Known as a central hub for opportunities and professional growth, The United Arab Emirates (UAE) is acknowledged worldwide for being a top choice for professionals to live and work. This is a result not only of the opportunities available in the country, but the clear and well-defined rules and regulations that promote fairness, equality, and harmonious work relationships. In February of 2022, The UAE introduced significant amendments to its labor laws, which apply to all businesses and employees operating in the UAE’s private sector, including those located in the country’s free zones, except for the Dubai International Financial Centre and the Abu Dhabi Global Market. The changes, which were announced by the Ministry of Human Resources & Emiratisation, are aimed at bolstering employee rights and safety, along with providing greater adaptability for companies. In this article, we will emphasize the critical changes to the UAE’s employment legislation that people need to be aware of.
Probation Period
As it was before the revisions, the maximum duration of probation periods is still up to six months only. However, both employers and employees are now required, under the new law, to provide a minimum of 14 days’ notice if either party intends to terminate employment during the probation period. Additionally, if the employee decides to terminate the employment to work with another UAE-based employer, the old employer can now ask for financial compensation from the new employer to cover recruitment costs. It is important to note that a maximum notice period of 30 days is required as well in this case.
Contracts
Before the revisions in the UAE UAE Employment Law, employers had the choice to hire under either limited or unlimited contracts. Unlimited contracts are usually open-ended contracts that can be terminated by mutual consent, while limited contracts mention the start and end dates of the employment period. Under the new law, unlimited-term contracts are no longer allowed, and only fixed-term contracts can be issued, with a maximum duration of three years.
Termination
While all contracts in the private sector now must be limited, termination remains a possibility even before the contract’s specified duration has concluded, as long as the stipulated amount of written notice, as mentioned in the employment contract, is provided. Additionally, termination of a contract is now possible even in the absence of behavioral or performance reasons, and the arbitrary dismissal compensation scheme has been lowered significantly.
Leaves:
The New Law also introduced various new leaves such as an increase in maternity leave, which is now 60 days (45 days at full pay and 15 days at half pay), which also applies to mothers who experienced miscarriages after completing 6 months of pregnancy, parental leave of 5 calendar days for both parents to be used within 6 months of the child’s birth, and compassionate leave of 5 calendar days for the death of the employee’s spouse and 3 days for the death of an employee’s parent, child, grandchild, sibling, or grandparent. Furthermore, employees are no longer allowed to carry over leave days which they have not used unless approved by the employer. Any remaining leave days will be automatically forfeited without compensation, except under specific circumstances or upon termination. In these cases, the remaining leave days will be compensated based on the employee’s basic salary.
Unemployment Insurance:
Unemployment Insurance was made mandatory in January of 2023. It is a social insurance scheme that provides financial support for employees, both Emiratis and expatriates, in case of termination. The insurance scheme applies to all employees except for investors and business owners, domestic workers, juveniles under the age of 18, temporary employees, and retirees who receive pension and have joined a new employer.
The rules of the insurance scheme are as follows:
- Employees with a basic salary of 16,000 or less have to pay a monthly amount of AED 5, which equals AED 60 annually, and the monthly compensation for this category must not exceed AED 10,000.
- Employees with a basic salary of AED 16,000 and more have to pay a monthly amount of AED 10, which equals AED 120 annually, and the monthly compensation for this category must not exceed AED 20,000.
Emiratisation:
As part of the UAE’s plan to encourage Emirati talent, the Emiratisation initiative was introduced to the private sector with the aim to recruit more Emirati talent in the private sector. “Nafis”, a governmental federal program, was also introduced as part of the UAE’s endeavors to empower Emiratis and facilitate their integration within the private sector. The rules governing Emiratisation are as follows:
- For companies of 50 skilled employees or less, a minimum of one Emirati talent must be hired.
- For staff sizes of 51 to 100 skilled workers, the target increases to two UAE national employees.
- For staff sizes of 101 to 150 skilled workers, the aim is to recruit three UAE national employees.
- For workforces exceeding 151 workers, one UAE national employee should be hired for every additional 50 workers.
If you have any questions regarding the changes made to the UAE employment law, or you’d like to know more about where you company stands in regards to changes you need to make to existing contracts, Emiratisation, or leaves, contact us to get more personalized advice and information.
CALL
LOCATE