EMPLOYMENT BULLETIN

REGULATORY UPDATE: AMENDMENTS TO THE EMPLOYMENT ACT

The President of the Republic of Maldives has ratified the Sixth Amendment to the Employment Act 2008 (the “Sixth Amendment”) on 22nd September 2020.
This Sixth Amendment proposes sweeping changes to several key provisions of Law No. 2/2008 (the “Employment Act”), the majority of which came into effect upon ratification.

A copy of the Sixth Amendment (in Dhivehi language) is available on https://gazette.gov.mv/

This bulletin highlights and summarises the salient provisions of the Sixth Amendment.

INTRODUCTION

Authors’ Note: Since publication of our initial bulletin on 14th August 2020, the President’s Office has published the ratified version of the Sixth Amendment with erratum with respect to Section 28 of the Sixth Amendment. Pursuant to this revision, the Section pertaining to Service Charge will come into effect from 1 January 2021 (and the Section pertaining to Sick Leave is effective from the date of ratification).

AMENDMENTS TO THE EMPLOYMENT ACT

Employment Agreement

• Employers who fail to provide employees with a signed copy of the employment agreement will be subject to an administrative fine.
• Employers must provide a counter-signed copy within 3 months of ratification.
• Failure to comply may result in a fine ranging from MVR 2,000 to MVR 20,000.

Probation Period

• Employees on probation are entitled to rights under Sections 32 to 57 of the Act.
• This includes working hours, leave entitlements, and remuneration protections.

Redundancy

• Redundancy is now formally recognized as a valid ground for termination.
• Applies where business ceases, restructures, or faces financial hardship.
• Employers must act in good faith and avoid targeting specific employees.
• Guidelines will be issued by the Ministry within 6 months.
• Minimum notice requirements:
  • Less than 1 year: 1 month notice or pay in lieu
  • 1–4 years: 2 months notice or pay in lieu
  • More than 4 years: 3 months notice or pay in lieu

Employee Right to Resign

• Employees may issue a notice of breach to employers.
• If not remedied, employees may resign with contractual notice.

Working Hours Records

• Employers must maintain records of working hours, overtime, and pay.
• Records must be submitted to the Labour Relations Authority upon request.
• Failure to comply may result in fines up to MVR 5,000.

Exempt Employees

• Exempt employees are no longer fully exempt from Chapter 4 provisions.
• They remain exempt only from Sections 32, 37, and 38.

Senior Management Definition

• Defined as employees designated by employers in senior roles.
• Detailed criteria to be issued by the Ministry.

Right to Leave Work Site

• Employees cannot be forced to remain at work after working hours.
• Employers must allow employees to leave freely after duty hours.

Sick Leave

• Minimum 30 days paid sick leave applies.
• Medical certificate required, except for limited exceptions.

Service Charge

• Effective from 1 January 2021.
• Mandatory 10% service charge applies in tourism sector.
• Must be distributed equally among employees.
• 1% may be retained as administrative fee.
• Employers must maintain and submit records to authorities.

Foreign Employment

• Work permits and quotas will be regulated by new rules.
• Annual quota fee of MVR 2,000 introduced.
• Work permit fee increased to MVR 350/month.

Expatriate Limits

• Maximum 100,000 expatriates per country allowed.
• 3-year grace period for compliance.

Training and Maldivian Employment

• HR head must be Maldivian if workforce exceeds 50 employees.
• 60% of senior management must be Maldivian (within 5 years).

Accommodation Standards

• Regulations to be issued within 30 days.
• 6-month grace period for compliance.

Minimum Wage

• Minister empowered to set minimum wage.
• Minimum Wage Advisory Board to be established.
• Implementation expected by end of 2021.