The Legal Framework

•  The primary law that regulates employment relationships in Yemen is Labour Law No (5) of 1995 as amended in April 2008 (“Labour Law).  This Labour Law is designed to operate more as a safeguard for an employee engaged in such relationship be it deemed the weaker party. For instance, one of the main characteristics of this Labour Law is that it sets the baseline of employees’ rights in a manner that cannot be contractually waived or derogated unless where such derogation aims to grant additional rights beyond those outlined in the Labour Law.  Further, any ambiguity that might be encountered while interpreting its provisions shall be read in favour of the employee.

• The Yemeni Civil Law No (14) of 2002 (“Civil Law”) also regulates employment matters in conjunction with the Labour Law. However, the Labour Law shall prevail over related Civil Law provisions in the event of any conflicts between the two.

• Yemen’s Constitution founded the legal framework on Islamic Sharia principles, and placed such principles on the top of the hierarchal legislative system. As a result, any agreement, covenant or rule found to violate such principles shall be deemed null and void.

• It should be flagged that Yemen’s regulatory system, including the Labour Law, is rather primitive compared to most Western and developed jurisdictions, suffering from vagueness, lack of detail and many unaddressed issues. This has compelled the firm to urge clients to adopt very well drafted and detailed employment contracts in order to overcome such shortfalls in the local laws.

• It should also be emphasised that since the eruption of the Saudi led war in 2015, almost two states were created in Yemen with totally independent governments and authorities. The first regime is the Southern government which is recognised by the international community as the legitimate government, whilst the second is the Northern government often called the Houthi government and known as the de facto ruler of Yemen’s northern part. As a ramification, each of the two governments adopted its own autonomous and separate jurisdiction and legislations. So far, the provisions of the Labour and Civil Laws remain in force with no amendments made by either government; with the exception of dissolving the Employment Arbitration Committee by the Northern government in 2021 (refer to S.4 below).  

 About the Contract  

• In terms of language, the Labour Law explicitly stipulates that employment contracts should not be drafted in other than the Arabic language. This does not prohibit the drafting of bilingual contracts, where the Arabic version shall prevail in case of any dispute.

• In general, the Labour Law recognizes two forms of employment contracts: fixed and indefinite term contracts. While opting for one of the forgoing forms, it should be borne in mind that should the duration of a fixed term contract exceeds five years, it would be treated as an indefinite term.

• Should the parties engaged in an employment relationship absent of a written contract, the employee may use any means of admissible evidence to prove any details related to such employment. On the contrary, the employer may only prove such matters through documentary evidence. In general, electronic forms of contracts or documents face difficulty standing before courts, especially if presented by the employer.

• From a practical standpoint, local courts frequently construe any relationship, regardless of the title that was given by the parties, as employment if the two main elements of an employment relationship were established: (a) vicarious liability and (b) wages.

• In reference to foreign employees, any non-citizen about to enter into an employment agreement within the Yemen jurisdiction would have to obtain prior approval from the Ministry of Labour & Social Affairs (“the Ministry”). In addition, any employer may not recruit foreign workers that exceed 10% of its total workforce. Nevertheless, the aforesaid percentage may increase by acquiring permission from the Ministry.

• Regarding background checks, the Labour Law does not provide any specific regulations in regard to obtaining employment references or carrying out background investigations on employees. These are actions taken by the employer to ensure the employee is well suited for the position upon an offer of employment. The Labour Law merely requires employers to provide the authorities with basic information regarding employees and their contracts.

• Since the Labour Law has set forth some mandatory provisions that should be observed in employment relationships, it might be necessary to outline a few of them:

• The probation period of an employee may not exceed six months; further, it is prohibited for an employee to be employed on probation more than once for the same position.

• If the relationship between the employer and employee continues after the expiry of a fixed employment term, such contract shall be considered extended for an indefinite term.

• In the case where the parties are in the process of negotiating an expired employment contract, the duration of such contract shall automatically be extended for a period of three months.

• Copies of all employment contracts must be deposited with the competent Ministry office.

• In the event of a change of employer, unless otherwise agreed, the previous employer’s obligations are automatically transferred to the new employer.

• The minimum wage payable to employees in Yemen cannot be less than the minimum wage paid by the state administration, which, as of 2016, amounts to approximately US$100 per month.

• Wage payments depend on the terms of the employment contract. Employees may be paid on a monthly, fortnight, weekly, or hourly basis. The monthly basis must be paid not later than the sixth day of the following month; the fortnightly basis must be paid not later than the third day at the end of every fortnight; and the hourly, daily, or weekly basis must be paid at least once each week.

• The maximum working hours is eight per day or forty-eight hours per week distributed over a maximum of a six day week, followed by one day of rest (with full pay). The public sector and most private entities adopt a forty-hour-five-day working week.

• Any overtime worked by employees is calculated as follows:     1.5 hours of basic wage per hour of overtime on normal working days; 2 hours of basic wage per hour of overtime during night, weekends or holidays (in addition to applicable wage entitlements).

