• news-banner

    Expert Insights

UAE Labour Law Update – The five big changes to note…

Federal Decree Law No. 33 of 2021 on the regulation of Labour Relations (New Labour Law) is set to change the face of the employment market in the UAE. Now that it has come into effect, we wanted to provide a reminder of the key changes and the potential impact for employers in the UAE.

1.  Anti-Discrimination Provisions 

The New Labour Law further defines the existing protections of the previous labour law, prohibiting discrimination on the basis of race, colour, sex, religion, national origin, ethnic origin or disability. Women have also been given additional protections with an express prohibition on terminating a female employee’s employment on the basis that she is pregnant or on maternity leave.

The New Labour Law has also added an express prohibition against sexual harassment, bullying, verbal, physical or psychological violence of employees by their employer, manager or colleagues, and an employer cannot force an employee to work against his or her will, including by threatening with a penalty.

2. The Introduction of Models of Work and Abolishment of Unlimited Term Contracts 

The New Labour Law has introduced new models of work; full-time, part-time, temporary and flexible work, with the possibility of further models being introduced.

Whilst employers are under an obligation not to allow an employee to work for other employers (without the appropriate consents), the New Labour Law does formally introduce the concept of part-time work and working for more than one employer. The employee is under a similar obligation not to work for other employers unless with the appropriate consents.

The temporary work model contemplates the ‘project’ work scenario, where a working relationship relates to a specific period of time with specific tasks. Finally, the New Labour Law introduces a flexible working model, allowing for factors like workflow, economic, and operational changes to dictate the working hours under a contract.

One of the key changes of the New Labour Law is the abolishment of unlimited term contracts, meaning that every employment contract in the UAE must be limited to a maximum period of three years. Although employment contracts are renewable and extendable, this change aligns the contract terms with residency visas here in the UAE.  It is important to note that employers only have one year to amend all indefinite contracts to fixed term contracts. It is likely that many company contracts will remain unlimited to ensure the retaining of key employees, however, how such a conflict would be treated in the event of a dispute is yet to be seen. It is important to note that continuous employment does not restart upon extensions and renewals.

Further, where an employee leaves an employer during their probation period to commence work with another employer in the UAE, the new employer may be liable to compensate the employer for recruitment and contract costs.

3. Non-Compete

Where an employee will have access to an employer’s customers or business secrets, the employer has the right to include a non-compete provision in the employment contract for up to two years after expiration of the contract.  Such provision must, however, specify the place, time and type of work that is covered by the non-compete, and must be limited in nature to protect the legitimate business interests of the employer.

In addition, the employee owes the employer an obligation of confidentiality and a prohibition against keeping any hard or soft papers or documents in relation to the business secrets without the permission of the employer.  We note, however, that the issue of non-solicitation is not dealt with under the New Labour Law.

4. Obligations of the Employer 

The employer has a number of obligations under the New Labour Law, some of the key requirements being:

  • maintaining appropriate records;
  • not keeping official documents (e.g. passport) of the employee;
  • provide appropriate accommodation or a housing allowance;
  • develop the skills of the employee and provide appropriate training to allow such employee to carry out his/her job;
  • provide a safe and appropriate working environment, health and safety training and bear the costs of medical insurance;
  • ensure the employee is aware of his or her rights and obligations;
  • bear the cost of repatriation where the employer terminates the employment contract;
  • imposing maximum working hours of no more than 8 hours per day or 48 hours per week; and
  • only deducting money from an employee’s salary for recovery of loans, correction of overpayments, schemes pursuant to UAE law (such as pensions and insurances), approved social projects, debts due by court order, reparation of harm caused by the employee as a result of error or violation of instructions and/or certain violations under the employer’s constitution (as agreed with the Ministry and subject to an overall cap of 5% of salary).

5. End of Service Benefit 

Whilst the calculation of end of service benefit/gratuity (EOSB) remains similar to its predecessor, the New Labour Law has implemented other protectionary measures such as:

  • removing the right of the employer to terminate an employee’s employment without EOSB;
  • removing the right of the employer to reduce the EOSB of an employee on an unlimited contract by up to two thirds based on an employee’s resignation; and
  • removing the right of the employer to deduct the EOSB of an employee on a fixed term contract where such employee resigns prior to the end of the fixed term contract.

Whilst removal of such rights for the employer further protects the EOSB position for employees, there have been some additions to the reasons for termination permitted by the employers. Employees can be terminated without notice where they:

  • abuse their position for profit or personal gain; or
  • commence work for another employer without the appropriate consents.

Executive regulations are due to be published, which will give additional details, clarity and guidance on the new employment landscape in the UAE. We will provide an update once the executive regulations are published.

