On 16 November, The Ministry of Human Resources & Emiratisation (MOHRE) announced an overhaul to the labor laws in the UAE. UAE Labor Law Federal Decree Law No. 33 of 2021 (New Law), which will come into effect as of February 2022, seeking to address changes in the work environment.

The New Law will replace current labor regulations from 1980 and will apply to companies and employees in the private sector, excluding companies in Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC) free zones, which will continue to follow respective employment laws.

Companies in the private sector must reframe their employment and recruitment strategies and mobility polices, as changes to labor regulations will impact existing immigration procedures. 

The New Law combines changes introduced to employment practices through various regulations over the past years. Below, please find a breakdown of several modifications which may impact the immigration process. 

 

Law aspect

Current law

New law

Potential immigration impact

Employment contract

Limited- and unlimited-term employment contracts are recognized.

Only limited-term employment contracts, not exceeding three years (renewable for similar or shorter periods), are recognized.

Employee may join another employer in accordance with the procedures that are to be set out under the regulation to be implemented.

All employment contracts shall be converted to limited term contracts for a term not exceeding three years by 1 February 2023. Such contracts may be extended or renewed after the expiration of the term of the employment contract. From an immigration perspective, there may be additional administrative burden or cost depending on the jurisdiction of the sponsoring entity.

Work models

Part-time work is recognized by the main law, and its executive regulations to a certain extent.

Part-time, temporary and flexible work models have been introduced and addressed in more detail. 

Employers will have more options to consider for their recruitment needs. Alternative work models may result in reduced costs of employment while increasing work efficiency.

Determination of  wages

Wages must be paid in local currency (UAE Dirhams).

The value/kind of wages  shall be specified in the employment contract to be paid in the local currency (UAE Dirhams), unless otherwise agreed between the parties in the employment contract.

Payment of wages in a foreign currency may have an impact on employer’s compliance with the UAE’s Wages Protection System. However, any specific implications will have to be assessed on an individual basis.

Probationary period

Probationary period is a maximum of six months and can be terminated by either party without serving a notice.

-The maximum probationary period remains six months.

-14 days’ notice is required when terminating an employee during the probation period.

- A minimum of one month’s notice is required, where the employee is joining another employer during and after the probationary period.

- The New Law imposes specific obligations on the new employer, including possible reimbursement of recruitment costs.

- A minimum of 14 days’ notice is required when the employee is leaving the UAE. The New Law imposes specific obligations on the new employer, including reimbursement of recruitment costs if the employee returns to the UAE within three months after the previous employment contract was terminated.

 

 

Employers must assess specific obligations relating to the termination of employment during and after the probationary period, including the reimbursement of recruitment costs in the case of workers seeking new employment in the UAE.

Penalties

Companies employing workers without the relevant work authorization may be subject to a penalty of AED 50,000 to 100,000.

Companies employing workers without relevant work authorization may be subject to a penalty of AED 50,000 to 200,000.

Employers must ensure that they remain compliant with the applicable work authorization requirements, otherwise they risk being subject to higher penalties.

Termination notice

The minimum notice period is 30 days; the maximum period is three months.

The notice may be served by either party in respect of termination of employment. The notice period should not be less than 30 days and should not exceed 90 days. All financial dues must be paid by the employer within 14 days from the termination of employment.

Employers will have to revise internal policies to ensure that the applicable termination mechanisms comply with the 14-day deadline. This new requirement may also impact when the employment residence permit cancellation can be processed by the employer.

 

We will continue sharing updates as developments occur.