There are some federal and emirate specific legal mechanisms that can be construed as offering some level of protection which extends to whistleblowing.
Sabrina SaxenaSenior Counsel,Employment & Incentives
The legal framework on whistleblowing and protection of whistleblowers is a developing area in the UAE. At present, there is no express provision in UAE law that defines whistleblowing save as in the Abu Dhabi Global Market (“ADGM”) however generally, whistleblowing is essentially a disclosure of (often confidential) information that is usually made by an employee or an ex-employee of an organisation that exposes illegal or unethical practices within that organisation.
In the UAE (save for the Dubai International Financial Centre (“DIFC”) and the ADGM), there is no overarching law that governs whistleblowing or deals with the protection of whistleblowers. However, there are some federal and emirate specific legal mechanisms that can be construed as offering some level of protection which extends to whistleblowing as set out further below.
On a federal level, the Federal Decree Law No. (31) of 2021 as amended (the “UAE Penal Code”) provides for a positive obligation for all individuals to report criminal conduct. However, in practice, it is rare for an employee to make a protected disclosure about his employer to the authorities. This is because all employees are under a statutory obligation to maintain confidentiality of their employment. As such, in the event a whistleblower discloses confidential information about their employer to any regulatory authorities or even to the UAE Police, not only may he be in breach of his employment contract but he may also be in breach of the UAE Penal Code. Consequently, the employer could take action against the whistleblower personally potentially resulting in police investigations and even criminal proceedings.
The obligation to report criminal conduct also extends to companies. For example, where a company employee makes a protected disclosure to it, the company has an obligation to report it to the relevant authorities. Again, this obligation does not tend to be proactively enforced.
All employees are under a statutory obligation to maintain confidentiality of their employment.
The Federal Decree Law No. 33 of 2021 as amended (the “Labour Law”) and its accompanying executive regulations, Cabinet Resolution No. 1 of 2022 as may be amended which came into effect on 2 February 2022 and replaced the previous Federal Law No. 8 of 1980 includes a provision on unlawful termination which may be construed as providing some level of protection for whistleblowers. Article 47 of the Labour Law provides that termination of an employee’s services by the employer is illegal if the termination of the employee was due to i) filing a serious complaint to the Ministry of Human Resources and Emiratisation; or ii) filing a case against the employer that has been proven to be true. If the Labour Court deems an employment termination as unlawful, the Court may award an employee compensation of up to 3 months’ total salary.
In 2016, the Dubai Government implemented Law No. (1) of 2016 Concerning the Financial Regulations of the Government of Dubai and Law No. (4) of 2016 Establishing the Dubai Economic Security Centre (the “Centre”), (collectively the “Financial Crimes Law”). The Financial Crimes Law offers protection to the reporter against discrimination or mistreatment in the workplace, to not be considered in breach of any obligations and not be subject to any legal or disciplinary action unless the report is false.
In a contrasting position, the DIFC has implemented the DIFC Law No. 7 of 2018 (the “Operating Law”), which governs whistleblowing protection in the DIFC. It applies to any person operating or conducting business in or from the DIFC. Under the Operating Law, a person who makes a disclosure of information to the DIFC Registrar of Companies or the relevant DIFC entity’s auditors or to a director/officer of the DIFC entity itself, is entitled to protection.
The disclosure must include the identity of the person making the disclosure, relate to a reasonable suspicion that the DIFC entity has contravened the Operating Law or other regulations/legislation and must be made in good faith. The Operating Law provides that those making good faith disclosures in accordance with the law shall not, as a result of making the disclosure, be subject to any legal or contractual liability, be liable for any other contractual, civil or other remedy or suffer any adverse consequence, and/or be dismissed from employment or otherwise subject to a detriment by the employer. Any act in contravention of these provisions may result in a fine of USD 30,000.
Additionally, the Dubai Financial Services Authority (“DFSA”) which is the DIFC regulatory body, effective as of April 2022, has launched a regulatory regime for whistleblowing which applies to all DFSA regulated entities operating in or from the DIFC. The regime provides enhanced legal protection for persons who report misconduct internally within DFSA regulated entities or externally to their auditor, the DFSA or a law enforcement agency. The regime requires all DFSA regulated entities to put in place measures to protect the identity of the whistleblower and to protect them from suffering any detriment.
At the end of 2022, the ADGM published its own whistleblowing guidelines for ADGM entities (“ADGM Principles”) which are intended to help ensure that whistleblowers are given adequate opportunities to speak up and are fairly treated when doing so.
Whistleblowing is broadly defined in the ADGM Principles as “the reporting of suspected wrongdoing to someone in authority and a “whistleblower” being the person who makes the report; that person might be part of the relevant organisation (such as an employee) or an external third party”. Where protected disclosures are made, ADGM entities are required to ensure that appropriately independent skilled professionals are involved in assessing and managing whistleblowing reports.
Internal channels for raising issues within an ADGM entity should be provided and communicated clearly to staff and, where appropriate, third parties. External channels for whistleblowing should also be identified and clearly communicated to staff.
Although no express mechanisms for protection for whistleblowers have been set out in the ADGM Principles, they do confirm that protection should be afforded to whistleblowers who make reports in good faith and that preservation of confidentiality should be afforded.
Practically, there are still challenges that exist with whistleblowing in this region. This is due to the cultural and legal implications that impact aspects such as making the initial disclosure up to its enforcement.
From an individual’s perspective, there is often a concern that a disclosure may lead to disciplinary action and/or dismissal (in addition to the potential criminal ramifications referenced above). The impact of termination of employment may not only impact an individual’s financial position and their ongoing employment, but it could also affect their residency status in the UAE where their UAE residence visa is sponsored by their employer as the termination of their employment will result in their sponsorship being cancelled.
Notwithstanding that the embedding of whistleblowing protections is on the rise, the challenge historically and to a lesser extent presently, is that there is a limited ‘speak up’ culture encouraging individuals to make a disclosure. There can be reputational risks associated with reporting wrongdoings to the authorities for both the individual and the organisation. In circumstances where a disclosure is subsequently publicised, this could also amount to defamation under the UAE Penal Code which would also amount to a criminal offence.
It is good practice to create an open, transparent and safe working environment where employees feel able to raise concerns without fear of retribution or retaliation.
Given that the UAE is continuing to take progressive steps towards ensuring better whistleblowing protections, it is recommended that employers have adequate procedures to deal with whistleblowing internally.
Notwithstanding the limitations above, many multi-national employers in the UAE operate whistleblowing hotlines which enable employees to report suspected or actual misconduct either anonymously or on provision of their details.
As such, many employers will implement some form of a hotline where employees can make protected disclosures confidentially, in addition to a whistleblowing policy which will explain to employees how a protected disclosure can be made (including the details of any hotline established) as well as the process once the disclosure has been reported.
As an employer, it is good practice to create an open, transparent and safe working environment where employees feel able to raise concerns without fear of retribution or retaliation. Although the law does not require employers to have a whistleblowing procedure in place, the existence of one demonstrates an employer’s commitment to listen to and act upon the concerns of its employees. In addition, it is important that the disclosures are appropriately investigated and resolved where possible.
For further information,please contact Sabrina Saxena
Published in February 2023
