UAE Labor Law | A Guide for HR Professionals in the UAE

 The UAE Labor Law (Federal Decree-Law No. 33 of 2021), which came into effect on February 2, 2022, replaces the previous labor law (Federal Law No. 8 of 1980). It introduces significant changes to modernize the UAE's labor market, enhance employee protections, and align with international labor standards. Below is a detailed summary of the key provisions that every HR professional must know:

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1. Scope of Application

• Applies to all private sector employees in the UAE, including free zones (unless specific free zone regulations state otherwise).
• Excludes employees of federal and government entities, domestic workers, and agricultural workers (covered under separate laws).

 

2. Employment Contracts

• Types of Contracts:
• Limited (Fixed-Term) Contract: Maximum term of 2 years and can be stretched up-to 3 years, renewable by mutual agreement.
• Unlimited Contract: No longer applicable under the new law.
• Contracts must be written in Arabic, with an optional translation in another language.
• Employers must provide a copy of the contract to the employee.

 

3. Probation Period

• Maximum probation period is 6 months.
• During probation:
• Either party can terminate the contract with 14 days' notice.
• Employees cannot switch employers during probation unless agreed upon by both employers.

 

4. Working Hours and Overtime

• Standard Working Hours: 8 hours per day or 48 hours per week.
• Overtime:
• Paid at 125% of the basic salary for weekdays.
• Paid at 150% of the basic salary for weekends or public holidays.
• Ramadan Working Hours: Reduced by 2 hours per day.

 

5. Leave Entitlements

• Annual Leave:
• 30 days for employees with more than 1 year of service.
• Pro-rated for employees with less than 1 year of service.
• Sick Leave:
• Up to 90 days per year (fully paid for the first 15 days, half-paid for the next 30 days, and unpaid for the remaining 45 days).
• Maternity Leave:
• 60 days (45 days fully paid, 15 days half-paid).
• Additional unpaid leave of up to 45 days for illness related to pregnancy or childbirth.
• Parental Leave:
• 5 days of paid leave for both parents within 6 months of childbirth.
• Study Leave:
• 10 days per year for employees enrolled in accredited UAE institutions.

 

6. Termination of Employment

The termination process includes:

• Termination by Employer:
• Requires valid reasons (e.g., poor performance, misconduct).
• Notice period of 30 to 90 days, depending on the contract.
• Employees are entitled to end-of-service benefits.
• Termination by Employee:
• Requires 30 days' notice for limited contracts.
• Employees can resign without notice if the employer breaches the contract.
• End-of-Service Gratuity:
• 21 days' salary for each year of service (first 5 years).
• 30 days' salary for each year of service (after 5 years).
• No gratuity for employees terminated for gross misconduct.

 

7. Non-Compete Clauses

• Non-compete clauses are enforceable if:
• They are limited to 2 years.
• They are reasonable in scope and geographic area.
• They protect the employer’s legitimate business interests.

 

8. Discrimination and Harassment

• Prohibits discrimination based on race, color, sex, religion, nationality, or disability.
• Employers must provide a safe and harassment-free workplace.

 

9. Wages and Payment

• Salaries must be paid in AED through the Wage Protection System (WPS).
• Employers must pay salaries at least once a month.
• Deductions from wages are limited to 50% of the salary.

 

10. Health and Safety

• Employers must provide a safe working environment.
• Employees must comply with health and safety regulations.

 

11. Part-Time and Flexible Work

• Allows for part-time, temporary, and flexible work arrangements.
• Employees can work for multiple employers with proper approvals.

 

12. Employee Records

• Employers must maintain accurate records of employees, including:
• Personal details.
• Employment contracts.
• Salary payments.
• Leave records.

 

13. Dispute Resolution

·       Labor disputes must be resolved through conciliation at the Ministry of Human Resources and Emiratisation (MOHRE).

·       If unresolved, disputes can be referred to the labor courts.

 

14. Emiratisation

·       Employers must comply with Emiratisation quotas to increase the employment of UAE nationals in the private sector.

 

15. Penalties for Non-Compliance

• Fines for violations of the labor law range from AED 5,000 to AED 1,000,000, depending on the severity of the offense.
• Repeated violations can result in license suspension or cancellation.

 

Key Takeaways for HR Professionals

1. Ensure all employment contracts comply with the new law.
2. Implement policies to prevent discrimination and harassment.
3. Stay updated on leave entitlements and end-of-service benefits.
4. Use the Wage Protection System (WPS) for salary payments.
5. Train managers and employees on the new labor law provisions.

 

This summary provides a comprehensive overview of the UAE Labor Law (Federal Decree-Law No. 33 of 2021). For specific cases or further clarification, consult legal experts or MOHRE guidelines. Let me know if you need help with any specific aspect!