MVR 50,000.00 will be imposed in cases where the employer
fails to provide information requested by the Ministry of Economic Development or
the Minimum Wage Advisory Board.
Composition of the Minimum Wage Advisory Board
• Consists of 11 members appointed by the President
o The Chairman of the Board is to be nominated by the Ministry of Economic
Development.
o A person nominated by the Ministry of Finance
o Associations representing tourism industry, construction industry, Women
entrepreneurs and SME businesses are to nominate one member each.
o Organisations representing employees’ rights and interests are to nominate
five members.
• The members appointed to the Board are to serve a term of three years. However,
all members except those removed due to their failure to perform the duties as a
member of the Board shall be eligible to serve another term.
• Members of the Board shall be removed if ordered by the President where they are
deemed incompetent or unable to discharge their duties, or if the Member fails to
attend three Board meetings without an acceptable justification, or at the end of
the members’ term.
• Once the Board has been established and Members appointed, the Board is further
required to publish a regulation on how the Board shall be run.
Remuneration of Members of the Minimum Wage Advisory Board
The remuneration of the Members of the Board is to be decided by the President on the
advice of the Minister.
Order Establishing Minimum Wage
• Minister of Economic Development is required to establish, through an order, a
minimum wage within 30 days of receiving advice from the Minimum Wage
Advisory Board.
• The order establishing the minimum wage must include in detail the wage to be
paid on an hourly basis, for part of the work, as well as the wage to be paid for
overtime. Furthermore, in such an order the Minister of Economic Development has
the discretion to set a specific minimum wage for specific industry and grant
employers a time period for compliance.
• Once the order establishing the minimum wage has been published in the Gazette,
the order will have legal standing until such order has been repealed or revised
under the EA.
• All employers are obligated to ensure compliance, for local workers, with the first
order establishing the minimum wage before the end of the year, 2021. With
regard to expatriate workers, employers are granted a maximum period of 2 years
from the date the Sixth Amendment comes into force, to ensure compliance with
the minimum wage order.
Employment Tribunal
(1) Submission of employment cases to the Employment Tribunal through Courts
The Sixth Amendment now allows employees to file complaints against employers
through the magistrate courts in the respective islands in which the dispute occurred. A
case submitted to the magistrate court, can be heard pursuant to the regulation (to be)
published by the Employment Tribunal. However, even though the case is heard
through the Magistrate Court, the final ruling on the complaint itself will be made by the
Employment Tribunal.
The regulation on how cases filed by employees will be heard in at Magistrate Courts
must be published 6 months from the date on which the Sixth Amendment comes into
force.
(2) Enforcement of Tribunal decision
The Employment Tribunal is now obligated to ensure that its decision is being complied
with by the parties, on its own initiative. Where the Employment Tribunal finds or a
party to the complaint informs the tribunal of non-compliance by the other, the Tribunal
must refer the case to the relevant court with the jurisdiction for the enforcement of the
decision.
The enforcement hearings in the relevant courts must be carried out in the same
manner as any other enforcement hearings. The Employment Tribunal shall not be a
party to the enforcement hearing between the parties to the dispute.
Notwithstanding anything in this section, none of this shall be interpreted in a way that
affect the rights of an individual to seek enforcement of a decision by the Employment
Tribunal on their own.
(3) Employment Tribunal hearing
All Employment Tribunal hearings are to be conducted and decisions to be conveyed in
a manner open to the public.
However, the Sixth Amendment provide that a Member of the Employment Tribunal may
hold the hearing behind closed doors in accordance with democratic norms, for the
following reasons:
o in the interest of public morals, public order, and national security;
o where the interests of juveniles or the victims of a crime so require; or
o where circumstances in which an open hearing is prohibited under any other law
occurs.
(4) Summoning to the Employment Tribunal
The Employment Tribunal is now granted the power to summon parties for questioning,
where they deem necessary and furthermore to require the submission of documents
and other relevant information necessary related to a complaint filed.
The actions which the Employment Tribunal can take for the failure to appear before the
Tribunal as required under the summon issued by the Employment Tribunal must be
specified in the regulation to be published under the EA.
(5) Remote Hearings
This new amendment allows the Employment Tribunal to conduct remote hearings
where:
o there is a state of emergency declared by the Government pursuant to the
Constitution or any other law; or due to a disaster it is unsafe to attend hearings in
person.
o there is a difficulty for a party to attend a hearing in person due to a difficulty in
travelling, be it from an adverse weather condition or the financial burden to travel
is too heavy on the party
The Tribunal is required to publish a regulation on how remote hearings will be
conducted within 1 (one) month of the Sixth Amendment coming into force.
Furthermore, all recordings of remote hearings are to be maintained for a period of 10
years from the date on which the decision has been rendered by the Tribunal.
(6) General meeting of the Employment Tribunal
The Employment Tribunal and its members are required to hold a general meeting,
which will be chaired by the President of the Tribunal. The purpose of the general
meeting is for the Members to identify and discuss the issues of the Tribunal and the
ways in which the Tribunal can improve the quality of its services. This shall include
setting areas in which the employees of the tribunal need training.
In such meetings, the Members shall find ways to address all administrative, record
keeping and budgeting matters of the Tribunal as well.
Disclaimer:
* This material has been prepared for informational purposes only. It is not intended to provide and should not be relied upon or construed as a legal opinion or legal advice regarding any specific issue, nor is this information intended to create, or receipt of it does not create, an attorney-client relationship between the reader and the firm.