The United Arab Emirates has issued Federal Labour Law in 2021 that came into effect from February 2, 2022, repealing the old law. The New Labour Law will apply to all companies and employees in the private sector in the UAE, including its free zones, the Dubai International Financial Centre, and the Abu Dhabi Global Market, which implement their own employment laws. The New Labor Law applies to any entities that are in connection with the federal or local government.
The prohibition under the law
The law prohibits discrimination against persons specifically on the grounds of race, colour, sex, religion, national origin, ethnic origin, or disability. The law expressly prohibits harassment, bullying, or any verbal, physical, or mental violence against employees. Also, Equal Pay for Women is introduced into the new labour law.
Fixed-Term Employment Contracts
All employees must be employed on fixed-term employment contracts not exceeding three years, which may be extended for the same period. Employers will have 12 months from now on, to transfer all their employees in new contracts. Employees may undertake full-time, part-time, temporary, or flexible work.
Termination by Employee During Probationary Period
Employees who want to move to another employer in the UAE during their probationary period may terminate their employment by giving at least one month’s written notice. In such a case, the employee’s new employer should compensate the old employer for recruitment costs.
Termination on Notice
Either party may terminate the employment contract by giving written notice. Notice periods have now changed to 90 days.
The circumstances in which an employee’s employment may be terminated have been expanded. It includes the permanent closure of the employer, the bankruptcy of the employer, and the failure of the employee to satisfy the requisite immigration requirements.
Suspension of up to 30 days with half pay will be permitted for an employer to undertake a disciplinary investigation. However, an employee will be entitled to be reimbursed for all payments that are held if the worker is discharged of any wrong action.
An employee’s end-of-service gratuity is stated to be calculated on the basis of working days, which would be a significant change. There is no reduction in end-of-service gratuity if an employee resigns. Employers do not have the right to withhold an employee’s end-of-service gratuity if the worker is summarily dismissed
Maternity pay has been increased to 60 days. Employees will now be entitled to maternity leave and pay in the case of stillborn babies and newborn deaths. Employees will be entitled to an additional unpaid leave of 45 days if they suffer a pregnancy-related illness. This period of leave will not be included when calculating the employee’s end-of-service gratuity.
Employees will be entitled to five days of paid leave in the six months following the birth of their child. This leave will be in addition to an employee’s entitlement to maternity leave.
Employees with differently-abled babies may be entitled to an additional 60 days’ leave on full pay. Employees will be entitled to five days paid leave for the death of their spouse and three days’ paid leave for the death of a parent, child, sibling, grandchild or grandparent. There is no qualifying service requirement.
Employees with more than two years’ service may be entitled to 10 working days’ study leave, although the New Labor Law did not describe whether this leave will be paid or unpaid. Employees will not be entitled to any paid sick leave during their probationary period.
Employers are strictly prohibited from retaining an employee’s passport.
Overtime will be capped at 144 hours in every three-week period and will be calculated as per basic salary. The overtime exemption that applies under the Current Labour Law, for employees in a supervisory or managerial position, no longer applies, and the executive regulations will determine new exemptions.
Entitlements On Death Of An Employee
Employers should pay a deceased employee’s spouse or children all remaining wages and end-of-service benefits within 10 days from the date of the employee’s death.
Resignation Without Notice
Employees will only be able to resign without giving notice if the employer does not meet his obligations. The employee can notify the MOHRE 14 days before leaving and in the case of harassment or violence, the employee can notify the MOHRE within five working days of being able to do so.
Employers must pay their employees all their final entitlements within 14 days of the termination of their employment. Employers are required to retain employment records for two years after the termination of employment.
Fines of up to 1,000,000 UAE dirham may be imposed for breaches of the New Labor Law, which may be multiplied in cases where numerous employees are affected.