Planning to work in Dubai? You must know these 10 New Labour Law

New UAE Labour Law: The Ministry of Human Resources and Emiratisation ("MOHRE") announced the introduction of Federal Decree Law No. 33 of 2021 Regulating Labour Relations, as well as its Executive Regulations, under Cabinet Resolution No. 1 of 2022 (collectively "New Law"), which went into effect on 2 February 2022 ("Effective Date"). We have outlined ten points that all retail industry clients should be aware of:

Fixed term contracts only

The concept of unlimited duration contracts has been eliminated under the New Law, and only fixed term contracts (of up to three years) can be issued. Employers have until February 2, 2023, to transfer all present employees on unlimited duration contracts to fixed term contracts.

Notice of Probation Period

While probation periods remain limited to six months, the New Law requires either party desiring to terminate employment during probation to offer at least 14 days' notice, and when an employee is joining another UAE-based employer, they must provide at least 14 days' notice. 30 days' notice is required. Employers might also seek reimbursement from the new employer for the employee's recruitment expenditures.

Temporary and irregular work schedules

Part-time work (with pro-rated benefits), temporary work (for specific project-based work), flexible work (where working hours and days may vary depending on an employer's needs), and job-sharing (no details provided by MOHRE) are now available as alternative flexible and atypical employment arrangements.

Working Days and Hours

Employers are now obligated to provide at least one rest day to their employees on any day of the week, not just Fridays. The maximum working hours remain at eight hours per day/48 hours per week (on a six-day working week) with a two-hour overtime restriction, however there are potential exemptions from these standards under the Executive Regulations, which limit working hours to no more than 56 per week.

Annual Leave

Employees must now use annual leave in the year in which it is accrued and cannot carry over unused days into the next holiday year unless specifically approved by the employer (or in very limited circumstances where the employer has prevented the employee from using leave in the year in which it accrued). Any days that are not used are forfeited without compensation. Unused leave days are only paid out in extraordinary circumstances or in respect of annual leave days acquired in the year in which the employment ends, and the pay-out is based only on basic wage.

Other Leave

Maternity leave: increased to 60 calendar days (45 days at full pay and 15 days at half pay); will also apply if an employee miscarries after six months of service.

Compassionate Leave: Five calendar days in the event of the employee's spouse's death and three calendar days in the event of the employee's parent or grandparent, kid or grandchild, or sibling's death.

Parental Leave: Five calendar days (per parent) to be used within six months of the child's birth.

Study leave: As long as the employee has more than two years of service and is studying at an approved UAE education institution, he or she is entitled to 10 calendar days per year to sit exams.

Discrimination and Pay Equity

Employees are now particularly protected against employment discrimination, and the legislation outlaws discrimination on the basis of race, colour, sex, religion, national origin, socioeconomic background, or disability. A disability that would hinder an employee's equal opportunities or preclude an employee from obtaining and maintaining employment.

While maternity and/or pregnancy are not protected characteristics, employers are banned from firing (or threatening to fire) an employee because she is pregnant or on maternity leave. Furthermore, the New Law mandates equal remuneration for men and women performing the same work.

Termination of Employment

Despite the usage of the term "fixed," the New Law states that fixed-term contracts can be terminated on notice throughout the term for a "legitimate reason," provided that the period of written notice under the employment contract is delivered. Termination with notice is now permissible for reasons other than an employee's performance or conduct.

Notably, redundancy is now specifically accepted as a valid grounds for termination if the employer is bankrupt or insolvent, or if there are any economic or unusual circumstances. Furthermore, the arbitrary dismissal compensation regime (under the old law) has been significantly reduced, with compensation potentially available to employees only in two specific termination instances, with it being noted that how the UAE Labour Courts interpret the new legislation remains to be seen.

There will be no reduction or forfeiture of gratuity

Employees who resign before five years of service have their end-of-service gratuity reduced (on unlimited-term contracts) or forfeited (on fixed-term contracts). Furthermore, summary termination meant that an employee's gratuity was forfeited. The New Law eliminates them, and employees are now entitled to their gratuity at the conclusion of their work, regardless of the reason for termination.

Payment of End-of-Service Benefits

All contractual and statutory entitlements must be paid within 14 days of termination of employment, or an employer may face fines ranging from AED 5,000 to AED 1,000,000 from MOHRE. The above is a review of the important elements that have had a significant impact on the contractual arrangements that retail enterprises have with their employees. To ensure legal compliance with the New Law and the Executive Regulations, it will be necessary to evaluate template paperwork as well as policies and procedures.

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