A company may be incorporated in Qatar under three different legal regimes:

  • the Commercial Companies Law (Law 5 of 2002, as amended);
  • the Qatar Financial Centre (QFC) Companies Regulations; or
  • the Qatar Science & Technology Park (QSTP) Free Zone Regulations (Schedule A of the Company Regulations).

The QFC regime was designed for banking, finance, insurance and other related businesses, while the QSTP regime was developed for businesses involved in research and development, technology, education, training and other related activities. Other types of businesses, including construction-related businesses, can avail themselves of the Commercial Companies Law regime.

Construction company

Given the specific scope of application of the QFC and QSTP regimes, the Commercial Companies Law provides the most appropriate legal framework for incorporating a construction company in Qatar. It recognises several types of entity, including single person companies, limited liability companies, public and private shareholding companies, and so-called ‘Article 68 companies’. An Article 68 company is a special type of shareholding company, at least one partner of which must be the government of Qatar, a public corporation, a public authority or a company 51% of the capital of which is held by the State of Qatar. If less than 51% of the shares in the capital are held by the State of Qatar, the formation of the company is subject to the approval of the Council of Ministers.(1)

Subject to certain exceptions, foreign investors may invest in most sectors of the national economy (including the construction sector), provided that they team up with one or more Qatari partner which owns a minimum of 51% of the shares in the capital of the local company (the Foreign Investment Law (Article 2.1 of Law 13 of 2000)).(2) Therefore, a single person company (ie, a company with only one partner) is a feasible option for a foreign investor only if an exemption is obtained from the Ministry of Business and Trade.(3)

Engineering construction-related office

The establishment of a local or an international engineering consultancy office in Qatar is governed by the Engineering Law (Law 19 of 2005). An engineering consultancy office created under the Engineering Law may undertake engineering construction-related work in Qatar.(4)

Local engineering consultancy office
 A foreign engineering company may register a local engineering consultancy office provided that it has one or more Qatari partner which owns no less than 51% of the shares in the capital of the local engineering consultancy office.(5) Qatari partners can be a Qatari physical or legal person. In the latter case it must be a wholly owned Qatari entity.

The local engineering consultancy office is divided into three classes. For each class, the Engineering Law provides special requirements, in particular regarding the minimum number of engineers involved and the scope and value of projects to be conducted.

International engineering consultancy office
 A foreign engineering company may register an international office in Qatar as a branch. The main office abroad must be licensed to provide engineering consultancy services and must have been continuously active in the engineering sector for at least 10 years. An international engineering consultancy office does not require a Qatari partner and is not divided into different classes. All of the engineers working for the local or international engineering consultancy office must be registered before the Engineering Committee and hold a Qatari engineering practice licence.

Other options

Depending on the circumstances, there may be no need to incorporate a local company for carrying out construction-related business in Qatar. Depending on the precise nature of the activities to be carried out, construction-related business may be undertaken by either a foreign branch or a trade representative office. A Qatari partner is not required in any of these scenarios.

Foreign branch
 Subject to obtaining an exemption from the Ministry of Business and Trade, a foreign construction company may register a branch in Qatar under Article 3 of the Foreign Investment Law. To obtain this exemption, the foreign construction or engineering company must have a contract or subcontract which facilitates the rendering of a service or otherwise benefits the public in Qatar. This generally entails entering into a contract or subcontract with the Qatari government or a quasi-governmental entity.

An exemption obtained from the Ministry of Business and Trade applies only in respect of the project for which it is granted. The Qatari branch of the foreign construction or engineering company is entitled only to conduct the necessary activities to fulfil its obligations under the specific project in respect of which the exemption has been granted, and therefore its lifetime is linked to the duration of the project.

Trade representative office
 A trade representative office might be considered to be a kind of ‘shop window’. It may be used to promote a foreign construction or engineering company in Qatar by introducing that company to the Qatari market through marketing and promotions. The trade representative office cannot sell or enter into contracts in Qatar. Business must be carried out either by the foreign construction or engineering company (where the contract can be performed outside Qatar) or by a company or branch established in Qatar (where the contract must be performed in Qatar).

