The UAE’s Largest Legislative Reform in History

On November 15, 2021, the government announced a set of new regulations (the New UAE Labour Law) aimed at unifying the employment system for the private and public sectors. Decree-Law No. 33 of 2021 on the Regulation of Labour Relations is expected to enter into force on February 2, 2022. These changes are among the most significant ever seen since the Labour Law was introduced in 1980. The Ministry of Human Resources and Emiratisation (MOHRE) explains that this new law responds to the rapidly changing work environment in the current context of COVID-19. It also aims to contribute to employees’ well-being in their work environment. Under these new decrees, public- and private-sector employees will have the same rights regarding leave and end-of-service benefits. In addition, employees will be able to apply for full-time, part-time, and temporary positions.

What changes does the new Law introduce?

            4 types of contracts are now available:

• Full-time
• Part-time
• Temporary
• Flexible

Regarding weekly working hours, workweeks may not exceed 48 hours, with a maximum of 144 hours worked over every 3-week period.             New categories of leave    Under this new law, employees will be entitled to the following leave:

• Maternity leave: maximum of 60 days (45 days at full pay and 15 days at half pay)
• Paternity leave: maximum of 5 days, to be taken intermittently or consecutively within six months following the birth of a child
• Bereavement leave following the death of a close family member: 3-5 days
• Sick leave: maximum of 90 days
• Study leave: maximum of 10 days for employees who must sit examinations, provided they have already completed two years with their employer. For the time being, we do not know whether this leave will be paid or unpaid.

            End-of-service benefits

• 21 days of basic salary for the first 5 years with the company
• 30 days of basic salary after 5 years with the company

            Employment contracts

Under Article 8 of this new law, indefinite-term employment contracts will be abolished. They will be replaced by renewable three-year fixed-term contracts.

• All employment contracts will be converted into 3-year fixed-term contracts
• Indefinite-term contracts will no longer exist

            1/02/2023: deadline for drafting new employment contracts

All private-sector employers are required to replace their employees’ current employment contracts with new contracts compliant with the new law. Employers have one full year to make these changes.

            Minimum wage

Article 27 of the new law will establish a minimum wage. For the first time in the UAE, a minimum wage is being discussed, an unprecedented measure for the UAE. The minimum wage amount will be determined and announced by the UAE Cabinet upon the recommendation of the Minister of Human Resources and Emiratisation, in cooperation with the competent authorities.

            Compressed workweeks

This new law provides for the possibility of shortening workweeks through a compressed working-hours model. Article 65 of the current law stipulates that normal working hours in the private sector are 8 hours per day or 48 hours per week. The new law allows employers to offer their employees 4-day workweeks consisting of 10 working hours per day. This change follows recent changes allowing the public sector to work 4 and a half days per week.

            Working hours and overtime

Employees are strictly prohibited from working more than 5 consecutive hours without taking a break of at least one hour. Only two hours of overtime per day and per employee are permitted. Where the nature of the work requires overtime, the employer must apply the following remuneration:

• More than two hours of overtime: daily wage increased by 25 percent
• If the overtime takes place between 22h and 4h: daily wage increased by 50 percent
• Employees working 3x8 shifts are not affected by these changes

            Non-compete clause

This new law allows employers and employees to enter into a non-compete agreement. The agreement must specify its duration, geographical scope, and the types of employment to which it applies.

            Notice of termination during the probationary period

                                 By the employer

An employer who decides to terminate an employee during the probationary period must give the employee 14 days’ notice.

                                 By the employee

As for the employee, the law requires 1 month’s notice if they wish to leave their position during the probationary period. In this case, the new employer must compensate the former employer for the recruitment costs incurred for that employee. Employees who wish to end their probationary period and leave the UAE may give 14 days’ notice. The same law stipulates that if the employee returns to the UAE within three months and joins a new employer, the new employer must compensate the former employer for the recruitment costs incurred for that employee.

            Equal pay for men and women

In addition to the provisions prohibiting discrimination based on race, sex, religion, etc., the new law explicitly states that women must be paid the same as men if they perform the same work or work of equal value.

            Protection against intimidation and sexual harassment at work

An employer may not force or threaten an employee with sanctions to obtain favors against the employee’s will. Sexual harassment, intimidation, and all forms of verbal, physical, or psychological violence are strictly prohibited. In addition, any form of discrimination based on race, color, sex, religion, or disability is also prohibited in the workplace.

            Abolition of court fees

Under this new law, employees or their heirs may file petitions or bring legal actions against employers without having to pay court fees. There is one limitation: the value of their claim must not exceed AED 100,000. Furthermore, the new law specifies that employers may under no circumstances charge recruitment and visa costs to employees. Employers are also prohibited from retaining or confiscating their employees’ official documents (passport, etc.). The new law has not yet been officially published, and we await further details in the coming weeks. Our partner, Merritt Legal Consultants, is available to provide you with additional information about the implementation of this new law. Merritt Legal Consultants works with a local law firm for all contentious proceedings and can assist you with your legal procedures. Please feel free to contact our lawyer, Maître Joséphine D’Angelo, by telephone at +971 56 953 7401 or by email at josephinedangelo@merritt-legal.com