The Federal Decree Law no. 33 of 2021 concerning the regulation of labour relations (the “New UAE Labour Law”) will take effect on February 2, 2022. It is the most significant amendment of its kind since the existing labour law was first established in 1980. The New UAE Labour Law aims to enhance regulations for different work categories (e.g. temporary and part-time work), provide greater protection for employees and introduce more flexibility into the workplace.

The UAE Ministry of Human Resources and Emiratisation (“MOHRE”) states that the New UAE Labour Law is in response to the rapidly changing workplace environment amid technological advancements in a Covid-19 world. Currently, the MOHRE is working on executive regulations that will oversee the implementation of the New Labour Law.

What will the New UAE Labour Law do?

The key amendments to the New UAE Labour Law include the introduction of:

  • A 3-year contract. This is a limited/fixed-term contract, which may not exceed three years, and is renewable for the same period or less upon agreement of both parties. Unlimited contracts pursuant to the existing labour law (i.e. Federal Law No. (8) of 1980) still apply but must be converted from unlimited to limited contracts within one year of enforcement of the New UAE Labour Law. Therefore, updated employment contracts will need to be drafted by companies in the private sector and entered into by 1 February 2023.
  • Non-compete. It will be mandatory for the employer, pursuant to the New UAE Labour Law, to enter into a non-compete agreement with its employees if it intends to protect its business interests. Whereas, under article 127 of the current labour law, an employer does not need to enter into a non-compete agreement in order to protect its business, as the current labour law restrains employees from working for a prospective employer that carries out a business which competes with his or her current/former employer’s business.
  •  Different work categories, including full-time, part-time, temporary and flexible work amongst other categories. Whereas the current labour law provides that an employee is supposed to work eight hours a day, 48 hours per week, the New UAE Law provides an option to the employee (provided that the contracts allows it) to work for 40 hours a week on a condensed working hours’ model. 
  • Judicial fee exemptions of up to AED100,000 relief applicable to workers that includes all stages of litigation and execution and requests submitted by employees. 
  • Protection against bullying and sexual harassment. Employer may not use any means of force against employees or use a penalty threat to provide a service against their will. It also prohibits sexual harassment, bullying, or any verbal, physical or psychological violence against workers by their superiors or colleagues, any type of discrimination on the basis of race, colour, sex, religion, nationality or disability with a special aim to empower women in the workplace. 
  • Equal pay for men and women in the workplace. It introduces an emphasis on granting women the same wages as men when performing the same task or other duties of equal value. 
  • Protection of workers’ documents and right to remain. Employers are prohibited from confiscating employees’ official documents and workers should not be forced to leave the country following the end of their work term. 
  • Onboarding costs. Employers shall bear the fees and expenses of recruitment and employment and shall not recover them directly or indirectly from the employee. 
  • Working hours and overtime. It will be prohibited for employees to work over five consecutive hours without at least a one-hour break, and no more than two hours of overtime for workers are allowed in one day. Should the nature of the job require more than two hours’ overtime, employees must receive an overtime wage equivalent to regular hour pay with a 25 per cent increase. If conditions required employees to work overtime between 10 pm and 4 am, they will be entitled to an overtime wage equivalent to regular pay with a 50 per cent increase. Employees on a shift basis are exempt from this rule. If workers are asked to work on a day off, they must receive a one-day leave or an overtime wage equivalent to the regular day pay with a 50 per cent increase. 
  • Annual leave. Employees shall be entitled to at least one paid-day off per week with the possibility of increasing weekly rest days at the discretion of the employer. 
  • Maternity leave in the private sector can be extended to 60 days (being 45 days fully paid leave and 15 days of half-paid leave). Employees can also opt in to an additional 45 days of unpaid leave following the 60-day period in case of any post-partum complications. 
  • Bereavement leave to range from 3-5 days depending on the degree of kinship of the deceased. 
  • Study leave. Employees are entitled to a 10-day study leave per year provided they are enrolled in an accredited institution in the UAE and have completed a minimum of 2 years with their employers. 
  • Payment of incurred holiday days on termination of employment will be calculated on the basic salary only. 
  • Payment of final settlements must be paid by the employer within 14 days of the termination of the employee’s employment. 
  • Notice periods have now been capped at 3 months (including for senior executives who typically have a 6-12 month notice period) whilst the minimum notice period remains at 30 days. 
  • Employee’s right to search for other employment. The employee will be entitled to 1 day off per week to look for new employment during their notice period where the employer issues such notice. 
  • Resignation without notice. An employee will be able to resign without giving notice if: (i) an employer breaches their obligations and fails to remedy such breach within 14 days of the employee notifying MOHRE of such breach; and (ii) in case of harassment or violence, the employee notifies the MOHRE within 5 working days. 
  • Termination by employee during probationary period. Employee may terminate its contract during the probationary period by providing at least 1 months’ written notice to the employer should the employee want to move to another employer based in the UAE. In this case, the New UAE Labour Law provides that the new employer should compensate the previous employer for any recruitment costs of said employee. Where the employee wishes to leave the UAE during the probationary period, the employee may terminate their employment by providing at least 14 days’ written notice. In such instances, where the employee returns to the UAE and obtains a work permit issued by the MOHRE within 3 months of their departure, the new employer should compensate the previous employer for any recruitment costs incurred in recruiting said employee. 
  • Termination by employer during probationary period. Employer may terminate an employee’s contract during the probationary period by providing 14 days’ written notice to the employee. 
  • Fines. Employers may face fines of up to AED1,000,000 for breaches of the New UAE Labour Law. Such fines may be multiplied in cases where more than 1 employee is affected by such breach. 

Hunton Andrews Kurth LLP will continue to monitor further developments in this area, and share our insights and experience as our clients navigate through the same. Please feel free to contact the authors, or your usual Hunton Andrews Kurth contact, for further information and assistance.