Comment

There are four alternatives for foreign investors which wish to undertake construction-related activities in Qatar. They may:

  • set up a local company under the Commercial Companies Law;
  • register a foreign branch (provided the scope and nature of the proposed project meet the criteria set forth in Article 3 of the Foreign Investment Law);
  • establish a local or an international engineering consultancy office; or
  • establish a trade representative office (simply to promote construction business).

Endnotes

(1) Law 2 of 2008 amending provisions of Law 5 of 2002 relating to the commercial companies.

(2) Law 13 of 2000 Regulating the Investment of Foreign Capital in Economic Activities as amended by Law 31 of 2004, Law 2 of 2005, Law 6 of 2006 and Law 1 of 2010 respectively.

(3) The Ministry of Business and Trade may grant an exemption in relation to selected sectors, such as agriculture, industry, health, education, tourism, development of natural resources or energy and mining, consultancy services, IT services, and other services related to sports, culture, entertainment and distribution (Article 2.2 of the Foreign Investment Law).

(4) Engineering Consultancy: preparing architectural and constructional drawings, diagrams, designs, surveying, diagramming; supervising over performance; giving advice; conducting feasibility studies; estimating costs and computing quantities; and managing projects in the various engineering professions (Article 1 of Law 19 of 2005).

(5) Law 19 of 2005 Regulating the Practice of Engineering Professions and Decision 1 of 2006 issuing the Regulations for implementing Law 19 of 2005 of the Board of Directors of the Public Works Authority and the General Authority of Planning and Urban Development.

Construction Law deals primarily with contract law and encompasses all aspects of the legal process, from the initial bidding on the project, to the negotiation and the formation of the agreements and contracts.

Construction law also governs disputes between the parties involved in the construction process (i.e. builder and homeowner). There are many laws that govern the construction process, and that apply to the various businesses and professions that are a part of and serve the construction industry.

Government contract law is a specific area of construction law. These projects involve the Federal, State and Local Governments, and are governed by very precise government laws, legal principles and legal procedures.

When injuries occur, workers’ compensation law is also a subset of construction law.

In construction law, both the owner and the contractor are required by law to act in good faith in the performance of their contractual obligations. Courts have held that the construction contractor owes the owner a duty to perform services in an appropriate workmanlike manner. This duty requires the contractor to warn the owner if the design or construction specifications may have damaging results. Likewise, courts have held than an owner has a duty to cooperate with contractors. The owner’s duty to cooperate also requires that the owner not interfere with or purposefully delay the contractor’s performance.

Although specialized, construction law can touch on many legal practice areas. If you have issues with your contractor, you might want to speak with an attorney who has expertise in this complex field.

How Employment Law affects Construction Industry

The construction industry has several minimum standards that are different from other industries. Employees performing construction work, and their employers, need to know the different rules for termination and general holidays. The Construction Industry Wages Act also sets the minimum wages in the industry for tradespersons and other construction workers in the Industrial, Commercial, Institutional sector (ICI) and the Heavy construction sectors.

 

 

Construction includes alteration, building, decoration, demolition, erection, maintenance, relocation, renovation or repair of buildings, structures, roads, sewers, water or gas mains, pipelines, transmission lines, tunnels, bridges, or canals.

The legislation only applies to employees. True independent contractors are not employees and are excluded from the legislation, but this type of employment relationship can be complicated. The nature of the relationship between the parties would determine whether someone is truly an independent contractor. Consideration needs to be given to a number of factors, such as:

  • Who controls duties and schedules
  • The ability to negotiate payment
  • The method of payments

A person who has not been paid properly and feels they may be an employee can file a claim with Employment Standards. An Officer will make a determination if the person is an independent contractor or an employee.

Most parts of The Employment Standards Code, which establishes the rights and responsibilities of most employees in Manitoba, also applies to employers and employees in construction, including:

See those fact sheets for more information.

 

Employees who work in the construction industry must be paid within 5 days after the end of the pay period. If employment has ended, the employer must pay all wages owed to the employee within 5 days.

The standards for general holidays and termination of employment are the same for all employees in ICI and Heavy construction, but wages and hours of work depend on the type of construction job and its location. The Construction Industry Wages Act covers employees working in the ICI and Heavy Construction sectors.

