The new labor law in UAE came into effect on February 2, 2022, which significantly restructured how employers and employees in the private sector work together. The government issued the new law under Federal Law No.33 of 2021, replacing the previous labor law (UAE Federal Law No. 8 of 1980).
The broad changes will push employers to adjust their contracts and company laws and policies effective February 2023. The driving force behind the move was to enable employees in the private sector to work on flexible employment terms such as flexible and condensed work hours, extended leave days and shared jobs. However, the public sector and domestic workers are unaffected by the law.
The following is a summary of the key areas affected by the new labor law in UAE:
Fixed-Term Employment Contract
Employees will now be hired under limited contracts of up to three years. The change comes as a significant shift from the previous unlimited contract terms. Further, employers have one year from when the new law kicks in to change indefinite term contracts into fixed-term employment contracts.
Flexible Working Arrangements
This is not necessarily a complete change as UAE workplaces were already applying them. Employees can choose full-time, part-time, temporary, or flexible work, depending on how they agree with the employer. Freelance work is also permitted under the Executive Regulations without the authority of a UAE employer, further cementing the country as a gig-friendly destination.
Probation Period
The probationary period will still be six months as before. However, employees under probation who want to end the contract must issue a 14-day notice to the employer. Likewise, if an individual wants to change jobs while on probation, they have to inform the employer 30 days prior, and if they're going to leave the UAE, they have to issue a 14-day notice.
Non-Competition Clauses
An employer can put a non-compete clause in the contracts for a maximum of two years from when employment ends. The employer should be specific about the nature and location of work an employee is prohibited from during this period.
Changes to Leave and Pay Terms
An employee will no longer have to attain one year of continuous service to claim full pay of 45 days of maternity leave. In addition, they can take an extra 15 days with half pay. The same leave and pay terms also extend to employees who experience miscarriage, stillbirth, and newborn death. However, there will be another 45 days added but without pay for pregnancy-related illness. A parent with a disabled or sick child will receive a 30-day fully paid leave, which starts after the maternity leave.
An employee will take either 5 or 3 days of paid compassionate leave for the death of a spouse or death of other family members such as a child or sibling, respectively. Employees with two years of service can take 10 days of study leave in a year provided they are enrolled in an accredited institution in the UAE. However, the new labor law has not specified the payment terms. Employees will be entitled to at least one rest day on any day, not limited to Fridays only, depending on the contract.
Contract Termination Update
An employee's contract can now be terminated on the grounds of redundancy. However, there are other viable grounds for the employer. The employee pursues profit or personal gain in their role or starts a new job without following the applicable rules and procedures. The notice given for termination is still 30 days; however, the maximum limit period reaches 90 days.
Employee Workplace Protection Measures
The new law prohibits discrimination towards employees regardless of race, color, gender, nationality, religion, ethnicity, or disability. Employees are also safeguarded against harassment. Employers will also have no power to withhold employees' official documents and passports. All end-of-service entitlements must be paid to the employee within 14 days from the date they stop working, including end-of-service gratuity payments to be paid in full after completing at least one year of service.
As we advance
All employers in the private sector, including those in the onshore and free zones, need to familiarize themselves with the new labor law in UAE and take action to ensure they avoid non-compliance risks.
The new labor law changes will also be heavily felt among the over 4.9 million workers registered under the UAE's Ministry of Human Resources and Emiratisation (MoHRE). They will have to adjust to updated employment policies and employment contracts.
Get in touch
If you're a business owner or professional wanting to set up your business in Dubai, Sentinel Business Centres will ease the stress of settling in. With the new law reshaping the UAE's labor force, there is no better time to have Sentinel's professional team and guidance by your side. Contact us to learn more and get started.