The new Labor Law “Federal Decree-Law No. 33 of 2021” came into effect on the 2nd of February 2022, the law focuses on regarding the regulation of labor relations entered into force on all establishments, employers and workers in the private sector in the country, whereby Federal Law No. 8 of 1980 regarding the regulation of labor relations ends.
His Excellency Dr. Abdul Rahman Al Awar, Minister of Human Resources and Emiratization, said that the new law strengthens the position of the UAE labor market as one of the most prominent and important global labour markets that offers flexibility, efficiency, ease of work and attraction of competencies, expertise and skills, while protecting and guaranteeing the rights of both parties to the employment relationship in a balanced manner.
The law is designed to enhance employment rights and boost the competitiveness of the UAE as a place to live and work, helping the region to attract and retain world class talent.
The UAE government have introduced significant changes to family leave entitlements , discrimination laws , termination of employment and ‘non-compete’ clauses in employment contracts . The new law also encourages business to introduce more part-tie and flexible working opportunities for employees.
In terms of employment contracts, all employees must now be employed on a fixed term employment contract spanning up to three years at a time. Contracts can be renewed and any renewal must be included in the total period of service. Previously employees could be employed under either permanent or fixed term employment contracts and must sign a registered MoHRE standard contract.
New types of work contracts were also introduced , this includes full-time, part-time, temporary, flexible, remote working and job sharing contracts. Previously only full-time employment was possible with part-time working contracts only being introduced in 2019.
New changes were also made regarding probationary periods . Previously, the regulations included a maximum six-month probationary period, with no notice required from either party to terminate employment . The new regulations still keep the six-month probationary period, however employers must give 14 days’ notice to dismiss. On the other hand, employees must give a 14 day notice to resign if they are leaving the UAE or a one month notice if they are leaving to join another employer in the UAE. In the case where an employee leaves during the probationary period to join another employer in the UAE, the old employer may claim the costs of recruitment from the new employer.
Regarding non-competition restrictions, previously , non-competition clauses were permitted with no stated maximum length . The maximum permitted length was generally considered to be 12 months. However due to new regulations, Non-compete clauses can be used and can last up to two years’ in length.
The restriction must go no further than is necessary to protect a legitimate business interest requiring that it is limited in terms of geographical location, type of work and length.
The law sets out the circumstances in which post-termination restrictions will unenforceable including where, for example, the employer terminates the employment in breach of its legal obligations due to the employee.
Restrictive covenants can be set aside where any of the following occur:
• the parties’ written agreement;
• the new employer or the employee pays up to three months’ compensation to the old employer (subject to the old employer providing their written consent);
• the employee is terminated during their probationary period; or
• as may be deemed appropriate in light of labor market needs
Termination of Employees
New changes were also made regarding different topics in termination of employees . Regarding notice periods, previously the minimum notice period of 30 days was required for employees who have completed their probationary period. Recently however, new regulation dictates that a maximum of 90 days’ notice period has been introduced. For employees leaving while still employed on unlimited term contracts, minimum notice periods apply of 30 to 60 to 90 days depending on the employee’s length of service .
In regards to summary dismissal , previously, Article 120 of the Old Labor Law suggest specific reasons for which employees could be summarily dismissed. Employees summarily dismissed were not entitled to notice period or end of service gratuity. Under new legislation, the exhaustive list set out under the Old Labor Law has been maintained, with two further additions : abuses position with the aim to obtain personal gains/profits and joining another establishment without complying with procedures in place. Employees summarily dismissed lose their entitlement to a notice period, however they now retain their entitlement to an end of service gratuity payment.
Potential Liability
In the topic of discrimination , previously there was limited protection against discrimination put in place for employees. However now under new legislation, specific protections have been introduced for employees , meaning that they cannot be discriminated against on the basis of race, sex, religion , nationality or disability.
Harassment was overlooked and there were little to no anti-harassment provisions under the Old Labor Law . Now there are protections against sexual harassment, bullying and any verbal , physical or psychological violence to protect employees from any form of verbal or physical harassment in the workplace.
The Old Labor Law contained a limited right for the UAE courts to issue fines against employers. Now the UAE courts are able to issue fines against employers for breaches of the Labor Law. The ranges of these fines can be seen below:
– AED 20,000-100,000 for providing false information to recruit an expatriate employee;
– AED 50,000-200,000 for illegally employing an individual or recruiting an employee without having work to provide; and
– AED 5,000-1,000,000 for any violation of the UAE Labor Law.
Furthermore, fines can be doubled by the court for repetition of violations.
The New Labor Laws of Federal Decree-Law No.33 of 2021 replace the old law of Federal Law No.8 of 1980 and modernizes the labor laws of the UAE by providing more protection to employees and protecting them from social and economic issues that have started to occur only in recent times.
