14 Things that changed in New UAE Labour Law 2022 That You May Not Know

What has changed in New UAE Labour Law 2022?

Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector, known as the ‘UAE Labour law’, governs the labour rights of employees in the private sector. The New Labour Law UAE  is designed to enhance employment rights and boost the competitiveness of the UAE as a place to live and work, helping the region to attract and retain world class talent. All employees working in the UAE, whether UAE nationals or expatriates, are covered by this legislation. Certain employees, however, are exempt and must follow a different set of regulations.

All private sector employers in the UAE must revise their written policies or handbooks to align with the New UAE Labour Law and must also draft new employment contracts. Employers have one year (up to February 2023) to make these changes.

Find out about laws and regulations pertaining to employment in the private sector.

Top recent changes to the New UAE Labour Law 2022

1. Labour contract

Previous UAE Labour Law: There are two types of contracts : LimitedOpens in a new tab. and unlimitedOpens in a new tab.

New UAE Labour Law 2022: The New Law replaces unlimited contracts with work contracts of a fixed term for a period of three years, which may be renewed on the same conditions with the consent of both parties for a similar period or less.

Employers have a maximum period of one Gregorian year from the date of the New Law’s implementation in which to do this, i.e. 1 February 2023.

The requirement for a MoHRE/free zone contract still exists, but now you can modify the MoHRE template contract and create different forms for different types of visas or work models.Opens in a new tab.


2. Termination / Resignation during probation

Previous UAE Labour Law : Maximum six-month probationary periodOpens in a new tab., with no notice required from either party to terminate the employment.

New UAE Labour Law 2022: The maximum six-month probationary periodOpens in a new tab. remains. However, employers must give 14 days’ notice to dismiss.

Employees must give:

  • 14 days’ notice to resign if they are leaving the UAE
  • one month notice required if they are leaving to join another employer in the UAE

If an employee leaves the country then returns to take up a new job within three months, the new employer would have to pay the former employer for the visa costs and the labour expenses incurred, if specified in the labour contract.

If an employee leaves the country without any notice, the company reserves the right to recommend Labour Department to impose a one-year ban.


3. Models of work

Previous UAE Labour Law: Only full-time employment was possible.

Part-time working was introduced in 2019 with some further flexibility added as part of 2020 Covid-19 regulations.

New UAE Labour Law 2022 : New models of workOpens in a new tab. introduced, including:

  • full-time
  • part-time, for one or more employers
  • temporary
  • flexible
  • remote working
  • job sharing

All employees have the same entitlements, however some of these may be pro-rated.


4. Non-competition Clause

Previous UAE Labour Law: Non-competitionOpens in a new tab. clauses were permitted, with no stated maximum length.The maximum permitted length was generally considered to be 12 months.

New UAE Labour Law 2022 : Under the New UAE Labour Law, an employer must require an employee to enter into a Non-Compete Agreement, which describes the terms of the Non-Compete and its duration, geographic scope, and type of work. Non-competition clause Opens in a new tab.can now be written into a contract. The maximum restrictive period is 2 years from the date of termination.

Non-compete post-termination restrictions remain statutory requirements except that the New UAE Labour Law sets a two-year cap. The non-compete may no longer be enforced on an employee if an employer breaches the New Law terminating employment for the first time. This may be due to failing to provide the requisite notice period.


5. Settlement of Gratuity (End of Service Benefits)

Previous UAE Labour Law: Employees with over one year’s service were entitled to an end of service gratuity payment (ESG),Opens in a new tab. calculated at the rate of:

  • 21 calendar days’ basic pay for every year of service up to five years’ service
  • 30 calendar days’ basic pay for every year of service over five years’ service.

Employee basic pay was calculated on the basis of calendar days, and a maximum cap of two years remuneration applied.

Employees summarily dismissed lost entitlement to ESG, and employees that resigned with less than five years’ service would see a reduction in their ESG.

New UAE Labour Law 2022: Employees with over one years’ service continue to be entitled to ESG, calculated on the same basis as before.Opens in a new tab.

Employees summarily dismissed now retain their entitlement to ESG, and no reductions apply where an employee resigns.

  • Less than one year – no gratuity;
  • less than five years of service – 21 days of basic salary per working year;
  • after five years of service – first five years on 21 days of basic salary per year and subsequent years on 30 days of basic salary per year.

Payment of ESG, together with all other termination payments, must be made within 14 days of the termination date.


6. Termination of Employment:

Previous UAE Labour Law: Employees could be dismissed by employers for a ‘valid reason’.Opens in a new tab.

Before the termination date of a fixed-term contract, employees were required to be given 30-day notice if they had completed their probation period. In addition, employees who were summarily dismissed were not entitled to notice period or end-of-service gratuity.

