What is UAE New Labor Law – Employment Guide 2024

The United Arab Emirates implemented a UAE new Labor Law on February 2, 2022, replacing Federal Law No. 8 of 1980. It governs the private sector employment relations entitled Federal Decree-Law No. 33 of 2021 and sets the new rules and comprehensive guidelines for the current employment contracts as well as policies about future hiring in the private sector.

The new labor Law binds the companies or employers in the United Arab Emirates to ensure the implementation of the amended legal terms to meet the global employment standards. It aligns and regulates various changes made by the Ministry of Human Resources and Emiratisation (MHRE) over the past few years.

Here we’ve mentioned in detail the significant amendments and aspects of the UAE New Labour Law.

11 Important Points in the UAE New Labor Law

1- Hiring on Fixed Term Contract

In the Emirates, there are two types of contracts, i.e., limited and unlimited. In the amended new Labor Law UAE, unlimited contracts are no longer applicable, so employers must place all employees on limited or fixed-term contracts for a minimum period of 3 years. In pursuance of the new law, employers must switch the employee’s contract to a fixed term until February 2023.

The contract can be renewed with the mutual consent of both parties. If the contract is not extended, but both parties keep working together, it will be considered renewed on previous terms and conditions.

2- Rules for Probation Period in UAE New Labor Law

According to the UAE New Labor Law, an employee’s probationary period is 6 months, i.e., it remains unchanged. However, the employer must provide written notice 14 days before terminating the worker’s employment contract. Similarly, for resigning from a job during the probation period, the employee must provide one month’s notice before joining another company in the UAE or 14 days’ notice if planning to leave the UAE.

3- Flexible Working Model

The New Labor Law states that the employees may avail any day of the week as the rest day by agreeing with the employer. Overtime can be capped at 144 hours every 3 weeks and can be calculated based on the basic salary.

According to the recent changes in the Labor Legislation, employees must consume their accrued annual leaves within one calendar year or as decided by the mutual agreement of both parties. Moreover, the payment for unveiled leaves is calculated based on the last basic salary of the employee at the end of his service contract.

You may read this What is gratuity in salary.

4- Rules for the Allocation of Leaves

Maternity Leave

The New UAE Labor Law allows 60 days of maternity leave, 45 days fully paid, and 15 days with half pay. The mothers may also avail of maternity leave in case of miscarriage, stillbirth, or a child’s death after birth.

Similarly, employees who give birth to a disabled child are entitled to an additional 30 days of fully paid maternity leave that can be extended to unpaid 30 days. Moreover, the current Law reduced nursing breaks from 18 months to 6 months from the delivery date.

Study Leave

According to the new employment act in the UAE, employees with more than 2 years of service can avail of a study leave of 10 days per year. The study leaves can only be availed on studying in a UAE institute; however, it’s not mentioned in the law whether these leaves would be paid or unpaid.

Leave to Find a New Job

As per UAE New Labor Law, the employee must provide a 14-day notice period to resign from the previous job as well as one month’s notice to join another company in the UAE. For finding a new job in the UAE, the employees are entitled to an unpaid leave of 1 day per week during the notice period.

Compassionate Leave

The New Labor law entitles 5 days of paid leave to the employee on the death of his/her spouse and 3 days of paid leave on the death of the siblings, children, parents, or grandparents. The leave is granted to manage funeral services, grievances, or other financial or legal matters.

5- Contract Termination Rules in New Labor Law UAE

The employer must provide a notice period of 30 days before terminating an employee. However, the New Law in UAE extends this notice period to 90 days before terminating employees or converting their unlimited contracts to a fixed term.

The duration of the notice period depends on the service years of the employees, such as:

• 30 days notice period for less than 5 years of service
• 60 days notice period for 5-10 years of service
• 90 days notice period for more than 10 years of service

6- Rules for Contract Suspension

In a disciplinary violation, the employer may suspend his employee temporarily for full 30 days on half pay to investigate the issue. However, Article 40 of the UAE New Labor Law states that if the employee proves innocent, the employer would be liable to pay the remaining dues of the employee’s suspension period.

7- End-of-Service Gratuity Entitlements as per UAE New Labour Law 2022

In the previous UAE Labor Law, UAE gratuity calculation was based on how many years you have served for an institute. The gratuity payment differed for 1-3, 3-5, and more than 5 years of service. However, under the UAE’s New Labor Law, employees are entitled to full gratuity payment on completing one year of service. Moreover, the Labor law ensures gratuity payments to employees within 14 days after leaving a job. You can use the online gratuity calculator to compute your gratuity or end-of-service benefits.

8- Currency of Salary Payments

The employers registered with the Ministry of Human Resources and Emiratisation should pay their employees’ salaries through the Wages Protection System. In this system, employees’ salaries are transferred only to those banks which the Central Bank of the UAE authorizes.

The old Labor Law imposes employers to pay salaries in UAE currency (Dirham), but the UAE New Labor Law also allows employers to pay salaries in UAE dirham or any other currency by the parties’ mutual agreement in the employment contract.

9- Workspace Guidelines and Prohibition of Discrimination

The UAE’s new Labor Law disallows biases based on a person’s race, gender, religion, disability, or nationality. Employers cannot fire an employee due to pregnancy or maternity leave. The law also stipulates that men and women should be paid equally for the same work.

The New Labor Law encourages employers to introduce awareness sessions or training to ensure policy implementation to protect employees’ rights. This strategy will help improve the ethical values and reputation of an organization.

10- Disciplinary Penalties

The New Labor Law imposes disciplinary penalties against workplace complaints. Article 14 protects the rights of the employees in a company by providing a shield against harassment and physical or psychological violence. The employer is liable to investigate the violations and properly prepare reports per the law. The UAE New Labor Law has specified the following penalties for any strict violation of the rules and regulations of the country:

• Legal notice
• Deprivation of due increment or promotion
• Termination from work, although giving the right of gratuity.

11- Unemployment Insurance Scheme

A new insurance scheme has recently been introduced in the UAE’s public and private sector organizations in 2023. According to this scheme, the employees will get up to AED 20,000 in cash until they secure a new job in the UAE.

Investors, domestic workers, temporary contract employees, pensioners, and minors (under 18) are exempted from claiming unemployment insurance benefits. The employee will have to pay a small annual amount to the plan to get unemployment insurance benefits.

Bottom Line

The UAE New Labor Law improves and ensures the best employment standards and practices to enhance the reliability and efficiency of the labor market. It also balances and strengthens employee and employer relations in the private sector.