The UAE has adopted a major reform in its legislative system that brought about 40 new laws and amendments to the company law, criminal law, personal status, among others. The amendments aim to develop the legislative structure in various sectors, the labor law being one of these, was the most recent. We try in this article to shed light on the changes introduced with the new labor law and their significance on both, the employer and employee.
The President of the UAE and the Ruler of Abu Dhabi Sheikh Khalifa bin Zayed Al Nahyan has issued the new Federal Decree-Law No. (33) of 2021 on the Regulation of Labor Relations which came into force on February 2, 2022.
The new Decree-Law has been described as the biggest update in the labor regulations since the issuance of the Federal Law No. (8) of 1980 Concerning the Regulation of Labor Relations forty years ago. This new set of laws and legislations have come after long and deep discussions with all the constituents of the public and private sectors in the State, to respond to the present and future challenges in the labor market nationwide and worldwide.
The issuance of the new Federal Decree-Law has been announced recently during a media briefing by the Minister of Human Resources and Emiratisation and came as a part of the overall update of laws in the state to create a responsive and competitive business environment. The Decree-Law shall prevail and repeal the Federal Law No. (8) of 1980 and any other contradicting regulations.
As the need had arisen in the past two years with the spread of the pandemic and all the preventive and protective measures accompanying it from lockdowns to working remotely to salary reductions and unpaid leaves… etc, it was all persisting and calling for updated labor legislation capable of dealing with all these novel situations and any other rapidly-changing fields like technological advancements to improve working conditions in UAE and aid the region to attract and retain world-class talent.
The objective of the amendment in the Labour Law is to enhance the elasticity, resilience and sustainability of the labor market nationwide, as well as ensure the protection of workers’ rights against sexual harassment and physical or psychological abuse. It provides possibilities for equal opportunity and enjoyment of rights against race, color, sex, religion, ethnicity or disability.
The provisions of the Decree-Law aim at maintaining high standards of the labor market by creating an attractive work environment for the employees and employers which allows them both to participate in the process of national development. This can be achieved by regulating the rights and obligations of all the parties involved in labor relations and assuring the resilience and sustainability of the labor market under unusual circumstances.
The Decree-Law shall apply to all the companies, employers and employees of the private sector in the state. As such, this excludes the federal and local government employees, in addition to the armed forces, police and security and any other group as proposed by the Minister of Labor.
Rights and Obligations of Employers and Employees
Gender and Age
People from all races, religions, ethnicities, genders are to be treated equally according to article (4) which prohibits any kind of discrimination that may undermine the chances of getting a job opportunity or staying in it for any of the aforementioned reasons. The Decree-Law emphasizes enabling women by granting them the same rights and wages as men for performing the same or similar kind of work of equivalent value, which shall come into force after proper enactment.
As per article (5), the employment of minors under the age of fifteen is totally prohibited, and only juveniles above fifteen are allowed to work under certain conditions like obtaining the permission of parents or guardians/custodians, limiting working hours to a maximum of six and banning them from certain types of work.
The Process and Conditions of Employment
The Decree-Law reinstated that it is not allowed to work in the UAE nor hire any person before obtaining the relevant work permits. The types of work permits and procedures of granting/renewing/canceling them shall be determined in the bylaw of the Decree-Law. The activity of recruitment or recruitment brokerage should be performed through a proper license. It is forbidden for employers to charge their employees any fees for employment or recruitment whether directly or indirectly.
Strict rules have been decided for the violating employers as the Decree-Law stated in article (60) that a fine of no less than AED 50,000 (Fifty Thousand Dirhams) and no more than AED 200,000 (Two Hundred Thousand Dirhams) shall apply to anybody who:
- Employs a worker without a work permit,
- Employs a worker and leaves him without work,
- Employs or approves the employment of a juvenile (including the juvenile’s guardian), or
- Closes an establishment or ceases its activity without taking the necessary procedures for settling its workers’ dues.
Types of Work
In addition to the full-time type of work, other types have been added to face unusual circumstances. These types are the:
- Part-time, which allows somebody to work for one or more employers for a certain number of hours or days.