The termination date of a fixed-term contract, employers may summarily dismiss employees without pay if the reasons are valid. For employees who have completed their probation period, the minimum notice period is 30 days.

Termination of contract – Specific to Unauthorised Absence – Absent from over 10 in-consecutive days in one year, or over seven consecutive days without informing the employer.

New UAE Labour Law 2022 : Employees can be dismissed for any ‘legitimate reason’. Expiration of a fixed term contract is a valid reason for dismissal.

Employees on fixed term contracts can now be dismissed on notice as normal, with no additional compensation being payable.

Victimisation – where an employee is dismissed for filing a complaint against the employer – is unlawful.

Minimum notice period of 30 days continues. However, a maximum of 90 days’ notice period has been introduced.

For employees leaving while still employed on unlimited term contracts, minimum notice periods apply of:

  • 30 days for employees with up to five years’ service
  • 60 days for employees with between 5 and 10 years’ service
  • 90 days for employees with 10 years’ service or more.

The exhaustive list set out under the Old Labour Law has been maintained, with two further additions:

  • abusing position with the aim to obtain personal gains and profits; and
  • joining another establishment without complying with controls and procedures in place.

Further, limitation has been placed on summary dismissal for failure to carry out basic duties – a written investigation and written warnings must technically be provided before the employee is dismissed.

Employees summarily dismissed lose their entitlement to their notice period, however now retain their entitlement to an end of service gratuity payment.

Termination of contract – Specific to Unauthorised Absence-Absent from over 20 in-consecutive days in one year, or over seven consecutive days without informing the employer.


7. Study leave

Previous UAE Labour Law: Not specified and there was no previous entitlement

New UAE Labour Law 2022:  Employees who have completed two years of work terms are entitled to 10 days of study leave a year, provided they are enrolled in an accredited institution in the UAE.


8. Annual Leave Entitlement

Previous UAE Labour Law: 30 calendar days per annum upon completion of one year of service. Employees were entitled to at least two days of leave per month from the moment of employment until the second year of work, when they are entitled to 30 days of leave. At the end of the holiday year, employees may elect to keep or receive their unused annual leaveOpens in a new tab..

Annual leave can be carried forward to the following leave year. Forfeiting of annual leave is not allowed.

During probation, the annual leave is unpaid.

New UAE Labour Law : 30 calendar days per annum upon completion of one year of service. The number of annual leave days that an employee is entitled to remains the same. Employees no longer have the automatic right to carry forward unused annual leave to the next holiday year. Any carry forward or payment in lieu can only be made with the agreement of the employer. Payment in lieu of holidays on termination is at the basic salary rate only.

During probation period, annual leave can be taken based on the actual accrual.

If a public holiday falls during the period of annual leave, it will be counted as annual leave only. Public holiday will not be excluded from the annual leave days.

Leave encashment Only on basic Salary.

Part-time employees are entitled to annual leave according to the actual working hours they spent at work, as specified in the employment contract.


9. Maternity Leave Entitlement:

Previous UAE Labour Law 2022: Female employees with over one year of service were entitled to 45 days of maternity leaveOpens in a new tab., paid at the employee’s customary wage. Employees who suffered from an illness linked to childbirth or pregnancy were allowed to take 100 days unpaid leave.

New Labour Law: Maternity leaveOpens in a new tab. is now 45 days at 100% pay, plus 15 days at 50% pay.

There is no minimum qualifying service requirement. This maternity leave is offered to mothers who lost a child or who had a stillbirth after six months of pregnancy.

If the pregnancy results in delivery of a disabled or sick child, the employee is entitled to 30 days of full pay leave starting after the end of the maternity leave. This can be further extended by another 30 days without pay.

Nursing breaks

Previous UAE Labour Law: Two breaks for half an hour each for a period of 18 months.

New UAE Labour Law: One or two breaks not exceeding 1 hour a day for a period of 6 months.


10. Compassionate leave

Previous UAE Labour Law: Not specified.

New UAE Labour Law 2022: All employees are entitled to compassionate leave in the event of a death of a family member:

  • death of spouse – five days’ leave;
  • death of parent, child, sibling, grandchild or grandparent – three days’ leave.

11. Rest day

Previous UAE Labour Law: If the work circumstances require that the Worker be employed on the rest day specified in the Employment Contract, or the internal work regulations, he shall be compensated with a substitute rest day.

New UAE Labour Law 2022: Everyone must have at least one rest day, with the option of more depending on their contract.


12. Overtime.

Previous UAE Labour Law: Under the Old Law overtimeOpens in a new tab. was for a maximum of two hours per day.

Employees could work an additional two hours of overtime per day.

Enhanced overtime rates of pay applied for all overtime hours at the rate of:

  • during ordinary working hours – 125% of normal pay
  • between 9pm and 4am – 150% of normal pay
  • on non-working days – 150% of normal pay.

