New Labour Law in force in the United Arab Emirates

new labor law in the uae

Federal Decree Law NR. 33/2021

The new Federal Decree Law nr. 33/2021, which replaces law nr. 8/1980, will enter into force on February 2, 2022.

Important changes are foreseen in the regulation of labor relations in the private sector.

The new law applies to all current contracts.

Who does the new law apply to?

Under Section 3:

  • The Law applies to all private sector establishments, employers, and workers in the U.A.E., except those located at DIFC and ADGM.
  • The law does not apply to: (i) employees of federal and local government entities; (ii) members of the armed forces, police and security forces; and (iii) domestic workers.

What is the default employment contract?

The open-ended contract disappears and is replaced by a single type of contract: the fixed-term contract, the duration of which cannot exceed three years and which can be renewed for a shorter or similar period by mutual agreement between the two parties.

The employment contract may be terminated with a minimum of 30 days and a maximum of three (3) months notice.

All existing contracts, including open-ended contracts, will have to be updated within one year of the entry into force of this new law (i.e., by February 1, 2023).

What are the new work models?

The new law introduces much more flexibility in the management of labour relations.

Thus, under section 7, it is possible to resort to :

  • Full-time: this allows an employee to work for a single employer on a full-time basis.
  • Part-time: this allows an employee to work for one or more employers for a certain number of days or hours.
  • Temporary work: allows the employer to hire an employee for a specific period of time or for a specific project.
  • Flexible work: this allows for changes in work hours or days, depending on the workload and the employer’s requirements. An employer may also allow employees to choose the hours they work.

Do I have to give notice during the trial period?

  • If the company wishes to terminate the employee’s contract during the probationary period, it must inform the employee in writing with a notice period of at least 14 days before the date of termination.
  • If the employee wishes to leave the company during the probationary period to join another company in the UAE, he/she must inform his/her employer in writing with at least 30 days’ notice prior to his/her departure. In addition, the new employer will be required to reimburse the current employer for all recruitment costs incurred in hiring the employee, unless otherwise agreed by the parties.

What about the non-competition and non-disclosure clause?

Under Article 10, the employer may prohibit the employee from working for a competitor or participating in a competing project in the same sector of activity, if the duties entrusted to the employee allow him to know the employer’s clients or to have access to trade secrets.

In order to be enforceable, the non-competition clause must meet certain cumulative criteria that determine its validity.

The clause must be written into the employment contract.

The clause is only applicable if it protects the interests of the company (when the employee is in direct contact with customers, for example).

The non-competition clause applies :

  • In time (its duration cannot exceed 2 years after the expiration of the contract)
  • In space (a geographical area must be specified)
  • To a specific activity

What is the premium for overtime?

Under Article 19, all overtime will be calculated on the base salary.

The overtime rate cannot be less than 25% for each hour of overtime.

The overtime rate cannot be less than 50% for overtime worked between 10:00 p.m. and 4:00 a.m. (except for rotations).

Overtime shall not exceed 2 hours per day and shall not exceed 144 hours in any 3 week period.

What’s new about maternity leave?

Under Article 30, the right to maternity leave is sixty (60) days and is paid as follows

  • 100% of salary for the first forty-five (45) days
  • 50% of salary for the following fifteen (15) days

After her maternity leave, the employee may request a leave of absence without pay for a period not exceeding (45) continuous or intermittent days, in case of illness of the employee or of her child following the pregnancy or the delivery which does not allow her to return to work. The illness must be proven by a medical certificate.

The employee is entitled to maternity leave as indicated above, if the delivery has taken place after six (6) months or more of pregnancy even if the child is stillborn or born alive and then dies.

The employee is entitled to an additional leave of absence of (30) thirty days at the end of the maternity leave period, paid at 100%, if she gives birth to a sick or disabled child, whose state of health requires constant support according to a medical report. The leave may be extended by thirty (30) days without pay.

What about the new leaves?

Under Article 32, an employee is entitled to paid leave in the following cases:

  • A parental bereavement leave of (5) five days, in the event of the death of a husband or wife, and (3) three days in the event of the death of a mother, father, child, brother, sister, grandchild, grandfather or grandmother, from the date of death.
  • Parental leave for a period of (5) five working days, for the employee (whether father or mother) to care for his or her child. This leave may be used continuously or intermittently within a period of (6) six months from the birth of the child.
  • Educational leave for a period of (10) ten working days per year if the employee is enrolled or regularly studying at one of the state-approved institutions in order to sit for examinations, provided that the period of employment with the employer is not less than two years.

What’s new in terms of wages and severance pay?

  • A minimum wage to be respected according to the employee’s qualifications
  • Equal wages between men and women for the same functions
  • End of service indemnity is due for all employees, regardless of the reason for termination, and is calculated on the basis of 21 days of basic salary for each year of service during the first five years and on the basis of 30 days for each subsequent year.

What’s new for dispute resolution?

The new law facilitates and accelerates the procedures for the settlement of labor law disputes. The date of the first hearing must be set within 3 working days after the receipt of the MOHRE’s claim, and the Tribunal must rule as soon as possible.

In addition, the new law exempts employees and their heirs from all court costs in all phases of litigation and enforcement, for any claim not exceeding AED 100,000.

More information is expected in the coming weeks. The changes introduced by this new law will need to be carefully reviewed once the law is officially published.

Companies will have to comply with this new law and will have until 1/02/2023 to make the necessary changes, including the conversion of any open-ended employment contract to a fixed-term contract.

Do not hesitate to contact our lawyer Josephine D’Angelo by phone at +971 56 953 7401 or by email at josephinedangelo@merritt-legal.com.