• The maximum working hours are reduced during the month of Ramadan to a maximum of six hours per day or thirty six hours per week.

• The working day of an employee must be broken by a minimum rest period of one hour. The maximum permitted continuous working hours is five.  

• Night work constitutes any work performed between 8:00 pm and 5:00 am.

• By default, Friday is the weekly off day.  It may be exchanged for another day of the week for work necessities.

• Employees are entitled to at least 30 working days of annual leave with full pay (for each year of effective service). Official holidays and days off falling within an employee’s annual leave may not be counted as part of his or her annual leave entitlement.

• Women are entitled to reduced working hours (to five hours per day, from the sixth month of pregnancy until the end of the sixth month after childbirth). According to the latest amendment to the Labour Law dated April 2008, women are also entitled to 70 days of maternity leave and employers are prohibited from dismissing any employee during such leave.

• Employees who are not covered by the provisions of the Social Insurance Act or any other regulation, will be entitled to receive from the employer, at the end of their service, severance pay equal to at least one month’s salary for each year of service (calculated on the basis of the last wage received by the employee).

• Upon the termination of an employee’s contract, the employer must provide the employee, free of charge, with a certificate of experience indicating the date on which his employment began, the date on which his employment was terminated, the nature of his work and the amount of his remuneration.

• The statutory “minimum” notice period, for terminating any employment contract under Labour Law is: 30 days for employees with monthly wages; 15 days for employees on fortnightly wages; and one week for employees working on hourly, daily or weekly wages, or working on project basis.

Termination of Employment Contracts

• Employers are entitled to unilaterally terminate a contract of employment without written notice or pay in lieu of notice only in certain circumstances, for instance in case of fraud, the employee being under the effect of drugs, assaulting a fellow employee or causing a material loss to the employer.

• An employer is also entitled to terminate the employment contract, by notifying the employee, if (i) there is a need for a reduction in the number of employees due to technical or economic reasons (following notifying the Labour Office), (ii) the employee is absent without legitimate reason for over 30 days within the same year or 15 consecutive days (provided that a written warning is first given by the employer), (iii) the employee reaches retirement age, or (iv) the employee is declared unfit to work by the competent medical committee. Terminating the contract of employment for any of the above reasons should not be considered as unfair dismissal. However, if the employer, terminates the employee’s contract for any other reason, not specified or permitted by Labour Law, it would be considered as a wrongful termination and the employee would be entitled to bring a claim against the employer for unfair dismissal which could result in a maximum compensation of six months pay.

• An employer may not terminate a contract of employment during any of the employee’s leave, during the investigation of a dispute between the employer and the employee (unless the employee commits another violation that requires his or her dismissal), or during the employee’s detention by the competent authorities in connection with his or her work, while a final decision has not yet been made in relation to the matter.

• According to the Labour Law, an employer may terminate the relationship for convenience by following very strict procedures laid down by the law, including serving witnessed verbal and written notices to the employee with copies to the Labour Office. Having stated so, unilateral termination by employers hardly passes unchallenged. Therefore, professional legal advice must be sought well in advance of any planned termination.     

Employment Disputes

• Prior to 2021, labour disputes were adjudicated and settled via public and compulsory arbitration committees as the first degree of resolution. These committees were imposed by the Labour Law and not by the will of the disputed parties, contrary to the general principles of arbitration. The arbitration procedures and panel were pre-determined by law. The arbitrators consisted of a representative of the labour union, the employer union, and a member of the Ministry. However, in 2021 this committee was abolished, and a Labour Court was established to replace it.

• • In general, litigation in Yemen is practically known for its prolonged bureaucratic proceedings and partiality. With regards to employment disputes, the local courts are clearly inclined towards employees, especially where the dispute involves a foreign employer. The fact that the Labour Law grants exclusive jurisdiction to local courts, this leaves no alternative dispute mechanisms to be sought.

Exclusive Malpractices to Yemeni Courts

• The firm has experienced a number of watertight ‘full discharge of liability and settlement agreements’ with terminated employees for cause, convenience or otherwise; whereby the employees would duly execute the agreements and receive all their legal dues, copies of which would then be filed with the Labour Office. Having been exposed to and practiced in different jurisdictions, the following scenarios was only experienced in Yemen:

• Employees who were duly terminated subject to the aforementioned procedures, would proceed with new claims against their employers, even after the lapse of the prescribed one year employment limitation period. Bewilderingly, the courts would admit such claims, setting aside the willful settlement agreements and dismissing the internationally recognized and adopted doctrine of limitation periods. I personally find this outrageous!

 Conclusion

        Surprising as it may read to more developed jurisdictions, it is our duty, especially as the exclusive representative of the Employment Law Alliance in Yemen, to provide an objective overview of the issues surrounding employment relationships, both under the Labour Law and court practices. Therefore, we cannot emphasise further, especially to foreign employers, the importance of seeking professional legal assistance pre and throughout employment relationships in this jurisdiction.