UAE Labour Law

August 4, 2023
Himanshu Kumar

UAE implemented a new UAE labour law on 2 February 2022 (replacing the Federal law of 1980) governing the employees working in the private sector.

As a result, significant changes occurred in the new laws and every organization had to amend these new laws. The significant changes that occurred were a result of challenges and needs that labour felt in the UAE over recent years. Additionally, the new UAE labour law reflects UAE’s government mindset to implement a regulatory framework aligned with global standards.

Scope of the new UAE Labour Law

The new law will apply to all employees and employers working in the private sector of the UAE. It will exclude those employees who are working in federal and government organizations, members of the armed forces, police and civil services and domestic employees of UAE or decrees carve out expectations to the Provision of Law.

Significant changes occurred in UAE Labour Law

Following are the significant changes that occurred in UAE Labour Law:

1. Change in Work Model

Various working models were introduced under the law in the UAE in addition to full-time employment:

Part-time work: Under this model, employees can work with one or more employers for a specific number of hours. This model provides flexibility to employees to work with more than one employer and manage their other tasks along with it.
Temporary work: Under this model, employees are hired for a specific task or specific duration of time. Employees are hired for a temporary period under this model.
Flexible work: Under this model, employees are assigned a particular work or task and they can perform it remotely at their convenience.

All these work models were introduced under the new law and all the benefits and terms and conditions are explained under the law.

Most importantly, the new law has provided employers with additional benefits to meet all the recruitment needs of labour. It provides flexibility to employees who seek non-traditional models of working.

2. Introduction of new visa categories

Significant changes occurred in the existing immigration landscape. The 12 types of work permits were introduced to reflect various employment arrangements including:

1. Work permit to recruit workers who are working outside the UAE.

2. Transfer work permit: This is a permit under which a non-national employee is transferred from a facility which is registered in the ministry.

3. Work permit for those employees under the residency of their parents.

4. Temporary work permit which is provided for some temporary period.

5. Task work permit is provided to those employees who are hired from outside UAE for a specific task or project.

6. Partial work permit to employ a worker on a part-time basis.

7. Juvenile work permit for those whose age is between 15 to 18 years.

8. Students, trainers or interns who are working in UAE and have reached the age of 15 years.

9. Work permit for those employees who come from GCC countries.

10. Work permits for those who belong to golden residency.

11. Work permit for National trainee to train Emirati citizens.

12. Freelance permits are provided to those individuals aiming to engage in their self-employment.

3. Employment Contracts

In compliance with the new law, those contracts that state unlimited-term employment are not valid anymore. Limited-term contracts cannot exceed 3 years. As a result, private employers have to convert their contracts of unlimited duration into limited contracts within one year of law issuance.

Further, employers can also opt for renewing their contracts without paying additional charges.

Limited-time contracts provide various benefits to employees. They are not bound to work for a longer duration. However, the new law will improve the retention rate of employees.

4. Scope of employee’s work

The new labour law states that employers are not allowed to assign the tasks different from what is mentioned in the employment contract until the following conditions are met:

Employee’s written consent stating their revised scope of work

Additional responsibility or work that is assigned should be updated in the employment contract within 90 days.

According to this, the employer can neglect to do the task or work assigned which is different from the employment contract.

5. Covenant not to disclose

The new law states the conditions and period under which covenant not to compete clauses can be legally enforceable. Moreover, employers can invoke the non-competent close at the time of leaving the organization under the following circumstances.

The employee has information of trade secrets or private information during their course of employment. The duration of a non-competent clause does not exceed more than 2 years.

6. Non-discrimination clause

One of the major changes in the new law is the prohibition of discrimination based on gender, caste, sex or color in the workplace.

To promote a non-discrimination culture within organizations in the UAE, new laws have been introduced following changes:

Employers are required to provide equal payout to all employees whether they are male or female.

Employers must protect employees from harassment and violence

As a result, employers must review all the policies introduced and do the necessary changes that comply with new laws and regulations.

7. Leave

In compliance with the new law following leaves are included in the new employment contract:

Maternity leave will be provided to female employees for 60 days of which 45 days will be full paid leaves and 15 days would be half-day leaves.

Employees are entitled to 5 days of leave in case of the death of their close ones (bereavement leave).

Employees who have completed 2 years of service shall be entitled to ten working days’ leave if they are enrolled in any certified educational institute in UAE.

Five working days of leave should be provided as paternity leave.

8. Workplace regulation

As per the new labour law, organizations, where more than 50 employees are working, must adhere to internal policies and procedures such as working hours, rewards, health and safety etc.

Hence employers must recheck their existing policies and make the necessary changes if any. In addition, employers must conduct necessary training sessions for the employees to make them aware of changes in labour law.

9. Financial exposure & disciplinary penalties

Under the new law a proper system is maintained to address the grievances and complaints of employees in the organization.

In addition to this new law has specified the actions that will be taken in case there are workplace violations:

Written notice to that employee
Warning letter
Payout deduction from monthly salary
Temporary suspension from work
Denial of promotion or appraisal
Dismissal from service

10. Introduction of unemployment insurance scheme

The UAE has come up with a new unemployment insurance scheme for employees of the public and private sectors. The new law will cover 60% of an employee’s basic salary.

The compensation amount is a max of AED 20000. However, employees under the age of 18 are not covered under this scheme.

Wrapping up

In order to be compliant with changes in UAE Labour Law one can make use of Zimyo Payroll Software. Payroll compliance or statutory compliance plays an important role in any organization and every organization has to abide by these laws.

Zimyo payroll is an end-to-end HR service provide which also has Payroll Software among its 40+ modules. Zimyo runs a swift and error-free payroll in minutes. Zimyo takes care of your compliance requirements like PF, ESIC, Professional tax, TDS, EDLI, etc. Moreover, you can create reimbursement approval workflow to let employees claim expenses reimbursement accurately.

The recent changes in UAE Labour Law was the result of issues faced by employees in UAE. So they made various amendments in the existing Labour Law of 1980. The major changes include change in work models and various workplace regulations.