UAE – New Federal Labour Law issued by Ministry of Human Resources & Emiratisation
The UAE Ministry of Human Resources and Emiratisation (“MOHRE”) has issued Federal Law No. 33 of 2021, UAE Labour Law (“New Law”). This New Law is intended to overhaul the labour market across the seven Emirates and address concerns of employers and employees alike in the changing landscape for recruiting and retaining employees in the UAE. The previous law was issued in 1980 and was amended from time to time by the MOHRE however the New Law repeals the previous law and seeks to bring about significant improvements to the labour market in the UAE.
The New Law sets out key changes on the way employers and employees will be required to interact with each other and also resets their respective obligations towards each other. In summary the New Law expressly recognises a variety of changes including:
Part-time, Temporary Work and Flexible Work which can be agreed upon between the parties.
Three Year Fixed Term Contracts for all employers and employee, the New Law provides one year from the effective date for all employers to update the previously existing unlimited terms contracts to the three year fixed term contract stipulated in the New Law.
Termination by the employer or alternatively resignation by an employee has been re-addressed with lawful justification for both the employer and the employee depending on particular circumstances which previously was uncatered for in the law.
Justification for end of service entitlements have been revisited and employer’s failure will now be subject to penalties and fine.
Unlawful termination is now a recognised basis for compensation against the employer.
The New Law also clarifies the position for parties in various areas but most notably equal pay, preventing harassment in the workplace, maternity & paternity leave, non-compete provisions and carry over of leave entitlements. In summary, there are significant improvements to the labour law regime proposed under the New Law which ultimately will result in a more efficient labour market and will improve UAE’s position as a jurisdiction on par with best international practices.
The New Law goes into force on 2 February 2022. It is critical companies and employers revisit their existing contracts for all employees in the onshore jurisdiction (excluding DIFC and ADGM) and update the employment agreements, employee handbook policies and procedures to ensure compliance with the changes issued under the New Law.