The United Arab Emirates (UAE) has enacted Federal Law No. 33 of 2021 as the New Labor Law. It will come into force on February 2, 2022. Also, it will repeal the Federal Law No. 8 of 1980 as the Current Labor Law. The New Labor Law shall be applied to all businesses and private-sector employees in the UAE, including free zones. Dubai International and Abu Dhabi Global Market are exempted from these laws as they apply their labor laws. There have been unexpected changes in the New Labor Law. However, several important issues affecting employers will be changing business practices, employment contracts, offshore company formation in Dubai, and policies.
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Elimination of Unlimited Contracts
Under article 8 of the new law, open-ended contracts will be abolished and replaced by fixed-term employment contracts that will last three years. The contract will be renewable under the agreement of both parties for a duration equal to or less than the period.
All private-sector employers will be required to replace their current employment contracts with contracts that comply with the new law. Employers have a maximum of one Gregorian year from the effective date of the new law to do so which is February 1, 2023.
Equal Pay and Minimum Wage
In addition to articles that prohibit discrimination based on sex, race, religion, etc. the new law explicitly states that all provisions that regulate the employment of workers without discrimination will apply to female workers. Also, it emphasizes on giving equal pay to women as men, if they are doing equal work or jobs.
A minimum wage law has been established under article 27. It is an unprecedented measure for the UAE. The amount of minimum wage will be determined and announced by the Cabinet of the United Arab Emirates on the proposal of the Minister of Human Resources and Emiratization in collaboration with the competent authorities.
New Categories of Leave, Work Model, and Working Week
Employees will be entitled to request additional types of leave under the new law such as
- Three-Day Bereavement Leave (Death of Close Family Members)
- Five-Day Paternity Leave (Intermittently or six months of the birth of a child)
- Ten-Day Study Leave (To Take Examinations, Employee should complete two years of employment with the employer)
- Maternity Leave (45 days on full pay and 15 days on half pay)
To improve the productivity and flexibility of the labor force, the new labor law provides work models of part-time work, flexible work, and temporary work.
The New Labor Law provides a shorter working week with a model of condensed working hours. Article 65 of the law states that the working hours in the private sector are 8 hours a day or 48 hours a week. The new law allows employers to have 40 hours a week such as a 4-day week consisting of 10 hours a day. This labor law complies with the 4.5 working weeks for the public sector.
Non-Competition Clause and 14-Day Notice of Termination
Non-compete protection afforded to an employer is strengthened by the New Law. It requires a legal requirement that an agreement has to be signed between the employee and employers. It specifies the geographical scope, duration, and types of work. An employer can terminate an employee at any time during the probation period but the New Labor Law states that the employer should give a 14-days termination notice to the employee.
Judicial Fees Exemption
Under New Labor Law, employees or their heirs can file a petition, sue or enforce orders against employers without court costs at any stage of the process. But the claim should not exceed 100,000 Dh in value. Also, the new labor law establishes that the employer will bear the costs and expenses for hiring and employment. They shall not be recovered directly or indirectly from the worker.
In Conclusion
The official publication of the new law and accompanying regulations will provide further updates on the changes in the new labor law. The new labor laws have been defined to increase productivity and flexibility in work. Also, changes have been made to eradicate gender or race discrimination in the workplace. Now women will be paid equally to men according to their work activities or job description.
The shorter working days and basic leaves will allow the employees to perform better at their jobs. The company formation in Dubai in 2022 and onwards would comply with the New Labor Law.
