Employer Obligations In Gulf Crisis

The legal and operational questions arising are pressing, and this article sets out the key employment considerations for HR leaders and in-house counsel.

Employee Wellbeing and Communication

The psychological toll of working through a regional conflict is significant, whether an employee is based in their country of employment, has been evacuated, or is watching events unfold from a distance. Employers have both a legal and a practical interest in addressing this.

Anxiety, disrupted sleep, and the stress of sudden displacement are foreseeable consequences in the current environment. Employers should plan proactively rather than reactively.

Employee Safety, Security, and Evacuation

There is no blanket government requirement for any nationality to evacuate at this time. Individual embassies have issued guidance specific to their nationals, and the position will vary depending on each employee's nationality and personal circumstances. Employers should therefore make individual, informed assessments for each affected employee rather than applying a one-size-fits-all approach.

Regardless of whether a formal evacuation order applies, the employer's duty of care to its workforce is engaged. This duty is not confined to working hours. Where employees, particularly expatriates, are present in a jurisdiction specifically as a result of their employment, the employer's responsibility for their safety may extend well beyond the office. Expatriate employees may be more exposed than local employees during a period of civil or regional instability, both physically and in terms of their access to support networks.

Employee movement: immigration, work authorisation, and taxation

An employee who leaves their jurisdiction of employment and works from another jurisdiction, whether their home country or a third country, may be doing so without work authorisation unless specific steps are taken. This creates a compliance exposure for both the employer and the employee that arises immediately. The issue does not resolve itself simply because the relocation was involuntary.

If an employee begins working in a country where the employer previously had no business presence, this presents a risk that the employer may now be considered to have a ‘permanent establishment' in that country and potentially be subject to corporate tax liability there. An employee's relocation can also affect their own individual tax residence and their social security regime, depending on the country and how long the relocation lasts. It may also give rise to new employment rights and obligations under that country's employment laws.

Payroll Continuity

In the absence of furlough schemes in the region, employers remain obligated to continue making payroll payments to employees. Employers in jurisdictions where wage protection systems (WPS) operate, which require salaries to be paid electronically in local currency through a qualifying local financial institution, remain bound to continue payments through those schemes. This obligation continues in full, and employers should ensure their payroll pipelines are operating normally.

Employers operating under employment jurisdictions that do not have WPS obligations benefit from greater flexibility, as these jurisdictions permit payment in any agreed currency. Regardless of the applicable regime, the legal obligation to pay salaries on time is unaffected by the geopolitical situation.

Employers should also consider the position of non-employed members of their workforce, including agency staff, contractors, and service company personnel, and whether any third-party payment arrangements require review.

Employees who find themselves stranded in the Gulf region while on a business trip for their foreign employer may continue to be entitled salary depending on the circumstances. Foreign employees stranded while on holiday in the region may also be entitled to continue to draw their salary if they are able to work remotely (though the employer will need to consider the immigration and tax implications of this, as noted above). If they are not able to work remotely, the employer should consider alternative arrangements with that employee including whether the employee's annual leave could be extended to cover their ongoing absence.

Cybersecurity Awareness

Periods of geopolitical instability are consistently accompanied by an elevated risk of cyberattack, including by state-sponsored actors. This risk is compounded by the rapid shift to remote working that a crisis environment typically produces, as employees connect to corporate systems using insecure networks and personal devices.

Military Service Call-Up

A number of countries impose national service obligations on their nationals. Once national service is completed, these individuals are typically treated as part of the reserve forces and may be subject to call-up should the military require additional personnel in times of national emergency.

Specific obligations apply to employers in each country when their national employees are called up for service. These typically include preservation of the employee's role, a right to return, and continued payment of full salary and pension contributions during the call-up period.

Redundancy and Constructive Dismissal

Where the current crisis leads an employer to consider reducing its headcount for economic or structural reasons, specific legal requirements apply. Those requirements remain in force during the crisis period.

Separately, employers must take care that operational decisions made in response to the crisis, such as materially altering an employee's role, location, or remuneration without consent, do not amount to a fundamental breach of contract. Constructive dismissal claims arising from crisis-period decisions are an exposure that employers often overlook until it is too late.

Takeaway for employers

The current conflict presents challenges across a wide array of employment and human resources considerations. Employers will need to be diligent, creative, and proactive in addressing those challenges whilst ensuring to comply with local government directives.