- Temporary work, which is either temporary by nature or focused on work that ends with the completion of a certain job.
- Flexible work, where the number of hours or days decreases or increases according to the bulk of work or on the economic and operating variables of the employer.
This is one pivotal change brought by the Decree-Law as it allows employers to hire employees with different work models as well as their respective obligations and conditions with easy and flexible procedures.
Types of Contracts
According to the new rules, the employment contract shall be a limited-term contract only, which may not exceed three (3) years. In the case of a limited contract, the extension shall be upon agreement between the parties. If there is a continuation of the original term without any explicit fixed term, then the original contract shall be extended with the same terms and conditions. Employers who have unlimited term contracts entered with their employees shall start to adjust their contracts to be in compliance with the provisions of the Decree-Law.
The Decree-Law also sets out the conditions of the probation period, stipulating that an employer can use it only once and for a period that does not exceed six months. If the employer is willing to terminate the employee or the latter is willing to resign and leave the country, a notice period of 14 days shall be served by any of them. In case the employee resigns to work for another employer, the notice period shall be one month and the new employer will be liable to compensate the old employer for all the hiring charges.
If either party terminates the employment contract during the probation period without following or complying with the provisions of the new Decree-Law, then the party who breached shall compensate the other party with an amount equal to the notice period or for the remainder of the period.
Employers have the right to add a non-competition clause in case of terminating the employment contract if the job entitled to the employee requires dealing with clients or knowing work secrets. In order for the non-competition clause to ban an employee from working with a business competitor, it shall specify the ban period (maximum of two years), geographical area. In addition, the type of work shall be considered to estimate the non-competition, and the claim will not be heard after one year commencing from the date of the incident discovery.
Compliance with the Contract
Unless otherwise agreed between the parties, the Decree-Law allows an employer to outsource another employer to do his original work or part of it, and the latter shall be solely responsible for the rights of the employees performing that work. Furthermore, an employer cannot ask his employee to do a job that is majorly different from the job agreed in the labor contract, unless in case of necessity and for a specified period of time, or if the employee issues a written consent in this regard.
Obligations of the Employer
The Decree-Law employer shall commit to maintaining the records and files of employees for a minimum of two years after they leave work, and not to hold any of the employees’ official documents while they are employed or force them to leave the country at the end of work relations. In addition, the employer shall provide the necessary elements for work to ensure a safe and professional environment. The employer also bears all the allowances, medical insurance, repatriation costs, and any other requirements to maintain smooth operation.
The employer shall not try, in any way, to keep the employee working for him or doing a certain job by coercion or threatening whatsoever. The employer and all of the employees shall refrain from practicing any kind of sexual harassment, physical or verbal assault, violence or mental pressure against any employee.
In case of an employee’s death, the employer shall deliver all his/her labor rights and end-of-service benefits to the successors within ten days from the death of the employee. The employee can provide the employer with a signed document specifying the authorized person who shall receive his labor rights after death.
Obligations of the Employee
The employee is obliged to perform the job tasks mentioned in the employment contract by him/herself without assigning them any third party whatsoever. In addition, the employee shall fully comply with the code of good conduct and work ethics, and preserve the tools, equipment, data, business secrets and all other work assets. The employee commits to handing over all work possessions in a good condition at the end of the employment relationship.
The employee shall also work during the agreed working days and hours and follow all the health and safety policies in effect to keep developing work skills and performance. The employee may not work for another employer unless there written permission is obtained from the original employer. If the employee is willing to work remotely, from the UAE or from abroad, an agreement shall be signed with the employer to agree on all the details.
If the employer provides accommodation to the employee, it needs to be evacuated within 30 days of the last working day; unless otherwise agreed between the parties in writing. The working hours have been reduced to eight hours per day or 48 hours per week; which shall depend upon the Cabinet’s approval. For night overtime, it shall start from 10 PM to 4 AM.
The employer has an obligation of paying the salary of the employee in the amount, time and way they agree on in the employment contract. The employee has the right to resign without notice if the employer breaches any of his obligations like holding or deducting the salary provided that the employee submits a notification to the Ministry of Labour within 14 working days before the last day of the work.
