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What you have to know about the New UAE Labor Law

News Fidinam DMCC

The Federal Decree Law no. 33 of 2021 (the “New UAE Labor Law”) shall take effect on February 2, 2022 and will repeal UAE Federal Law 8 of 1980 (the current Labor Law).

 

Like the current Labor Law, the New UAE Labor Law shall apply to all companies in the private sector, including Free Zone companies, with the sole exceptions of Dubai International Financial Center and Abu Dhabi Global Market which have their own labor law.

 

The major changes introduced by the New UAE Labor Law are summarized here below.

Abolition of unlimited contracts

Under Article 8 of the New Law, unlimited contracts are to be abolished and replaced with work contracts of a fixed term for a period of three years, which may be renewed on the same conditions with the consent of both parties for a similar period or less.

All employers in the private sector shall be required to replace their current employment contracts with contracts which comply with the New Law.

Employers have a maximum period of one year from the date of the New UAE Labor Law’s implementation in order to redraft existing employment contract in compliance with the new law, deadline is therefore 1 February 2023.

 

Minimum wage

Article 27 of the New Law will set a minimum wage, (as per current Labor Law there is no minimum wage).

The minimum salary amount has yet to be announced shall be determined by the UAE Cabinet following a proposal by the Minister of Human Resources and Emiratisation. 

No discrimination equal pay for equal work

 The New UAE Labor Law explicitly prohibits discrimination based on race, sex, religion etc., with an emphasis on granting women the same wage as men if they perform the same work.

New categories of leave granted to employees

 Employees shall have the right to request additional types of leave under the New UAE Labor Law, including (i) bereavement leave of three days following the death of close family members, (ii) parental leave of five days, to be taken intermittently or consecutively within six months of the birth of a child and (iii) study leave of 10 days for an employee who has to take exams, provided that they complete two years of work with that employer.

Maternity leave has also been amended, with 45 days of full pay and the next 15 days with half pay.

Different working models

 The New UAE Labor Law introduce new models of part-time work, temporary work and flexible work and also provide the option for a shorter working week via a condensed working hours model.

For instance, employers have the option to allow their employees to work for 40 hours in a week on a condensed model (e.g. 4-day week consisting of 10 hours per day).

Non-competition clause

 The New UAE Labor Law explicitly affirms the right of the employer to stipulate a non- compete agreement with the employee.

Notice of termination during the probation period

 The New UAE Labor Law requires that employees must serve 14 days’ notice on their employer if they wish to do terminate the contract during the probation period while the employer is still entitled to dismiss an employee at any time during their probationary period.

Notice of termination after the probation period

 The New UAE Labor Law capped the notice period at 3 months. Minimum notice period remains 30 days.

Our comment

As of today, it is still difficult to predict what will be the practical impact of the new law since many provisions of the law shall be detailed by executive regulations not yet approved and published.

 

 

The overall perception is that UAE will remain a dynamic labor environment where both, employer and employees, shall have reasonable freedom to achieve legitimate interests in line with business requirements and adequate economic remuneration of employee shall be trigged by their skills and performances rather than by initial contractual negotiation.

 

 

As usual, at Fidinam we keep monitoring the forthcoming legislation framework. Should you have any questions, please do not hesitate to get in touch with us via the form below.

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