Our thinking

  • Women in Leadership: Planning for the future

    Sarah Wigington

    Events

  • Essential Intelligence – UAE Fraud, Asset Tracing & Recovery

    Sara Sheffield

    Insights

  • Arbitration: Getting value for your money

    Daniel McDonagh

    Insights

  • Charles Russell Speechlys Partner Promotions 2024

    Bart Peerless

    News

  • Thomas Snider, Reem Faqihi and Dalal Alhouti discuss the impact of technology on the arbitration landscape for Legal Community MENA

    Thomas R. Snider

    In the Press

  • Charles Russell Speechlys advises Countryside Partnerships on its joint venture with Abri to develop 1,500 homes in West Sussex

    Sarah Wigington

    News

  • Charles Russell Speechlys boosts international private wealth offering with the arrival of Amira Shaker-Bortman

    Amira Shaker-Bortman

    News

  • Breaking Barriers: The Tech Revolution in Arbitration

    Thomas R. Snider

    Insights

  • Mark Howard writes for the Evening Standard on the blocked Telegraph takeover, the NSI Act and the Enterprise Act 2002

    Mark Howard

    In the Press

  • Retail Week quotes Ilona Bateson on the CMA’s investigation into environmental claims in the fashion retail sector

    Ilona Bateson

    In the Press

  • Fashion and the Green Claims Code brought into focus by open letter from the CMA.

    Ilona Bateson

    Quick Reads

  • Charles Russell Speechlys grows its rankings in The Legal 500 EMEA directory

    Frédéric Jeannin

    News

  • Family Offices for Middle Eastern Clients

    Elinor Boote

    Insights

  • The Lawyer covers the recent growth and strategy of our corporate practice

    David Collins

    In the Press

  • The role of national courts in arbitration

    Thomas R. Snider

    Insights

  • Charles Russell Speechlys advises on three secondary fundraises across three different markets

    Paul Arathoon

    News

  • Embracing AI's potential in arbitration

    Thomas R. Snider

    Insights

  • Thomas Snider, Patrick Gearon and Dalal Alhouti discuss the impact of AI on international arbitration for Legal Community MENA

    Thomas R. Snider

    In the Press

  • There is a new tax law in town – but it’s probably not what you think

    Sarah Kadhum

    Quick Reads

  • Landmark European AI Act Passed By The European Parliament

    Louise Zafer

    Insights

  • Drafting the “perfect” arbitration agreement

    Alim Khamis FCIArb

    Insights

  • Peter Smith shares his thoughts on digital asset disputes for Legal Community MENA

    Peter Smith

    In the Press

  • Charles Russell Speechlys hosts international arbitration event in Dubai

    Peter Smith

    Quick Reads

  • The ongoing fight against fakes

    Charlotte Duly

    Quick Reads

  • Abu Dhabi’s New Arbitral Centre Unveils its Rules

    Dalal Alhouti

    Quick Reads

  • New Regulations for the UAE’s Media Sector in 2024

    Mark Hill

    Quick Reads

  • Under the Influence: Legal Considerations for Social Media Influencer Partnerships in the UAE

    Mark Hill

    Quick Reads

  • EU AI Act – Will it become a law for all the world?

    Nick White

    Quick Reads

  • Ctrl + GCC: The Rise of e-Sports in the Gulf

    Mark Hill

    Quick Reads

  • Digital Markets, Competition and Consumers Bill: Will new consumer protection rules restrict access to Gift Aid?

    Quick Reads

  • The End of the SAG-AFTRA Strike & What it Means for the Middle East

    Mark Hill

    Quick Reads

  • UAE Strengthens its Position as Leading Destination for A.I.

    Mark Hill

    Quick Reads

  • Dubai Court of Cassation Extends Arbitration Agreement Across Subsequent Contracts

    Peter Smith

    Quick Reads

  • UAE Polishes Federal Arbitration Law

    Peter Smith

    Quick Reads

  • Drone deliveries: Be Prepared

    Emma Humphreys

    Quick Reads

  • New Governance Guidelines for family-owned businesses in the UAE

    William Reichert

    Quick Reads

  • Product compliance and Brexit - UK Government concedes to CE markings indefinite recognition

    Jamie Cartwright

    Quick Reads

  • Has the Orpéa plan impaired shareholder's consent? - Le plan de sauvegarde d'Orpéa n'a-t-il pas vicié le consentement des actionnaires historiques ?

    Dimitri-André Sonier

    Quick Reads

  • Will the downturn in the Paris region property market lead property companies to turn to ad hoc proceedings, as they did in the 1990s?

    Dimitri-André Sonier

    Quick Reads

  • Les défaillances en France proches de leur niveau de 2019 - French insolvencies close to 2019 levels

    Dimitri-André Sonier

    Quick Reads

Back to top