The Decree-Law, however, stated the cases where the employer is allowed to deduct the salary of an employee as follows:
- The installments of a loan the employee had taken from the employer
- An excess amount paid by mistake to the employee
- Subscriptions paid for social security, pension, EOSB, insurance… etc.
- Deductions for the violations of the employee based on the employer’s approved sanctions list
- Debts against court decisions up to quarter the salary, except for maintenance and alimony
- Any damages caused to the work property, tools or equipment by the mistake of the employee
In case there are many reasons for the deduction, it shall not under any circumstances exceed 50% of the employee’s salary per month.
The employee has the right to get a minimum of 1-day rest per week, in addition to all national holidays announced by the government. If the work requirements necessitate the employee to work during the public holidays, then the employee shall be entitled either to a day off in lieu of the day he worked or a day’s basic wage in addition to 50% of such basic wage at least.
The employee is entitled to a paid annual leave of no less than thirty days for each year of service, and 2 days per month after finishing 6 months until 1 year. The employee shall be compensated for the unused days of leave he couldn’t take, or benefit from them during the next year provided that the employer cannot force the employee to accumulate it for more than two years. At the end of employment, the employee shall be paid for any unused days of leave.
For maternity leave, the employee is eligible for 45 days of full salary and 15 days half salary. After finishing these days, the employee can benefit from 45 days of unpaid leave for medical necessities.
Any employee who finished 6 months of service is eligible for a maximum of ninety days connected or separate days of sick leave, whereas the first fifteen days are fully paid, half salary for the next thirty, and the last forty-five days are unpaid. The employee shall present to the employer a valid medical report. If the employee fails to return after this period, the employer has the right to terminate him/her after paying all the labor dues.
Employees are also eligible for other types of paid leave, namely mourning leave (5 days for the spouse and 3 days for the parents, sons, siblings, grandparents and grandsons), parental leave (5 working days for the mother and father), 10 working days study leave for employees who are studying in a certified educational institution conditional to the completion of two years work, and civil service leave for nationals. The employee can have an unpaid leave in agreement with the employer, provided that unpaid leaves are not calculated in the years of service. There shall be additional regulations, implementing these new rules.
Compensation for Work Accidents
Work accidents and career diseases, and the conditions and procedures to be followed in such cases, are to be determined by a resolution from the Council of Ministers, as proposed by the Minister of Labor. Pursuant to the Decree-Law, and in case of a work accident or disease, the employer undertakes to cover all the treatment costs until the return of the employee to duty or give compensation if unfitness for work has been proven.
If the employee could not return due to further treatment, he/she will be entitled to a period of 6 months in full salary, extended for another 6 months in half salary. In case the work accident or disease resulted in death, the family of the employee will be eligible for compensation equivalent to the basic salary of 24 months, provided it doesn’t go below AED 18,000 and doesn’t exceed 200,000.
The employee will not be eligible for compensation in the following cases:
- Deliberate self-harm
- The injury happened under influence of an intoxicating substance
- Violated or ignored the regulations of health and safety
- Committed gross misconduct
- Refused to be checked or treated by the medical body
The employer has the right to impose disciplinary actions against an employee who violates the provisions of the Decree-Law, ranging from written attention letter to warning letter, deduction, suspension from work for no more than 14 days, deprivation from scheduled salary raise or promotion and termination with reserving the right to pay the gratuity.
The employee can be temporarily suspended from work up to 30 days in case of a disciplinary investigation and for as long as the court proceedings last in case of criminal investigation, with half-pay for this period. If the investigation proves that the employee is innocent, the latter shall be entitled to his full wage.
Any disciplinary actions can be imposed only if the violation is made at work or in relation to work. For each violation, only one disciplinary action can be imposed.
