The most important changes made to the laws of the U.A.E in 2023

 2023 has been a year of significant legal changes in the UAE, encompassing various areas like labor, taxation, personal status, and environmental protection. Here are some of the most important changes:

Employment Law:

Involuntary Loss of Employment (ILOE) Scheme: Introduced as a form of social security, this scheme provides compensation (up to 3 months' salary) to employees who lose their jobs involuntarily.

What is the ILOE Scheme?

The ILOE Scheme is a mandatory social security program that provides financial support to eligible employees who lose their jobs involuntarily. This means the job loss was not due to the employee's resignation, disciplinary action, or misconduct.

Who is eligible for the ILOE Scheme?

All employees working in the private and federal sectors in the UAE are eligible for the ILOE Scheme, except for:

·       Investors and business owners

·       Domestic workers

·       Employees temporarily

·       Individuals below 18 years old

·       Retirees receiving pensions who join a new employer

What are the benefits of the ILOE Scheme?

 Eligible employees who lose their jobs involuntarily can receive the following benefits:

Monthly cash compensation: Up to 60% of the average basic salary for the last 6 months before job loss, capped at AED 20,000 per month.

Compensation period: Up to 3 months per claim.

Access to job search assistance: The Ministry of Human Resources and Emiratization (MOHRE) provides job search assistance services to ILOE beneficiaries.

How to register for the ILOE Scheme?

Employees do not need to register for the ILOE Scheme individually. Employers are responsible for registering their employees with the ILOE insurance pool. The registration process is online and can be completed through the website of the Ministry of Human Resources and Emiratization (MOHRE).

How to claim ILOE benefits? 

Employees who lose their jobs involuntarily can claim ILOE benefits by following these steps:

Report the job loss to the Ministry of Human Resources and Emiratization (MOHRE) within 7 days of the termination date.

Submit the required documents, including the termination certificate and salary slips.

Attend job search training sessions organized by MOHRE.

Once the claim is approved, the employee will receive the monthly compensation through bank transfer.

Here are some additional things to keep in mind about the ILOE Scheme: 

The scheme is funded by contributions from both employers and employees. Employers contribute 0.5% of the employee's basic salary, and employees contribute 0.5% of their basic salary.

The ILOE Scheme is a relatively new program, and the long-term impact is still unknown. However, it is expected to provide much-needed financial support to workers who lose their jobs through no fault of their own.

Changes in Employment Contracts: An employment contract is a legally binding agreement between an employer and an employee that outlines the terms and conditions of employment. It sets out the rights and responsibilities of both parties, such as: 

Job title and duties: The employee's position and responsibilities within the company.

Start date and duration: The date the employee begins working and the length of the contract (fixed-term or unlimited).

Salary and benefits: The employee's compensation, including base salary, bonuses, allowances, and any other benefits such as health insurance and paid leave.

Working hours and location: The employee's expected working hours and the location of their work.

Termination clauses: The grounds for termination of the contract by either party.

Confidentiality and non-compete clauses: Agreements protecting the employer's confidential information and preventing the employee from competing with the company after leaving.

Types of employment contracts in the UAE 

There are two main types of employment contracts in the UAE: 

Fixed-term contracts: These contracts have a specific start and end date. They can be renewed, but both the employer and employee must agree to the renewal.

Fixed-term employment contract

Unlimited contracts: These contracts do not have a specific end date and can continue indefinitely. They can be terminated by either party with notice.

Important things to consider when reviewing an employment contract in the UAE

·       Review the contract carefully before signing it. Make sure you understand all of the terms and conditions and seek legal advice if necessary.

·       Negotiate the terms of the contract. You may be able to negotiate your salary, benefits, and other terms of employment.

·       Keep a copy of the contract for your records.

Changes to employment contracts in the UAE 

The UAE's labor law was recently updated in 2022. The new law made some significant changes to employment contracts, such as:

·       All new employment contracts must be fixed-term.

·       Existing unlimited contracts can be converted to fixed-term contracts.

·       Employees have more rights to terminate their contracts without notice in certain circumstances.

·       Emiratisation quotas: Companies must now employ at least 2% UAE nationals, increasing by 2% annually until reaching 10% for skilled positions.

·       Anti-discrimination: The law now explicitly prohibits discrimination based on race, nationality, religion, gender, or other protected categories.

Taxation:

Corporate Tax: The introduction of corporate tax in the UAE has been a significant change for businesses operating in the country. Here's a breakdown of the key aspects to keep in mind:

Tax Rate:

A 9% tax rate on taxable profits exceeding AED 375,000.

Businesses with profits below AED 375,000 are exempt from taxation.

Taxable Profits:

Calculated as revenue minus allowable expenses.

