New U.A.E labor law changes Employment sector of Emirates

The Ministry of Human Resources and Emiratization (“MOHRE”) has approved a revision of UAE labor law and Federal Decree No. 33 of 2021, which establishes employment relationships and related implementing regulations pursuant to Council Decision No. 33 of 2021. 1 of 2022. (Collectively the “New Law”), which became effective on February 2, 2022 (the “Effective Date”).

  Fixed-term employment contracts only:

 The new law has abolished the concept of permanent employment or unlimited contracts and only fixed-term employment contracts (up to 3 years) can be concluded. Employers have until February 2, 2023 to convert all current permanent employees to temporary contracts.  Temporary contracts only. The new law abolished the concept of permanent contracts and only fixed-term contracts (up to 3 years) can be concluded. Employers have until February 2, 2023 to convert all current permanent employees to temporary contracts.

  Probation or Internship:

 While the probationary period has a maximum duration of six months, the new law now requires a minimum of 14 days' notice from anyone who intends to terminate the employment relationship during the probationary period and if the employee is employed by another employer domiciled in the UAE starts must offer at least   30 days in advance. In addition, the employer can ask the new employer for reimbursement of the costs of hiring the employee.

 Part-time work and flexible working arrangements 

 Some new alternative forms of flexible and a typical work have been introduced, including part-time work (with associated benefits), agency work (for specific project work), flexible work (where working hours and days can vary according to the needs of the employer) and job sharing (details from MOHRE not yet known) 

Working days and Hours

 Friday is no longer an obligatory rest day and employers are obliged to give their employees at least one rest day on each day of the week. The maximum working time remains eight hours per day/48 hours per week (assuming a six-day week) with a two-hour overtime limit, but there are potential exceptions to these requirements under the Executive Rules, which limit working hours to no more than 56 per week.

Annual leave:   Employees are now required to take annual leave in the accrual year and cannot carry unused days over to the next annual leave year unless the employer agrees (or in very limited circumstances where the employer has prevented the employee from taking leave during the accrual year). Unused days expire without compensation. The payment of vacation days not taken is only made in exceptional cases or in relation to the vacation days accrued in the year of termination of the employment relationship   and is only paid on the basis of the basic wage.

 Other leave

The new law expands and introduces various innovations:

Maternity leave: extension to 60 calendar days (45 days fully paid and 15 days half paid); this also applies if the employee suffers a miscarriage after 6 months.

Extraordinary leave: five calendar days in the event of the death of the employee's spouse and three calendar days in the event of the death of a parent or grandparent, child or grandchild, brother or sister of the employee.

Parental leave: five calendar days (for both parents) within six months of the birth of the child.

 Educational Leave: 10 calendar days per year to sit exams provided the employee has been employed for more than two years and is 

Study leaves: 10 calendar days per year to sit exams as long as the employee has more than two years of service and is studying at an accredited educational institution in the UAE.

Discrimination and equal pay: Workers are now particularly protected from discrimination in the workplace and the law prohibits discrimination based on race, colour, sex, religion, national origin, social status and Invalidity that would jeopardize the worker's equality of opportunity or prevent him or her from finding and keeping a job. While maternity and/or pregnancy are not listed as protected characteristics, employers are not permitted to fire (or threaten to fire) a female worker because she is pregnant or on maternity leave. In addition, the new law provides for equal pay for men and women for the same work.

Termination of Employment:

 Dismissal Without prejudice to the use of the term “limitation”, the new law provides that fixed-term employment contracts can be terminated for “good cause” during the contract period, provided that the notice period of the employment contract has expired. Termination without notice for reasons other than those relating to the employee's performance or conduct is now permitted. First, the notion of dismissal is now explicitly recognized as a valid ground for dismissal when the employer is insolvent or insolvent, or when there are economic or exceptional reasons. In addition, the compensation scheme for arbitrary dismissals (under the old law) has been significantly reduced, with compensation possibly only being available to workers in two, specific cases of dismissal, merely pointing out that it is still unclear how the labor authorities will do this Court will interpret new Prohibition on reducing or withdrawing premiums A former employee who resigned five years ago is entitled to a reduction in severance pay (permanent contracts) or is fired (fixed-term contracts). In addition, the termination without notices also led to the loss of the employee's tips. The new law eliminates them, so the employee is now entitled to termination pay regardless of the reason for the termination. (Note - until February 1, 2023 reduced severance pay for employees retiring from permanent contracts at that time)

 Payment of Service Termination Fees

Payment of all contractual and statutory dues must be made within 14 days of termination of employment or the employer may be fined from AED 5,000 to AED 1,000,000 by the MOHRE. The above summarizes the main points that have a significant impact on the contractual arrangements that retailers have with their employees. This requires a review of documentation templates, policies and procedures to ensure legal compliance with the new law and supporting regulations.