Exemptions to limits on overtime existed, however were limited.

New UAE Labour Law : The New Law significantly changes the operation of overtimeOpens in a new tab.. A limit of two hours per day of overtime continues to apply. A further cap of 144 total working hours (including overtime hours) over a three-week period also applies.

 Overtime is calculated on the basis of basic salary only (as opposed to also including allowances). The Executive Regulations will detail the categories of employees who are exempt from overtime.


13. Paternity Leave

Previous UAE Labour Law: Not specified.

New UAE Labour Law 2022 : Up to 5 days of paternity leave to be taken intermittently or concurrently over six months after childbirth.


14. Other Changes New UAE Labour Law 2022:

Salary Currency.

The Old Law stipulated that salary must be paid in UAE dirhams (AED). The New Law allows for any currency to be used, however, the Executive Regulations will hopefully deal with how this will operate in practice especially how it will align with the Wage Protection System which applies to employers regulated by the MHRE (outside the free zones) with requires payment in UAE dirhams. We expect most employers to continue paying salaries in UAE dirhams.


Discrimination

In Previous Labour Law , Limited protection against discrimination existed for employees, primarily arising out of wider Anti-Hate legislation.

Under the new labour Law 2022, Employers must not discriminate against employees on the basis of race, colour, sex, religion, national origin, ethnic origin or disability. Employers are prohibited to discriminate against workers in jobs involving similar tasks. A woman is granted a wage equal to the wages of a man if she performs the same work, or an alternative work of equal value.


Harassment:

There was Little to no anti-harassment provisions existed under the Old Labour Law.

The New Law Labour Law 2022 prohibits harassment and physical, verbal and mental abuse against employees.However, the New Law does not set specific compensations or remedies for harassment or discrimination although this may be dealt with in the Executive Regulations.


Fines

The Old Labour Law contained a limited right for the UAE courts to issue fines against employers.

Under the New UAE Labour Law 2022, The UAE courts are now able to levy fines against employers for breaches of the Labour Law. Fine ranges are:

  • AED 20,000-100,000 for providing false information to recruit an expatriate employee;
  • AED 50,000-200,000 for illegally employing an individual or recruiting an employee without having work to provide; and
  • AED 5,000-1,000,000 for any violation of the UAE Labour Law.

Fines can be doubled by the court for repetition of violations.


Collective Labour Disputes:

The New UAE Labour Law 2022 provides for collective labour disputes where a group of employees can submit a complaint to the MHRE. The MHRE can impose sanctions against the employer and to avoid the dispute harming the public interest. Such disputes may be dealt with further in the Executive Regulations.


Passport

There was no legal basis for employers to withhold the passports of their foreign employees in Circular No. 267 of 2002 issued by the Ministry of Interior (MoI). However, if the passport is surrendered voluntarily by the employee, it may not be considered as an offence if it is held by the employer if the employee grants their consent in writing and if the employer agrees to return it when requested.

According to the new UAE Labour Law 2022, official documents cannot be confiscated by employers and employees’ passports cannot be held anymore.


Internal Policies:

The UAE Labour law was silent on mandatory employee policies. However as per the New UAE Labour Law 2022 Employers with 50+ employees must have in place:

  • a grievances policy;
  • a disciplinary sanctions policy.

Any other policies are at the discretion of the company.


FAQ-Frequently Asked Questions on New UAE Labour Law 2022

Can I change my job after 6 months in UAE 2022?

Employees must give:
14 days’ notice to resign if they are leaving the UAE
one month notice required if they are leaving to join another employer in the UAE.

How is 2022 gratuity calculated?

Less than one year – no gratuity;
less than five years of service – 21 days of basic salary per working year;
after five years of service – first five years on 21 days of basic salary per year and subsequent years on 30 days of basic salary per year.

What is the probation period in UAE 2022?

The probation period is Six Months and cannot be extended.

When did the New Labour UAE Labour Laws 2022 come into effect?

New Labour Law came into effect February 2022.

What is the legal age to work in UAE?

For full time employment is 18 years and above.
Students in Dubai between ages of 15 to 18 years may get a temporary work permit known as a Juvenile Work Permit, which can only be valid for one year.

What is the new labour contract in UAE?

As per the new Law, a worker can be hired on a fixed-term employment contract for up to three years. The term may be extended or renewed for a similar or shorter duration.

What is the notice period for limited contract in UAE 2022?

Minimum notice period of 30 days continues. However, a maximum of 90 days’ notice period has been introduced.

What is basic salary in UAE for labour?

Currently, there is no basic salary percentage in the UAE Labour Law; meaning the law does not require that the basic salary be a certain percentage of the gross salary. 

Deena

Human Resource professional and writer.

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