The United Arab Emirates (UAE) has issued Federal Law No. 33 of 2021 (the New Labor Law), which became effective on Feb. 2, 2022, and repealed UAE Federal Law No. 8 of 1980 (the Current Labor Law). The New Labor Law will apply to all companies and employees in the UAE, including its free zones, except the Dubai International Financial Centre and the Abu Dhabi Global Market, which implement their own employment laws. Pursuant to the Law, the employees both in government and private sectors will have similar working environment and facilities. These include equality, non-discrimination, models of work, similar hours of work, leave and payment of end of service benefits.
It should be noted that, the New Labor Law introduces several unexpected changes. The rationale for some of the changes is to identify the rights of all the employees and workers in the UAE in a balanced manner. The objective of this Decree-Law is to:
- Elaborate and unify the general rules of work for all employees and workers in the UAE.
- Promote an effective, attractive and sustainable employment market by ensuring protection for parties to the work relationship and its developments.
- Identify the rights of all Employees and Workers in the UAE in a balanced way.
Nevertheless, there are a number of significant issues for affected employers to bear in mind and changes will need to be made to employment contracts, policies, and practices. The key aspects of the New Labor Law below, together with the main action points for employers are:
- Update template employment contracts to reflect the requirement for all employees to be issued with fixed-term contracts not exceeding three years
- Ensure that all existing employees employed on indefinite employment contracts are moved onto fixed-term employment contracts by no later than Feb. 2, 2023.
- Amend or replace existing employment contracts or policy documents that contain references to specific statutory entitlements (for example, 45 days’ maternity leave).
- Amend current sick leave policies to reflect the fact that employees are not entitled to take paid sick leave during their probationary period.
- Amend existing maternity and paternity leave policies to reflect the different entitlements
- Consider implementing equal opportunities and anti-bullying and harassment policies to reflect the new anti-discrimination/bullying/harassment provisions.
- Consider implementing a grievance policy to facilitate employee complaints of discrimination, bullying and harassment.
- Update disciplinary policies to reflect (i) the expanded number of reasons for termination; (ii) the fact that an employee’s end-of-service gratuity can no longer be withheld in any circumstances; (iii) the prohibition on discrimination, bullying and harassment.
- Amend working time policies to reflect the cap on overtime hours and the changes to the calculation of overtime pay.
The New Law also prohibits discrimination against persons specifically on the grounds of race, color, sex, religion, national origin, ethnic origin or disability. It remains to be seen how this protection will be enforced in practice or what the remedy will be for individuals who are victims of discriminatory conduct.