The Employment Standards Code covers employees in the house building sector.

Employees and employers in all sectors of construction can terminate employment at any time without notice. No notice is required by either party regardless of the number of years they have worked together.

Unlike employees in other industries, construction employees are paid for general holidays at 4% of their regular earnings. Regular earnings include vacation wages but do not include overtime wages. Employers can include the general holiday pay on every cheque, or pay it all out at the end of the year.

Construction employees who work on a general holiday are entitled to 1 ½ times the regular wage for all hours worked in addition to general holiday pay.

Construction employees must be paid all general holiday pay by the end of the year. Some employers add general holiday pay to every cheque or in smaller amounts throughout the year, while others pay it all at the end of the year. Employees who are not sure how they are being paid for general holidays should ask their employers.

Construction employees earn general holiday pay at 4% of their gross regular wages. They receive this pay even if they never work on a general holiday.

For example: if employees work from June 1 to June 30, a period where there is not a general holiday, they would still receive 4% of their regular earnings as general holiday pay.

If an employee works on a general holiday, they must be paid 1 ½ times their regular wage for all hours worked on that day, in addition to 4% general holiday pay.

Employers in the construction industry can pay employees for their vacations and general holidays once a year, on every cheque, or in smaller amounts throughout the year.

For vacation pay, employees earn 2% of their total gross wages for each week of vacation. Employees with less than five years of service with the same employer are entitled to two weeks’ vacation and receive 4% of their regular wages for vacation pay. Employees with at least five years with the same employer get three weeks’ vacation and earn 6% as vacation pay.

For general holidays, the employee receives 4% general holiday pay.

The standard hours of work in the residential construction sector are 8 hours in a day and 40 hours in a week.

In ICI construction, the standard hours are 10 hours in a day and 40 hours in a week.

In Heavy construction, the standard hours are

  • If the work is being done outside Winnipeg: 50 hours per week
  • If the work is being done in Winnipeg:
    • 50 hours per week from April 1 to October 31
    • 48 hours per week from November 1 to March 31

Any hours worked in excess of these standard hours must be paid at 1 ½ the employee’s regular wage rate as overtime.

The ICI and heavy construction sectors do not include:

  • House building (except for major building construction projects)
  • Renovations and redecorations (unless the work requires structural or architectural renovations)
  • Onsite maintenance by regular maintenance staff
  • In-shop prefabrication of structures
  • Construction of farm buildings

Employees doing these types of construction are covered under The Employment Standards Code.See the Quick Guide to Employment Standards fact sheet for more information.

Generally, the construction of a dwelling unit falls under the house building sector and is covered byThe Employment Standards Code. However, the construction of an apartment building or complex, whether the units are rented or owned, is part of the ICI sector.

Generally speaking, all renovations and redecorations are excluded from the ICI sector unless the work involves the structural or architectural alteration or remodelling of the building or structure. The need for a blueprint is one sign that the work being done is likely part of the ICI sector.

No. The onsite maintenance of an industrial, commercial or institutional building is specifically excluded from the ICI and heavy construction sectors and is covered instead by The Employment Standards Code.

Employees who prefabricate a structure or part of a structure away from a construction site are excluded from the ICI and Heavy sectors. Employees who are required to build structures or parts of structures directly on the construction site are part of the ICI sector.

Construction of farm buildings is not part of the ICI or heavy sector. A farm building is a building or structure, other than a dwelling, situated on a farm and used in the actual farming operation. This includes buildings used to house equipment or livestock, or those used for production, storage, or processing agricultural produce or feeds. For example: the construction of a hog barn, milking centre, grain bin or silo would be excluded from the ICI and heavy sectors.

Some employees may want to buy tools from their employers. The tools may even be a condition of employment, which employees must have for that workplace. Common examples are automotive mechanics and construction workers. Employers can deduct the cost from an employee’s wages only if the employee agrees, and the tool:

  • Remains the property of the employee
  • Is not unique to this particular employer
  • Is available for purchase from different suppliers
  • Can reasonably be expected to be used at different employers in the same occupation
  • Is voluntarily bought from the employer instead of another supplier
  • Is not required by law to be provided by the employer to the employee

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Workplace Safety and Health legislation states any equipment, device, or clothing required to be worn to help with rescue or to provide protection from health and safety hazards at a workplace must be provided and paid for by employers. There are exceptions for safety headwear and some safety footwear.

