In November last year, the UAE issued Federal Law No.33 (the new UAE labour law) which will come into effect on 2nd February 2022.
Like the previous version of the labour law, it will apply to all companies operating in the private sector of the UAE, including free zones (except for Dubai International financial centre and Abu Dhabi Global Markets free zones, which have their own laws). It comes as part of the UAE’s continual progress to align with the rest of the world and attract top talent to work for companies in the UAE.
Included in the updated labour law are several changes that need to be acknowledged by businesses and put into effect quickly to avoid fines and other penalties.
Outsourced Payroll Solutions are here to help companies adapt to the changes as easily and smoothly as possible. Below are some of the frequently asked questions about the changes.
1. When does it come into effect?
The new labour law comes into effect on 2nd Feb 2022. All changes must be put in place by that date to remain compliant. The only exception to this is changing employment contracts from unlimited to limited periods, of which you have until 2nd February 2023 to comply.
2. What is the difference between limited and unlimited contracts?
An unlimited contract does not have a definitive end date, whereas a limited contract has a specified end date.
3. Does the Visa have to be for the same duration as the contract period?
No, it does not, although this is the reason unlimited contracts have been made mandatory, it is up to the employer if you want to match the visa length to the contract length (e.g. if the limited contract is 1 year in length, the visa will last for 1 year).
4. How will End of Service gratuity change?
Provisions related to the end of service gratuity in the new Labour Law are clear when it comes to scope. It stipulates explicitly that GCC nationals are not eligible to gratuity. The most significant change is that the old labour law provides that employees will be entitled to a reduced gratuity payment in certain cases and will forfeit payment entirely in others. For example, in the event of summary dismissal. This is no longer the case. With the new Labour Law employees continue being entitled to gratuity irrespective of the reason for and timing of termination.
Once the limited contracts are implemented, the initial joining date must be used to calculate the period of continuous service, and for the employees joining with a limited contract the initial date must be used.
5. What are the new working models?
The new LL aims to introduce flexibility by specifically providing alternative working models alongside the traditional full time working model including part-time, temporary and flexible/freelance working arrangements though it remains to be seen how the new arrangements will work in practice like what type of work permit will be required and will the standard form contracts used by the Ministry of Human Resources and Emiratisation (MoHRE) and various free zone authorities etc.
6. Can an employee work for multiple employers?
Yes, under the new labour law, you are allowed to work for multiple employers as long as you do not work full time for any one employer.
7. Does the non-compete clause apply automatically or should it be specified in the contract?
No, it does not automatically apply. It must be clearly stated in the employment contract with all the terms relating to it. The MOHRE have announced they will be releasing a list of job titles and skills the non-compete clause will not apply to.
8. How has maternity leave changed?
In the previous labour law, new mothers were entitled to 45 days of paid maternity leave. As of 2nd February 2022, new mothers will be entitled to 60 days maternity leave (45 days full pay, plus 15 days half pay).
9. What are the new leave types?
Bereavement leave- 5 paid leave days (death of a spouse) or 3 paid leave days (death of a parent, child, sibling, grandchild or grandparent)
Study leave- 10 paid leave days for employees having completed at least 2 years of service and being enrolled in a UAE educational institute
Parental leave- 5 paid leave days in the first 6 months after a new baby is born. This is applicable to new mothers and fathers.
Search for work leave- 1 unpaid leave day per week to search for a new job during the notice period
10. Are there fines for non-compliance
Yes, there are fines for non-compliance of the new labour law and are stated very clearly. The fines range from AED 5000 to AED 1000000.