A Breath of Fresh Air – the New UAE Employment Law 2021

Sarah Malik, Saher Khan and Swetha Sivaram

In November 2021, Federal Decree-Law No. 33/2021 regulating labour relations in the private sector in the UAE was issued,” states Sarah Malik. “The Implementing Regulations to the new Law will also be issued by 2 February 2022 when Federal Decree-Law No. 33/2021 is expected to come into force.”

 

“Its sweeping changes include the abolition of unlimited contracts, the introduction of anti-discrimination protection, recognition of different types of work models, such as flexi working, part-time and temporary work and additional leave,” Malik adds. “It is also the first significant change to the UAE Labour Law, Federal Law No. 8/1980 which has been in force since 1980. A key point to note is that all UAE private sector employees and employers both onshore and in the free zones are subject to the new Law, except those in the DIFC and ADGM, which have their own employment legislation.” 

“The changes which have been introduced in this new Law match the UAE’s vision for the next 50 years,” Malik explains. “They are part of a wholesale reform of UAE law which saw 40 new laws being issued at the end of last year, including the new Data Protection Law (Federal Decree-Law No. 46/2021) and a Law on the Unified General Rules of Work in the United Arab Emirates (Federal Decree-Law No. 47/2021),” Malik continues. 

“Federal Decree-Law No. 33/2021 has two overarching aims to encourage Emiratisation and help the UAE attain a global recognised standard of employment protection for employees, which will help the country maintain its position as a preferential place to live and work.” 

MOST SIGNIFICANT CHANGES? 

“Probably the first most significant change introduced by this law is the abolition of unlimited contracts,” Malik states. “This means all employment contracts will have to be limited term contracts, and they cannot exceed three years. Although, the term of a contract may be extended or the contract could be renewed. In addition, after an employment contract term has expired, the employee will be able to join another employer if procedures which are to be set out under the Implementing Regulations are undertaken.,” 

“This is arguably one of the most significant changes in the new law as employees will no longer have the same sort of job security they would otherwise have had under an unlimited contract. Currently, the position is also unclear on what will happen in the case of a limited term employment contract which expires without the parties having agreed an extension.” 

“The next most significant change involves equality and non-discrimination policies,” Malik states. “Federal Decree-Law No. 33/202 introduces equality and discrimination protection provisions for employees and places an emphasis on protection from discrimination based on race, colour, sex, religion, national or social origin or disability. In addition, Article 4 of Federal Decree-Law No. 33/2021 requires equal pay for equal work done by men and women.” 

“Although it should be noted that these provisions on discrimination do not preclude positive discrimination towards Emiratis which is being actively encouraged and is not subject to any anti-discrimination legislation” Malik adds. 

“Federal Decree-Law No. 33/2021 also bans harassment and forced labour,” Malik states. “It addresses physical or psychological bullying and sexual harassment. These acts are banned in the workplace and include creating an intimidating, hostile and degrading environment.” 

“Harassment has not been defined in the Law, but it is likely to follow the same common law definition principles.” 

“Meanwhile, Article 14 of Federal Decree-Law No. 33/2021 deals with forced labour and states employers cannot coerce or threaten an employee to perform work or services against their will. “ 

“In terms of work models, there is no doubt that the changes in this area have been a direct reaction to the COVID 19 pandemic and the global change in attitude toward traditional working patterns,”

Malik continues. “New work models including part-time, temporary and flexible work have been introduced in this law. Under the provision for flexible work models, working hours and days can vary depending on the work volume or on the employer’s financial and operational position. Remote working is also allowed with the employer’s consent.” 

“There have also been changes in respect of non-compete clauses, and Federal Decree-Law No. 33/2021 has defined the term of a non-compete clause. They may not exceed two years from the date of termination of the contract and must also be specific in terms of the time, place and type of work to which restrictions will apply to the extent necessary to protect the employer’s lawful interests.” 

