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The UAE New Labour Law You Should Need to Know

The Ministry of Human Resources and Emiratization (MOHRE) announced UAE labour law revision. The Federal Decree-Law No. 33 of 2021 (the “New Law”), which has become effective from February 2, 2022 (the “Effective Date”), aims to address developments in the workplace, align UAE labour relations with global best practices, and acknowledge the necessity for unusual and flexible working arrangements. The UAE New Labour Law, which will ultimately replace Federal Law No. 8 of 1980, as modified (the “Old Law”), is the most critical change to UAE labour law.

You need to know: New rules on employment contract in the UAE: Frequently Asked Questions

Following are the significant modifications of the UAE New Labour Law:

  1. Work Pattern (Article 7)

The patterns of work to be contracted upon shall be in line with the following:

  1. aFull time: which means working for one employer for full daily working hours throughout the days.
  2. bPart-time means working for one or more employers for a specified number of working hours or days designated for work.
  3. Temporary work is work whose execution requires a specific period or is based on a particular task and is ended by its completion.
  4. Flexible work: which is work whose hours or working days change according to the workload and the employer’s economic and operational variables. The worker may work for the employer at varying times according to the work conditions and requirements.
  5. Any other patterns of work specified by the Implementing Regulation hereof.

   2. Fixed-term Employment of Three years (Article 8)

All workers must sign fixed-term employment agreements with a maximum term of three years. The employment contract may be extended after the period has expired for comparable or shorter lengths of time (on multiple occasions). The contract is presumed renewed on the same terms and conditions stated in the most recent version if it is not renewed or extended, but the parties still go on as if it is still in force. Any extension or renewal will automatically count against an employee’s total hours worked, whether for end-of-service bonuses or other considerations.

The provisions of the New Law will automatically take effect after the Effective Date for workers presently employed under unlimited-term contracts. Employers must convert any existing unlimited-duration contracts into fixed-term contracts (i.e. by February 1 2023). If an employee is currently engaged under an unlimited-term contract, any party may end the employment relationship for a good cause with the following minimal notice requirements:

  • If the employee’s tenure was less than five years, 30 days.
  • When an employee has worked for more than five years, their notice period is 60 days;
  • When they have worked for more than ten years, it is 90 days.
  1. Non- Competition Clause (Article 10)

1). The employer may require that the employee under the employment contract shall not compete with the employer after the expiration of the contract or be engaged in any competitive project in the same sector. If the work assigned to the employee allows him to learn about the employer’s clients or access its work secrets. As long as

  1. the demand is apparent as to the time, location, and kind of employment required to safeguard legitimate business interests.
  2. The non-competition term must be approximately two years from the contract’s expiration date.

2). If the employer ends the employment agreement in violation of the terms herein, the requirement shall be void.

3). If one year has elapsed since the date the violation was discovered, the employer’s allegation that the employee violated the terms of this Article will not be heard.

4). The Implementing Regulation herein establishes the requirements governing this Article, skill levels, or vocations that may be exempt from the provisions of Clause (1) of this Article following the criteria and norms provided by the Regulation.

  1. Types of Leaves

Employees from other countries are entitled to paid annual, sick, maternity, parental, bereavement, and study leaves in the UAE.

1). Annual Leave

With each year of service completed, an employee is eligible for 30 days of annual leave. It follows Article 29 of the Employment Law, which reads as follows:

The worker shall be entitled to an annual leave with a full wage of not less than:

  1. Thirty days for each year of extended service;
  2. Two days for each month if his service term is more than six months and less than a year;
  3. A leave for parts of the last year he spent at work if his service is ended before using his annual leave balance.

2). Maternity Leave

  • If a pregnant woman reaches six months of pregnancy, she is eligible for up to 60 days of paid maternity leave according to the following:
    • The first (45) forty-five days with full wage; and
    • The following (15) fifteen days with half wage.
  • The female worker shall be entitled to maternity leave if the delivery took place (6) six months or more after pregnancy, whether the fetus was born dead or alive and then died.

3) Sick Leave

A worker in the UAE is also entitled to 45 days of paid sick leave, as stated in Article 31(3) of the Employment Law.

4) Bereavement Leave and Study Leave

  • Employees are entitled to three days of bereavement leave for the loss of a parent, child, sibling, grandparent, or grandchild, and five days for the death of a spouse, according to Article 32 of the Employment Law.
  • Additionally, if taken within six months of the child’s birth, an employee is entitled to five days of paid parental leave.
  • An employee enrolled in an educational institution in the UAE may request up to 10 days of study leave per year, provided he has worked for the company for two years.
  • It is important to remember that an employee in the United Arab Emirates may use the unpaid time off with the permission of his employer.

 Article 33 of the Labour Law reads as follows:

  • An employee may take unpaid leave in addition to the leaves mentioned in this Clause with the employer’s permission.
  • Following the applicable laws in effect, the leave mentioned in the preceding paragraph is not included in the employee’s service to the company and the pension system.

Additionally, following Article 21(5) of Cabinet Resolution No. 1 of 2022, an employee may be permitted to combine paid and unpaid time off for annual leave and bereavement-related reasons.

  1. Notice of Termination of Employment Agreement (Article 43)

1). Employment contract may be terminated by either party for any reasonable cause as long as the other party is informed in writing and work is completed within the notice period stipulated in the contract. It must be at least (30) thirty days long and no more than (90) ninety days.

2). Even if the absence of notification does not harm the other party, the party that disregarded the notice period must pay the further party compensation, known as a notice period allowance. This compensation must equal the worker’s wage for the notice period or the remaining portion.

  1. End-of-Service Benefits Payment (Article 51)

1). The full-time foreign worker, who completed a year or more in continuous service, shall be entitled to end-of-service benefits at the end of his service, calculated according to the basic wage as per the following:

  1. A wage of (21) twenty-one days for each year of the first five years of service;
  2. A wage of (30) thirty days for each year exceeding such period.

2). The employer shall pay the worker, within (14) fourteen days from the end date of the contract term, his wages and all his other entitlements.

For more information relating to the UAE New Labour Law, please don’t hesitate to contact our labour lawyers in Dubai.

Hassan Humaid Al Suwaidi., LL.B. is a Senior Partner in HHS Lawyers. He has 20 years of experience dealing with high-value and complex cases. Frequently featured in local and international legal directories and commended for his ability to attain favorable outcomes for clients, Hassan has been involved in some of the largest legal settlements. A major part of his work is providing expert legal advice on UAE legislation and acting for individuals and businesses during disputes and litigation.