U.A.E.: New labor law will introduce significant changes

Employer Action Code: Act

Federal Decree Law No. 33 of 2021 represents a significant overhaul of the U.A.E.’s federal employment regulations, replacing the current labor law (Federal Law No. 8 of 1980) and related decrees. The intent is to modernize the framework for employment in the private sector to reflect the many changes that have occurred in the U.A.E. since the Federal Law No. 8 was introduced. Such changes include the economy growing by over 700% and the labor force expanding by about 1,500% due to population growth and a massive influx of foreign workers in the private sector (Economist Intelligence Unit data). The new law will come into effect on February 2, 2022, and, like its predecessor, will apply only to the private sector.

Key details

Some of the more noteworthy aspects of Federal Decree Law No. 33 include:

• Employment contracts: All employment will be based on fixed-term agreements, valid for up to three years and renewable for the same or different terms, without limit (contracts automatically renew for the same period unless expressly terminated). The minimum notice period of 30 days for termination of employment is unchanged, but a new maximum notice period of 90 days will be introduced. Use of indeterminate-length employment contracts will no longer be allowed, and any such existing contracts will have to be converted to fixed-term within one year of the law’s effective date, subject to minimum notice periods of termination of the contracts of 30, 60 or 90 days depending on length of service. 
• Employment types and working time: New provisions on part-time and temporary employment, remote working and flexible work time – allowing for compressed workweeks – will apply (none of which are addressed by Federal Law No. 8).
• Employer-paid leave: Leave entitlements introduced or amended by the law include:
• Maternity leave: Employees will be entitled to an increased maternity leave of 60 calendar days — 45 at full pay and 15 at half pay — irrespective of length of service (compared with 45 days at full pay and half pay for staff with less than one year of service under Law No. 8). Eligibility for leave will apply to miscarriages after six months and stillbirths. In the event of complications for the mother or child following birth, the employee will be eligible for an additional 30 calendar days of leave (at full pay). Conversely, the period of time that new mothers are entitled to paid daily nursing breaks will be reduced from 18 months to six months after birth.
• Annual leave: In principle, annual leave entitlements will have to be used during the related leave year. Automatic carry forward of unused leave (or payment in lieu of unused leave while in service) will no longer apply. Compensation for unused leave will be permitted only at termination.
• New leaves: 10 days of annual study leave will be provided for employees with at least two years of service, along with bereavement leave (regardless of length of service) of five days for the death of a spouse and three days for the death of a child, parent, sibling or grandparent.
• Termination: Reasons for which employment contracts (regardless of their fixed-term nature) may be terminated with notice will be expanded to include financial difficulties, bankruptcy, business closure or difficulties in renewing a work permit.
• Discrimination, harassment and equal treatment: The new law broadly prohibits discrimination on grounds such as race, gender, religion and nationality; protects against harassment (including sexual harassment) in the workplace; and incorporates recent regulations on equal pay for equal work.  
• Early termination of employment trial periods: These will, for the first time, be subject to a minimum notice period of 14 days for both parties, increased to 30 days for foreign workers who leave to join a new employer in the U.A.E. during the trial period.
• Denomination of pay: Compensation will be payable in the currency agreed in the employment contract (rather than payable only in local currency [i.e., the U.A.E. dirham]).  
• Non-competition periods: For the first time, non-competition periods will be subject to an explicit maximum agreed term of two years.

Employer implications

Law No. 33 represents a substantial change in U.A.E. employment law. A variety of points in the new law are expected to be clarified by implementing regulations and decrees during the course of December. The new labor law was approved as part of broader reform efforts meant to modernize a variety of federal laws, some of which could also affect companies. Employers should review their current policies and practices to ensure they remain compliant with the new requirements and continue to monitor for further developments. It’s worth noting that — similar to the previous law — employers located in free zones with their own employment legislation (such as the Dubai International Finance Centre – DIFC) will not be subject to these new federal rules.

Contact

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Steve Clements

Senior Director, Integrated & Global Solutions, CEEMEA

email Email phone +971 44 55 1743

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