UAE Labour Laws
Amendments of 2022

On February 2, 2022, the UAE implemented Federal Decree Law No 33 of 2021 replacing Federal Law No. 8 of 1980 related to the UAE Labour Law.

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These changes have been informed to all regulatory entities and governing bodies and necessitate amendments to existing employment contracts, as well as modifications to policies and procedures concerning future agreements with new employees.

The UAE government has changed to a Monday–Friday work schedule (with a half day on Fridays) for all government employees. While not required in the private sector, many private sector companies have already implemented a Monday–Friday working week, while some are in the transition phase. The following is an overview of key changes to the UAE’s labour laws.

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Work Models:  Historically, only full-time employment was possible. Part-time working was introduced in 2019 with some further flexibility added as part of 2020 Covid regulations. New models of work introduced, including:

• full-time

• part-time, for one or more employers

• temporary

• flexible

• remote working

• job sharing

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Employment Contract Duration: All employment contracts must be fixed-term contracts not exceeding three years. Contract terms may be shorter if agreed upon. Each contract on completion can be renewed for another three year term and this can be done unlimited number of times on agreement between employer and employee. Employers have a deadline of February 2023 to make necessary changes to their existing agreements.

 

Probation Duration: The probationary duration can vary from three months upto a maximum of six months and this remains unchanged in the new law. The addition to the new law however now requires the employer to provide at least 14 days (previously one day) written notice as an intention to terminate the contract. If an employee decides to resign during the probationary period, the employee must:

• give one month’s notice if resigning to join another employer in the UAE; or

• give fourteen days’ notice if the employee plans to leave the UAE.

 

Rest Days: Under the new law, employers are not required to implement a rest day on Fridays. It can be on any day of the week as long as agreed by both parties.

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Overtime: 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.

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.

Rates of pay for overtime continue unaffected and are calculated on the rate of basic pay, except that the enhanced premium for night work now only applies for hours worked between 10pm and 4am.

Limited exceptions apply to the overtime (and overtime pay) provisions. This list of exemptions has not been materially expanded and includes for members of the board and for employees with supervisory responsibilities.

 

Salary Payments: Employers may pay employees’ salaries in any currency as long as the same is agreed upon by both parties in the employment contract. A new regulation outlining this salary payment through WPS (Wage Protection System) is expected to be announced.

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Internal policies: The law was silent on mandatory employee policies.

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.

 

Annual Leave: Under the new law, employees must use their annual leave in the same calendar year that it accrues, unless otherwise agreed by the parties. The new law does not provide detail on how to handle unused leave (i.e., whether it can be considered forfeited). Further details on this are expected to be announced by the Ministry of Human Resource and Emiratisation (MHRE). Employees are entitled to payment in lieu of unused leave upon the termination of employment calculated on the basis of an employee’s basic salary only.

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Maternity Leave, Parental Leave, and Additional Leave Maternity Leave: The new law increases maternity leave entitlements to sixty(60) calendar days; the first 45 days are paid in full and the remaining 15 days at one-half pay. The new law prohibits employers from reducing an employee’s maternity pay in the event that an employee has not completed one full year of employment at the time of availing of maternity leave. Employees are now entitled to maternity leave and pay in circumstances where the employee miscarries after 6 months of carrying, suffers a stillbirth, or experiences the death of an infant after birth. Employees who give birth to specially challenged or sick children whose health conditions require “constant companion[ship]” are entitled to an additional 30 calendar days of maternity leave (with full pay), which can be further extended for an additional 30 days (unpaid). The law reduces employees’ entitlement to nursing breaks from 18 months to 6 months from the date of delivery. Employees still have extended unpaid time off after exhausting maternity leave for pregnancy related medical condition, but the entitlement has been reduced to 45 days from 100 days.

 

Compassionate Leave: In the event of the death of an employee’s husband or wife, the law entitles the employee to five days’ paid leave. In the event of the death of an employee’s parent, child, sibling or grandparent, the law entitles the employee to three days’ paid leave. Suspension Employers may now suspend employees for up to thirty days, with half pay during a disciplinary investigation. An employee will be entitled to reimbursement of all withheld pay if the employee is ultimately cleared of wrongdoing.

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Study leave: Employees with more than two years’ service are entitled to ten days’ leave per year in order to sit exams. To be eligible, the employee must be studying at a government approved UAE educational institution.

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Notice periods: Minimum notice period of 30 days for employees who have completed their probationary period.

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.

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Non-competition restrictions: Non-competition clauses were permitted, with no stated maximum length.

The maximum permitted length was generally considered to be 12 months. Non-compete clauses can be used and can last up to two years’ in length. The restriction must go no further than is necessary to protect a legitimate business interest requiring that it is limited in terms of geographical location, type of work and length.

The law sets out the circumstances in which post-termination restrictions will unenforceable including where, for example, the employer terminates the employment in breach of its legal obligations due to the employee.

Restrictive covenants can be set aside where any of the following occur:

• the parties’ written agreement;

• the new employer or the employee pays up to three months’ compensation to the old employer (subject to the old employer providing their written consent);

• the employee is terminated during their probationary period; or

• as may be deemed appropriate in light of labour market needs.

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Contract Termination Notice Periods: The minimum notice period for the termination of an employment contract remains thirty days, but the maximum notice period is now capped at ninety days. The new labor law also imposes minimum notice periods for terminating current unlimited-term contracts prior to implementing the new fixed-term contracts. In this instance, the employer must provide at least thirty days’ notice if the employee was employed for less than five years; at least sixty days’ notice if the employee was employed for more than five years but less than ten years; and ninety days’ notice if the employee employed for more than ten years.

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Grounds for Termination: Redundancy termination is considered a valid grounds for a termination of an employment contract under the new law. Under the prior law, redundancy was not recognized. There are additional grounds for “for-cause” termination, including where an employee: (i) abuses his or her position for profit or personal gain; or (ii) commences work for another employer without complying with the applicable rules and procedures.

 

Job-Search Leave: Employees are now entitled to one day of unpaid leave per week during the notice period to look for new employment.

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Discrimination: Limited protection against discrimination existed for employees, primarily arising out of wider Anti-Hate legislation. Specific protections have been introduced for employees, meaning that they cannot be discriminated against on the basis of:

• race;

• skin colour;

• sex;

• religion;

• national origin;

• social origin; or

• disability.

Positive discrimination in favour of Emiratis is an exempted category.

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Harassment: Little to no anti-harassment provisions existed under the Old Labour Law.

Express protections against sexual harassment, bullying and any verbal, physical or psychological violence against employees have been introduced.

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

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.

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Summary dismissal: Article 120 of the Old Labour Law prescribed specific and limited reasons for which employees could be summarily dismissed. Employees summarily dismissed were not entitled to notice period or end of service gratuity.

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.​​

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End-of-Service Gratuity: Under the new law, employees will be entitled to full EOSG when they resign, provided they have completed at least one year’s service.

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The old law calculated EOSG as a part or percentage of the monthly salary based on the duration of completed employment.

Payment of End-of-Service Entitlements Under the new law, all termination entitlements must be paid to employees within fourteen days after the termination date. Prior to the new law, there was no stipulated period for payment.

Non Competition Agreements The maximum restricted period for the enforcement of a noncompete agreement under the new law is two years after completion of contract or termination of employment.