“There have also been changes to maternity leave and pay,” states Malik. “Female employees are now entitled to 60 days maternity leave rather than 45 days with the first 45 days paid in full and half pay for the next 15 days. Maternity leave will also be available to female employees who have still births”. 

“In addition, female employees are entitled to an additional 45 days of unpaid leave, if they or their child suffers from a disease resulting from the pregnancy or delivery and this leave does not have to be taken consecutively. If the child suffers from any illness, the female employee will also be entitled to an additional 30 days paid leave from the end of their maternity leave and an additional 30 days unpaid leave. This is a welcome change which recognises that differing situations mothers can face and that when there are complications after birth, further time is required before a female employee is able to return to the workplace. This will also have a positive impact on retaining the best Employees.” 

“In terms of sick leave, if an employee suffers from a non-occupational sickness, they will have to notify their employer of this no later than three working days and provide evidence of the illness by a Medical Certificate,” Malik adds. “It should also be noted that employees on probation are not entitled to paid sick leave, although they may present a Medical Certificate and be granted unpaid leave. There have also been changes on compassionate leave,” Malik continues. ”For example employees are now entitled to five days bereavement leave if their spouse dies and three days leave if another immediate blood relative such as a parent, son, brother, sister, grandson or grandparent dies. This is calculated from the date of death. However, the Law does not include bereavement leave for the loss of daughters and granddaughters”. 

“In the past if time off work was taken for these reasons it could be deducted as unpaid leave. Another significant provision is that non-Emirati employees who take unauthorised absences from work, without a valid reason before their employment contract expires will have to be reported to the Ministry for Human Resources and Emiratisation by the employer,” Malik notes. “The employee will also not be granted another work permit to join any other employer for up to one year.” 

“Meanwhile upon termination of employment, notice can be served by either party and the notice period should not be less than 30 days and not more than 90 days. If an employment contract is terminated by an employer, employees also have the right to take one day off per week to seek employment, although employers have to be notified by the employee of this leave at least three days before,” states Malik. 

“There will also be changes on End of Service Gratuities for non-full-time expatriate workers employed under other work models detailed in the Implementing Regulations and these will be calculated on a pro rata basis depending on whether the work is full time, part time, or temporary. These gratuities will also no longer be withheld where employees are summarily dismissed. Although there is no pro rata reduction if employees resign within the first five years of employment.” 

OTHER CHANGES 

“Applications and claims filed by employees are also now exempt from judicial fees at all stages of litigation and execution if the value is less than 100,000 AED,” Malik adds. “In addition, there are also new fines of between 20,000 and 100,000 AED for those who submit false information or documentation with the intention of recruiting an expatriate or obstructing or preventing any judicial officer from implementing the provisions of the new Law.” 

WHAT SHOULD COMPANIES DO NOW? 

“Federal Decree-Law No. 33/2021 has brought in wholesale changes to the UAE Labour Law which should not be underestimated,” Malik states. “Private sector companies will need to ensure their employment contracts are in line with and comply with these new requirements. Companies will also need to put anti-discrimination and anti-harassment policies in place and provide management and employees with sufficient training on these topics. It will be necessary for private sector companies to understand and adapt to this new Law. This includes ensuring their contractual documentation complies with the changes as under Article 68 of Federal Decree-Law No. 33/2021, and employers have one year to ensure all their fixed term contracts are in place. 

“They will also have to implement equal pay provisions in their organisation for work of the same value and will have to understand and implement the discrimination regulations,” states Malik. 

“This means updating policies, procedures and contractual documentation and working on the premise the new Law is the current law. Employers and employees will need to understand how they have been affected, and the potential consequences of their conduct. Workplace policies and practices will also have to change to reflect the new Law’s expectations of conduct.

This publication is not intended to offer legal advice and is solely for informational purposes.

Also published by LexisNexis Middle East in the LexisNexis Middle East Law Alert January-February 2022