Contact Workplace Safety and Health at 204-945-3446 for more information.

Employers may not deduct wages to cover any costs for faulty work, poor quality work, loss of customers, cash shortages, or damages to their property. This includes: the cost of car accidents and parking tickets involving company vehicles, dishes broken by employees, customers leaving without paying. See the Deductions fact sheet
Employers have the right to take action against an employee who caused the damages in civil court. If a court issues an order of repayment, the employer can then garnish the wages of the employee.

European Legal requirements and operation of construction companies

The mechanism under which the UK can extract itself from the European Union is set out in Article 50 of the Treaty on European Union. A leave vote will trigger a notice under Article 50 (which the UK may or may not decide to give immediately), which will be followed by exit negotiations. As part of the process, the UK will need to consider and negotiate the options for its future relationship with the EU. Article 50 provides for a two year negotiation period, during which time the UK will continue to be a member of the EU, and subject to its laws. No country has ever previously withdrawn from the EU and the impact of a leave vote is therefore the subject of much debate, speculation and uncertainty. The implications of a Brexit will very much depend on the outcome of negotiations in respect of the UK’s future relationship with the EU, but issues, which might affect the construction industry, are:

Availability of labour

The construction industry relies heavily on European labour. Until now, movement of labor through the EU has been facilitated by the principles of freedom of movement enshrined in European law.

A leave vote is likely to impact on availability of labour as free movement is likely to be restricted following the transition period. Whilst the UK may introduce new visa systems this could take a considerable time and added complexities may deter workers from seeking to work in the UK, perhaps preferring other European destinations.

A shortage of workers could be serious for the construction industry. It may lead to higher wages being commanded by those workers who are in the UK labour market which individual workers may no doubt welcome, but which in turn could increase the cost of projects. Depending on the replacement schemes put in place, construction companies may find themselves faced with increased bureaucracy in dealing with visas and immigration law. On the other hand, it’s possible that a skills shortage may result in increased investment in training and upskilling of local workers to fill the gaps

Materials

Similarly, EU membership allows free movement of goods across member states through the elimination of customs duties and quantitative restrictions. A leave vote will have implications for construction companies who import materials from the EU (and indeed for companies who export to the EU), and could leave them facing new duties or restrictions. If UK companies wish to continue to export materials or products to the EU they would still need to comply with EU product regulations in the relevant EU member state.

Investment

Investment is another area where the impact of a Brexit is likely to be felt. EU investment has funded numerous significant projects and regeneration schemes and the potential loss of such funding could affect the viability of future schemes. The counter argument, however, is that any loss of EU funding will be outweighed by the saving of the UK’s contributions to the EU, part of which could instead be directed towards such projects.

Regulation

EU “red tape” often comes in for criticism. From a construction perspective, given that most measures, (for example EU laws relating to health and safety and environmental protection), are now enshrined into UK law a Brexit may have little impact, at least initially. Is the UK likely to seek to amend or repeal legislation that protects the health and safety of our workers and the future of our environment? Perhaps not, but there may be areas of such laws which the UK may wish to address in time. For example, the extension of the application of the CDM Regulations to domestic projects was a requirement of EU law. It’s unclear whether the government would seek to amend this, and other EU driven regulations, following a Brexit, but a wholesale relaxation of regulation seems unlikely.

Conclusion

The company law in Qatar has been briefly explained along with its regulations and obligations as well as the procedure of establishing companies under the said law with regard to various types of companies inclusive of both local and international businesses. As a whole, the company law in Qatar appears to be convenient for the business start-ups particularly in the local context.

The next section discusses the construction law and the requirements and limitations imposed by the said laws in relation to the businesses as well as the employees.

The employee protection laws and the ways in which they have been enshrined in compliance with the construction law, have been examined in the next section in detail.

The European regulations with this regard also have been discussed in the sections which follows the above and the differences which might occur due to the separation of the United Kingdom from the European Union and its subsequent legal backdrop that affects the aforementioned laws, have also been discussed at the end.