An Overview of the New Labour Law

New Federal Law

Musthafa Zafeer.O.V.

Founder & Chairman
Musthafa & Almana

An Overview of the New Labour Law

The New Federal Law No 33 of 2021 (“New Law”) introduces a raft of measures designed to modernise employment legislation and bring it in line with international best practices and provide greater protection for employees. The new amendments clearly define the intention of the UAE Government in providing both UAE Citizens and expats greater protection and more flexibility at the workplace.

The Salient Features Of The New UAE Labour Law:

  • 3 year contracts and flexible working models
    • According to the New Law, the term of the employment contract shall be 3 years which shall be renewable for the same period or less on mutual agreement. UAE citizens and expat residents can opt for full-time, flexible, temporary, or part-time work when applying to private companies and government entities. Both private and public sector workers can combine more than one job model, so long as the total working hours do not exceed the maximum 48 hours per week as mentioned in the law. The new work models offer flexibility to both workers and employees to select the type of contract that best suits the job role's requirements and objectives.
  • Equal Pay For Equal Work
    • The New Law explicitly affirms that all provisions regulating the employment of workers without discrimination shall apply to working women, with an emphasis on granting women the same wage as men if they perform the same work or other work of equal value.
    • Employees will also be protected under new anti-discrimination regulations and prohibit sexual harassment, bullying, or any verbal, physical, or psychological violence against workers by their superiors or colleagues, any type of discrimination on the basis of race, colour, sex, religion, nationality, or disability with a special aim to empower women in the workplace.
  • Non-compete Agreement
    • The New Law strengthens the non-compete protections afforded to an employer by introducing a statutory requirement for a Non-Compete Agreement to be executed between the employer and employee.
  • Change in Working Hours
    • The New Law also provides for the option of a shorter working week via a condensed working hours model. The New Law gives the option for employers to allow their employees to work for 40 hours in a week on a condensed model, i.e. a 4-day week consisting of 10 hours per day.
  • Overtime Wages
    • Payment of overtime wages for the employees who are required to work more than the scheduled time has been clearly defined under the New Law. The employees shall be entitled to overtime payment, in the following circumstances :
      • if the nature of the job requires more than two hours’ overtime, employees must receive an overtime wage equivalent to regular hour pay with a 25 percent increase;
      • If conditions required employees to work overtime between 10 pm and 4 am, they will be entitled to an overtime wage equivalent to regular pay with a 50 percent increase;
      • If workers are asked to work on an off day, they must receive a one-day leave or an overtime wage equivalent to the regular day pay with a 50 percent increase.
  • Leave and Holidays
    • Annual Leave: While the annual leave period remains the same, the new changes are that employees can now legally request paid annual leave during their probation period and that for any annual leave taken, they must be paid full salary.
    • Maternity Leave: Under Article 30 of the New Law pregnant women are protected from termination due to pregnancy or absence as a result of pregnancy. Additionally, they will also receive longer maternity leave, with 45 days of full pay and the next 15 days with half pay. Employees can also opt into an additional 45 days of unpaid leave following the 60-day period in case of any post-partum complications.
    • New Categories: Employees shall be entitled to additional types of leave, including
      (i) Bereavement Leave of three days following the death of close family members,
      (ii) Parental Leave of five days, to be taken intermittently or consecutively within six months of the birth of a child, and
      (iii) Study Leave of 10 days for an employee who has to take exams, provided that they complete two years of work with that employer.
  • Termination of Employment
    • As per New Law, unlike before, Employers are prohibited from withholding employees’ official documents and workers should not be forced to leave the country following the end of their work term. This is a clear distancing from the old practices and it shows the clear intent of the Government in line with Global Standards . Also, the following changes have been introduced so as to safeguard the interests of the employees:
      • Notice periods have now been capped at 3 months and the minimum notice period remains at 30 days;
      • If the notice is given by the employer, then The employee will be entitled to 1 day off per week to look for new employment during their notice period.
      • An employee will be able to resign without giving notice (i) if an employer breaches their obligations, provided the employee notifies MOHRE of such breach and the employer fails to remedy such breach within 14 days of such notice; and (ii) in case of harassment or violence, the employee shall notify the MOHRE within 5 working days;
      • Employee may terminate the contract during the probationary period by providing at least 1 months’ written notice to the employer should the employee want to move to another employer based in the UAE. In this case, the New UAE Labour Law provides that the New Employer should compensate the Previous Employer for any recruitment costs of said employee which has been incurred by the First Employer.
      • Where the employee wishes to leave the UAE during the probationary period, the employee may terminate their employment by providing at least 14 days written notice. In such instances, where the employee returns to the UAE and obtains a work permit issued by the MOHRE within 3 months of their departure, the new employer should compensate the previous employer for any recruitment costs incurred in recruiting said employee;
      • An employer may terminate an employee’s contract during the probationary period by providing 14 days' written notice to the employee.

Gratuity Amended – No Retrospective effect

Full-time private and public sector workers who have completed less than five years of service will be granted gratuity of 21 days' basic salary for each year for the first five years of employment. It further says that Employees who have more than five years of service are entitled to the gratuity of 30 days' basic salary for each year of work after the first five years, as well as receive 21 days' basic salary for each year of the first five years.

For the avoidance of any doubt, the old gratuity calculation scheme shall apply to private-sector employees under unlimited contracts until their contracts are renewed to limited within one year as per Article 68 of New Labour Law. Until then, employees under unlimited contracts will have their end-of-service gratuity calculated per the scheme mentioned in the old Labour Law No. 8 of 1980. The provisions of the new labour law shall apply to their renewed limited contracts moving forward.

Legal Costs : Finally Under the New Law, employees or their heirs may file claims, pursue litigation or enforcement orders against employers without incurring Court Fees at any stage of the process, provided that their claim does not exceed Dh100,000 in value.

The New Law is a reflection of UAEs motivation and intention to make it the most employee friendly regime in the region and provide its populace the flexibility and freedom to reflect the Post –Covid realities of the employment market . The legislators have brilliantly brought a balance and win- win situation for employees and employers While it may feel that it is slightly leaned towards employee welfare , these amendments will also favour employers , as they compete to bring in the best talent in the world to UAE.

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