Federal Decree Law NR. 33/2021

The new Federal Law NR. 33/2021 on labour law, which replaces Law NR. 8/1980, will enter into force on 2 February 2022. Important changes are expected regarding the regulation of employment relationships in the private sector. The new law applies to all existing contracts.

Who does the new Law apply to?

Pursuant to Article 3:

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

What is the default employment contract?

The indefinite-term contract is being removed and replaced by a single type of contract: the fixed-term contract, whose duration may not exceed three years and which may be renewed for a shorter or similar period by mutual agreement between the two parties. The employment contract may be terminated subject to a notice period ranging from a minimum of 30 days to a maximum of three (3) months. All existing contracts, particularly indefinite-term contracts, must be updated within one year from the entry into force of this new law (i.e. before 1 February 2023).

What are the new work models?

The new law introduces much greater flexibility in managing employment relationships. Thus, under Article 7, it is possible to use:

• Full-time work: this allows an employee to work for a single employer on a full-time basis.
• Part-time work: this allows an employee to work for one or more employers for a certain number of working days or hours.
• Temporary work: this allows an employer to hire an employee for a specific period or for a specific project.
• Flexible work: this allows working hours or days to be changed according to the workload and the employer's requirements. An employer may also allow employees to choose their working hours.

Is notice required during the probationary period?

• If the company wishes to terminate the employee's contract during the probationary period, it must notify the employee in writing, subject to at least 14 days' notice before the termination date.
• If the employee wishes to leave the company during the probationary period to join another company in the UAE, they must notify their employer in writing, giving at least 30 days' notice before their departure. In addition, the new employer must reimburse the current employer for all recruitment costs incurred in hiring the employee, unless otherwise agreed between the parties.

What about non-compete and non-disclosure clauses?

Under Article 10, an employer may prohibit an employee from working for a competitor or participating in a competing project in the same business sector if the employee's assigned duties allow them to become familiar with the employer's clients or access trade secrets. For it to be enforceable, the non-compete clause must meet certain cumulative criteria that determine its validity. The clause must be included in the employment contract in writing. The clause is enforceable only if it protects the company's interests (for example, when the employee is in direct contact with customers). The non-compete clause applies:

• In time (its duration may not exceed 2 years after the expiry of the contract)
• In geographical scope (a geographical area must be specified)
• To a specifically identified activity

What is the overtime premium?

Under Article 19, all overtime hours will be calculated on the basis of the basic salary. The premium rate may not be less than 25% for each overtime hour. The premium rate may not be less than 50% for overtime worked between 22:00 and 04:00 (except for shift rotations). Overtime must not exceed 2 hours per day and must not exceed 144 hours every 3 weeks.

What is new regarding maternity leave?

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

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

After maternity leave, the employee may request unpaid leave for a period not exceeding (45) forty-five continuous or intermittent days if she or her child develops an illness resulting from pregnancy or childbirth that prevents her from returning to work. The illness must be proven by a medical certificate. The employee is entitled to maternity leave as set out above if the birth takes place after six (6) months or more of pregnancy, even if the child is stillborn or is born alive and subsequently dies. The employee is entitled to an additional (30) thirty days of leave at the end of the maternity leave period, paid at 100%, if she gives birth to a sick or disabled child whose health condition requires constant care according to a medical report. The leave may be extended by thirty (30) days without pay.

What about the new types of leave?

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

• Parental bereavement leave of (5) five days in the event of the death of a spouse, and (3) three days in the event of the death of a mother, father, child, brother, sister, grandchild, grandfather or grandmother, starting from the date of death.
• Parental leave of (5) five working days for an employee (whether father or mother) to care for their child. This leave may be taken continuously or intermittently within a period of (6) six months from the child's birth.
• Study leave of (10) ten working days per year if the employee is enrolled in or regularly studying at one of the educational institutions accredited by the State, in order to sit examinations, provided that the period of employment with the employer is not less than two years.

What is new regarding salaries and end-of-service benefits?

• A minimum salary based on the employee's qualifications
• Equal pay for men and women performing the same functions
• End-of-service benefits are due to all employees, regardless of the reason for termination of the contract, and are 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 is new regarding dispute resolution?

The new law facilitates and accelerates labour dispute resolution procedures. The date of the first hearing must be set within 3 working days after receipt of the MOHRE complaint, and the Tribunal must rule as soon as possible. In addition, the new law exempts employees and their heirs from all court fees at all stages of the dispute and enforcement proceedings for any claim not exceeding AED 100,000. Further 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 must comply with this new law and will have until 1/02/2023 to make the necessary changes, particularly converting all indefinite-term employment contracts into fixed-term contracts. Please do not hesitate to contact us support@merritt.ae