Specific rules and exclusions apply to certain expenses, so careful accounting is important.

Who is Liable: 

All businesses operating in the UAE, except for those in designated Free Zones (subject to specific conditions).

This includes onshore and offshore companies, branches of foreign companies, and individual entrepreneurs.

Compliance & Filing:

First taxable year starts on the first financial year beginning on or after June 1, 2023.

Tax returns must be filed electronically within 9 months of the fiscal year-end.

Advance tax payments may be required in some cases.

Free Zones:

Some Free Zones offer corporate tax exemptions under specific criteria.

Businesses should confirm their Free Zone's regulations regarding corporate tax.

Personal Status Law: Personal Status Law in the UAE: Key Changes and Implications

The UAE underwent significant changes to its personal status laws in 2022, particularly for non-Muslims. Here's a breakdown of the key aspects and implications: 

Key Changes: 

Civil Marriage Recognition: Introduced legal recognition for civil marriages performed outside the UAE for non-Muslims residing in the country, providing greater rights and stability.

Personal Status Court: Established a dedicated family court for non-Muslims to handle matters like marriage, divorce, inheritance, and child custody.

Divorce Grounds: Simplified and expanded grounds for divorce, allowing either spouse to initiate the process without fault attribution.

Joint Guardianship: Introduced joint custody options after divorce, promoting shared responsibility for child-rearing.

Inheritance: Established inheritance rights for non-Muslims based on wills or, in their absence, on succession laws of their home countries.

Implications:

Greater Legal Certainty: Provides non-Muslims with a clearer legal framework for personal matters, addressing uncertainty and potential conflicts of law.

Enhanced Protection: Improves legal protection for individuals in marriages, child custody arrangements, and inheritance matters.

Flexibility and Choice: Offers greater flexibility and choice in personal matters, aligning with international practices and evolving social structures.

Potential Challenges: Implementation and interpretation of the new laws require ongoing refinement, and adaptation to specific cultural and religious backgrounds may be necessary.

Additional Points: 

·       The Personal Status Law for non-Muslims applies unless individuals choose to apply their home country's laws in specific situations.

·       UAE citizens and Muslims still follow a separate personal status law based on Sharia principles.

·       Resources like the official government website and legal professionals can provide further guidance and support in navigating the new laws. 

  Non-Muslim Personal Status Law: A new law provides a legal framework for marriage, divorce, inheritance, and other personal matters for non-Muslim residents.

·       Environmental Protection: 

UAE's Single-Use Plastic Ban: A Step Towards Sustainability

The United Arab Emirates (UAE) has taken a significant step towards curbing plastic pollution and promoting sustainability with the implementation of a ban on single-use plastic bags and other disposable plastic items. This ban, which began in January 2023, aims to reduce plastic waste, protect the environment, and encourage responsible consumption. 

What is banned? 

The ban covers a wide range of single-use plastic items, including: 

·       Plastic bags: All types of single-use plastic bags, regardless of material or thickness, are prohibited.

·       Plastic straws and stirrers: These often unnecessary items are also banned, with the exception of straws for medical purposes.

·       Lightweight plastic cups and lids: Thin plastic cups and lids used for beverages are no longer allowed.

·       Food containers and cutlery: Disposable plastic food containers, plates, bowls, and cutlery are also included in the ban.

·       Cotton buds with plastic stems: These small but harmful items can easily pollute waterways and harm wildlife.

Exceptions and Alternatives 

There are some exceptions to the ban, such as:

Plastic packaging for food and pharmaceuticals: These items are still allowed to ensure hygiene and safety.

Industrial and agricultural plastic uses: Certain specific applications of plastic in these sectors are exempt.

To encourage the use of sustainable alternatives, the UAE has also implemented:

A levy on single-use plastic bags: Retailers charge a small fee for any single-use plastic bag provided to customers.

Promotion of reusable bags and containers: The government and businesses are encouraging the use of reusable alternatives like cloth bags, metal straws, and reusable food containers.

Impact and Future Plans 

The UAE's single-use plastic ban is expected to have a significant positive impact on the environment. Experts estimate that it could reduce plastic waste by up to 80%. This will help protect ecosystems, reduce ocean and landfills pollution, and improve public health.

 The UAE is not stopping there. The government has ambitious plans to phase out even more single-use plastic items by 2026, including plastic cutlery, cups, styrofoam, and boxes. This comprehensive approach demonstrates the UAE's commitment to becoming a leader in sustainable development.

Here are some resources to help you stay updated:

Ministry of Human Resources and Emiratisation: https://eservices.mohre.gov.ae/

Federal Tax Authority: https://www.tax.gov.ae/en/

Dubai Courts: https://www.dc.gov.ae/