Labor Law UAE and All You Want to Know About Employees' Rights

Learn more about labor law UAE from Khairallah’s team. Following the most significant reform to the law governing employment relationships in the country since 1980, private sector businesses in the United Arab Emirates (UAE) will assess their policies and practices.

On February 2/2022, Federal Decree _ Law No. 33 of 2021 regulating labour issues in the private industry went into effect. The law is intended to strengthen workers’ rights and increase the UAE’s competitiveness as a location to live and work, assisting the region in attracting and retaining top talent.

Family leave rights, discrimination regulations, termination of employment, and ‘non-compete’ clauses in employment agreements have all seen significant modifications. Businesses can also implement part-time and flexible employment arrangements under the new rules.

We’ve compiled a list of some of the most major changes to the legal framework.

Table of Contents

Contracts of Employment and Recruitment

1-Employment Contract

Previously

According to labor law UAE, employees could be hired on a long-term or short-term basis.

All workers must sign a standard contract with the MoHRE (or the applicable free zone). Optional supplementary corporate contract with additional clauses.

Currently

All workers must sign a standard contract with the MoHRE (or the applicable free zone). Optional supplementary corporate contract with additional clauses.

The requirement for a MoHRE/free zone contract is still in place. Changes to the MoHRE template contract are now possible, and several forms are available based on the type of visa or employment arrangement.

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2-Models of Work

Previously

In the past, a full-time job was the only option. But part-time work became legal in 2019, with some additional flexibility provided as part of the COVID regulations for 2020.

Currently

New work models in labor law in the UAE have been introduced, such as:

working for one or more employers, full-time or part-time.

job sharing temporary flexible remote working

All employees are entitled to the same benefits, but some of them may be pro-rated.

3-Period of probation

Previously

No notice is necessary from either side to terminate the employment after a maximum six-month probationary period.

The maximum probationary period of six months is still in place. Employers, on the other hand, must offer 14 days’ notice before firing someone.

Currently

Employees must provide the following labor law UAE:

If they are departing the UAE, they must give 14 days’ notice to quit.

If they are left the UAE to work for another company, they must give one month’s notice.

The old employer may recoup the costs of recruitment from the new employer if an employee leaves during the probationary term to work for another business in the UAE (or returns to the United Arab Emirates to work within 3 months).

4-Restriction on competition

Previously

Non-competition agreements were allowed, with no limit on how long they may be.

The maximum period allowed was widely thought to be 12 months.

Currently

Non-compete agreements are legal and can extend for up to two years.

The restriction may only go so far as to protect a genuine business interest, which means it must be restricted in terms of location, type of employment, and duration.

The legislation specifies the situations in which post-termination limitations are unenforceable, such as when an employer terminates an employee’s employment in violation of its legal obligations to the employee.

When any of the below events occur, the restrictive covenant can be lifted:

the parties’ written agreement; the new employer or employee pays the previous employer up to three months’ remuneration (subject to the old employer’s written consent); the employee is fired after their probation period; oras may be judged acceptable in light of labour market needs.

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Employees’ Benefits

1-Internal Policies

Previously

Employee policies were not covered by the statute.

Currently

Employers with 50 or more employees must have the following in place:

a policy on grievances; a policy on disciplinary sanctions

Any policies are at the company’s discretion.

2-Overtime

Previously

Workers could work an extra two hours per day in overtime.

For all overtime hours, enhanced overtime pay was applied at the rate of:

125 per cent of normal pay during normal working hours; 150 per cent of normal pay between 9 p.m. and 4 a.m.; 150 per cent of normal pay on non-working days

There were several exceptions to the overtime rules, but they were few.

Currently

Overtime continues to be limited to two hours each day. Over three weeks, a total of 144 total core hours (including overtime hours) are also capped.

Overtime pay rates remain the same and are based on the basic pay rate, with the exception that the increased night premium now only applies to hours worked both 10 p.m. and 4 a.m.

The overtime (and overtime pay) regulations are subject to exceptions. This list of exemptions, which includes members of the board of directors and staff with supervisory responsibilities, has not been significantly increased.

3-Employees’ Salary

Previously

All salaries were required to be paid in UAE’s local currency/dirhams (AED).

Currently

According to labor law UAE, employees may be treated in currencies other than AED if the company and employee agree.

4-Maternity leave & maternity pay

Previously

Female employees with more than a year of service were eligible for 45 days of maternity leave, paid at their regular rate of pay.

Employees who were unwell during pregnancy or delivery were eligible for an additional 100 days of unpaid leave.

Currently

The amount of time you can take off for maternity leave has been extended to:

45 days at 100% salary, plus 15 days at 50% pay

There is no longer a minimum service requirement to qualify.

Women who have had a miscarriage or stillbirth after 6 months of pregnancy can now take advantage of this maternity leave.

If the employee is suffering from a pregnancy-related disease, an extra 45 days of unpaid leave is possible, as well as an additional 30 days of “paid leave” and 30 days of “unpaid leave” if the employee’s kid is disabled.

5-Annual leave

Previously

Employees were entitled to at least the following amount of annual leave:

For the first year of employment, you will be required to work two days per month; after that, you will be required to work 30 days per month.

At the end of the holiday year, employees might carry forward or be reimbursed for any unused annual leave. The basic annual leave entitlement has not changed.

Employees no longer have the legal right to carry over unused annual leave to the following year’s vacation. Only with the employer’s permission may you carry forward or make a payment in lieu.

Payment instead of holidays is made at the rate of basic wage only if you are terminated.

6-Study leave

Employees who have worked for more than two years are entitled to 10 days off per year to take tests. To be qualified, the employee must be enrolled in a UAE educational institution that has been approved by the UAE government.

7-Compassionate leave

In the event of the loss of a family member, all employees are also entitled to compassionate leave:

Death of a spouse entitles you to five days off; death of a parent, child, sibling, grandchild, or grandparent entitles you to three days off.

We have mentioned to you the most important information regarding the differences in labor law UAE between the past and the present in the United Arab Emirates regarding employee vacations and their salaries.