Termination of Employment Contracts
According to the Decree-Law, the employment contract is considered terminated in the following cases:
- Both parties agree on terminating it in writing
- The contract term has ended (unless extended or renewed)
- Terminated unilaterally but in compliance with the provisions of the Decree-Law and the notice stated in the employment contract
- Death of the employer if the contract is linked to him personally
- Death or invalidity of the employee
- The employee is condemned and goes to jail for more than 3 months
- Permanent and procedural closure of the company
- Bankruptcy or insolvency of the employer
- The inability of the employee to renew the work permit for some reason
In case of terminating the employment contract by one of the parties, a notice shall be served to the other party as per the employment contract, provided that it shall not be less than 30 days nor more than 90 days. The employee shall remain in service until the end of the notice with full salary unless the party who terminated the contract waives its right for the notice in writing. The employee has the right to be absent for 1 day each week during the termination notice period, with prior permission, to search for work, and which should be without pay.
The employer may dismiss the employee without notice if the employee:
- Presented fictitious identity or provided forged documents
- Committed gross misconduct which resulted in substantial loss to the employer
- Violated the internal policies on health and safety of employees or premises
- Failed to perform the job tasks and continued to do so after a written investigation and two termination warnings
- Divulged any of the work secrets
- Attended to work under the effect of alcohol or drugs
- Assaulted or insulted the employer, manager or colleagues
- Absents himself without a valid excuse for more than 20 intermittent days or 7 consecutive days per year
- Exploited position to make a profit
- Moved to another employer without completing the required procedures
The Decree-Law continues that the employee can resign without notice if the employer:
Breached any of the contract obligations (provided that the employee informs the Labor Department 14 days before leaving without a response from the employer)
- The employee was assaulted or harassed by the employer and informs the Labor Department within 5 days
- The employee is under any safety or health risks at work with the knowledge of the employer
- The employee is requested to perform a job that is substantially different from the original job agreed on in the employment contract, without the written approval of the employee, with the exception of the article (12) of this Decree-Law
- The employer may not terminate an employee for any health issues or unfitness before using all the sick leaves decided by law. Any termination by the employer is considered illegal if the reason is due to a complaint by the employee to the Labor Department, and if proven, the first will be obliged to compensate the latter with a maximum of three months’ salary for illegal termination.
Employment contracts shall remain valid in case of changing the legal form or ownership of the company, and the new employer shall be responsible for their continuity as per the provisions of the Decree-Law.
If the non-national employee absents himself without an excuse before the end of the contract will not be granted another work permit for a period of one year from the date of absence, and no other employer who knows about it may hire him or keep him hired.
Any non-national employee who absents himself from work without lawful reasons prior to the end of the contract for a limited period, may not take up employment elsewhere even with the consent of the employer for one year after the date on which he absented himself from duties. And no other employer who is aware of that may employ or keep such employee in his service during such period. The Ministry of Labour can exclude certain job types or skill levels from this provision, in line with the bylaw of the Decree-Law.
End of Service Gratuity
According to the Decree-Law, any full-time non-national employee who completed one year or more in service shall be eligible for an end of service gratuity based on the last basic salary, provided that it is calculated on the basis of 21 days’ salary for the first five years and 30 days’ salary for any period beyond that. The gratuity shall not exceed in any case the salary of two years.
The employer may deduct any amounts which are due according to the law or a court decision. All other pending salaries and dues shall be paid to the employee within a period of 14 days from the day the employment contract ended.
In case of an individual dispute between the employer and employee regarding the deserved dues, any of them can raise a complaint to the Ministry of Labor who calls both parties to conciliation. If the conciliation fails within the period provided in the bylaw of the Decree-Law, the Ministry shall refer the complaint to the competent court with a memo explaining the dispute and parties’ pleas.
The court shall set the date of the first hearing within 3 days of the referral and try to reach a verdict quickly. The Ministry and court shall avoid in an individual dispute imposing sanctions or administrative measures on the company that may harm the employer or other employees. Any claim for labor rights will be time-barred if it is not raised within a year from the date the right arose. Any labor claim that does not exceed AED 100,000 shall be exempted from all court fees and at all levels.
In case of dispute between the employer and all employees or a group of them, the parties can file a complaint to the Ministry of Labour within the limitations of the Decree-Law and its bylaw. The Minister may apply administrative measures on the company to prevent any harm to the public welfare. Based on the Minister’s proposal, the Council of Minister may issue a resolution to form a committee(s) known as the “collective dispute committee” to look into the collective labor disputes that cannot be resolved amicably by the Ministry.
