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New Labour Laws in the UAE

The New Labour Law (Federal Law No. 33 of 2021) has gone into effect from 2nd February 2022, in the UAE and looks very attractive. It applies to all companies and employees in the private sector in the UAE, including all free zones. Employers will need to make changes to employment contracts, policies, and practices. In effect, employees both in government and private sectors will have a similar working environment. These reforms will improve employee morale and give them more time for their personal and mental wellness.

Listed below are some of the key aspects of the New UAE Labour Law.

  1. Protections Against Discrimination:
  • The law prohibits discrimination against individuals on the grounds of race, religion, color, sex, national origin, ethnic origin, and disability. 
  1. Protection Against Harassment:
  • The law prohibits harassment, bullying, or any verbal, physical, or mental violence against employees.
  1. Equal Pay for Women:
  • Although this seems to be a new development, the concept of equal pay in the UAE is not new. Provisions requiring women to be paid equally as men for an equal value of work were introduced into the current Labour Law in 2020.
  1. Fixed-Term Employment Contracts:
  • All employees must be employed on fixed-term employment contracts for up to three years. However, the contracts may be extended for the same period.
  • Employers will have one year from February 2, 2022, to transition all their employees onto new contracts. 
  1. Flexible Working Models:
  • The new Labour law provides flexible working models for employees. Employees may undertake full-time, part-time, temporary, or flexible work. In practice, these models are already implemented by many UAE employers.
  • The UAE, for the first time, recognises part-time working where an employee may be employed with two or more employers in the private sector.
  1. Template Employment Contracts for Flexible Working Models:
  • The new law will issue executive regulations containing template employment contracts for each of the new flexible working models. The Ministry of Human Resources & Emiratization (MHRE) will introduce the new template contracts with a straightforward, dual-language format.
  • However, some companies may still want to issue their own employment contracts containing more sophisticated terms and conditions.
  1. Termination on Notice and Notice Periods:
  • Either party may give written notice to the other to end the employment relationship for good reason. Minimum notice periods are still 30 days, but they are now capped at 90 days.
  • This may be an unwelcome development for employers who need to handle the departure, replacement, and recruitment of senior executives. Typically, senior executives have notice periods of 6 to 12 months.
  1. Notice Periods for Existing Unlimited Employment Contracts:
  • Although unlimited contracts are to be replaced by fixed-term employment contracts, the New Labour Law imposes minimum notice periods for the termination of existing unlimited contracts, depending on the employee’s length of service. These include:
    • 30 days in case the employee’s period of service is less than five years
    • 60 days in case the employee’s period of service is more than five years
    • 90 days in case the employee’s period of service is more than ten years
  1. Termination During Probationary Period:
  • By Employers: Employers may terminate employment during the probationary period by giving written notice of 14 days.
  • By Employee:
    • Employees who want to move to another employer in the UAE during their probationary period may terminate their employment by giving written notice of at least one month. In this case, the New Labour Law also states that the employee’s new employer should compensate the old employer for recruitment costs.
    • Employees who want to leave the UAE during their probationary period may terminate their employment by giving written notice of at least 14 days. In this case, the New Labour Law states that if the employee returns to the UAE and obtains a work permit with another employee within three months of their departure, The employee’s new company should reimburse the employee’s previous employer for the expenditures of recruitment.
  1. Reasons for Termination:
  • The reasons for terminating an employee’s employment have been expanded to include:
    • The permanent closure of the employer
    • The bankruptcy of the employer
    • The failure of the employee to satisfy the requisite immigration requirements
  1. Suspension of Employees:
  • Suspension of employees up to 30 days with half pay will be permitted to enable an employer to undertake a disciplinary investigation. However, if the employee is ultimately cleared of any wrongdoing, he will be entitled to reimbursement of all pay that is withheld.
  • However, most employers will likely continue to suspend employees on full pay and benefits. 
  1. Maternity Leave and Pay:
  • As per the new labour laws, maternity pay is increased to 60 days (45 days of full pay and 15 days of half pay). There is no qualifying service required to avail maternal pay.
  • Employees will be entitled to an additional unpaid leave of 45 days if they suffer a pregnancy-related illness. This period of leave will be excluded while calculating the employee’s end-of-service gratuity.
  • Further, employees will now be entitled to maternity leave and pay in the case of stillborn babies and new-born deaths.
  • Additional maternity and paternity leaves will also help in promoting care for the new born.
  1. Parental Leave:
  • Although this seems to be a new development, the concept of parental leave was introduced into the current Labour Law in 2020. Employees will be entitled to five days of paid leave in the six months of the birth of their child.
  • This leave will be in addition to any maternity leave that an employee is entitled to. There is no criterion for qualifying service.
  1. Disability Leave:
  • Employees with babies who have disabilities may be entitled to an additional 60 days of leave on full pay.
  1. Formation of Supreme Arbitration Committee:
  • A supreme arbitration committee for collective labour disputes has been formed to deal with workplace irregularities.

Conclusion:

The New Labour Law is in response to the rapidly changing workplace environment in the UAE amid technological advancements in the ongoing pandemic world. It aims to enhance regulations for different work categories, such as temporary and part-time work, to provide greater protection for employees and introduce more flexibility into the workplace. 

If you are a foreign investor or an entrepreneur looking to start a business in the UAE, our team at Creative Zone can guide you on the New Labour Laws and their applicability to your business. Please call us at 800 LICENSE (5423673) to speak to one of our Labour laws advisors today.


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