The sanctions decided by the Decree-Law shall not affect any other stronger sanctions decided in other laws. The sanctions are fines that range between different categories and amounts; such as a minimum of AED 5,000 and a maximum of AED 1,000,000 for whoever makes a violation of this Decree-Law if the violation is repeated within a year, it doubles then. In respect of the fine imposed on the employer, the Decree-Law shall be multiplied by the number of workers in respect of whom the violation was committed, with a cap of AED 10 Million.
Regarding the violations, a fine between AED 20,000 and AED 100,000 shall be applied to any person who provides wrongful information or documents to bring a foreigner to the country, entangles or prevented a public employee mandated to execute the provisions of the Decree-Law by force or threat, the latter divulges any work secrets even after leaving the job.
In addition, a fine between AED 50,000 and AED 200,000 will be applied to any employer who hires a worker whose work permit has been rejected, brings a worker and left him without work, uses the work permits for purposes other than those they were granted, closes a company without settling the dues of employees, hires a juvenile or the guardian/custodian who allowed it.
Finally, any person who misuses the electronic access granted to him/her to the system of the Ministry and undermines the labor procedures or relations will be subject to a fine between AED 200,000 and AED 1,000,000.
The rights decided to employees by virtue of the Decree-Law are minimal and shall not affect other rights decided by any other legislation, agreement, acknowledgment or employment contract that are more beneficial to the employee. The employer has no right to modify the terms and conditions of the employment contract for the excuse of complying with the Decree-law unless it is more beneficial to the employee.
The employer and employee have the right to terminate the unlimited employment contracts via 30 days’ notice if the employment period is less than 5 years, 60 days if it’s between 5 and 10 years and 90 days if it’s more than 10 years. Employers shall rectify their status and convert unlimited employment contracts to limited contracts based on the limitation, terms and conditions of the Decree-Law and within a year from coming into force.
The Decree-Law sets out the purview of the Council of Ministers and that of the Ministry and states that the Council of Ministers shall issue the Bylaw of the Decree-Law based on the Minister’s proposal. The Decree-Law shall supersede the Federal Law no. (8) of 1980 and any other provisions that contradict the Decree-Law. The resolutions and regulations that were valid before issuing the Decree-Law shall remain valid as much as they don’t contradict it, and until the date of issuing what replaces them.
What Has Changed with the Decree-Law 33 of 2021
Perhaps one of the most significant changes brought by Decree-Law No. (33) of 2021 is restricting the term of employment contracts to fixed-term contracts and stopping work with the unlimited-term contract provided for in Law No. (8) of 1980. The Decree-Law gave employers a period of one year from the date it comes into force to rectify the status of already entered unlimited contracts and convert them to limited contracts.
New types of employment contracts have been introduced as well, namely part-time, temporary work and flexible work, which reflects an intention of tackling any novel situations like the COVID-19 to keep high work productivity with reduced or flexible working hours.
The Decree-Law also prohibited all kinds of job discrimination based on color, religion, race, gender and granted women the right to get the same salary as men for the same kind of job they do. It also regulated the work of juveniles in terms of parents’ permission, working hours and type of work.
Furthermore, the amendments added new types of leave like mourning leave, parental leave and study leave. It also extended maternity leave by granting pregnant women 45 fully paid days and 15 half paid, which can be extended without pay in some cases.
As the Decree-Law is seen to be promoting the principles of equality, fairness and safety to maintain a healthy work environment and stable labor market, it also emphasized forbidding all kinds of violence, threatening, physical or verbal assault and sexual harassment by any of the employers, managers or colleague.
In general, the Decree-Law came to recognize a number of rights that are already recognized but have been disputed since they were not regulated in one legislation. The legislators of the UAE have noticed such important details in response to the progress of the labor market on all levels and the arising challenges. This can be greatly seen in recent years with all the reforms and unprecedented adaptation of labor laws and many other laws.