The Federal Decree-Law no. 33 of 2021 (the "New UAE Labor Law") came into effect on February 2, 2022. The main objective of the amended UAE Labor Law is to ensure the efficiency of the UAE Labor market and regulate the employment relationships and define the rights and obligations of the parties to this legal relationship in a balanced manner.
The provisions of the new UAE Labor law shall apply to all Establishments, employers, and workers in the UAE private sector. (Ref. Article (3))
The provisions of the new UAE labor law does not apply to:
The labor contracts should be limited contract from 2nd February 2022. Existing unlimited contracts must be converted to limited contracts within 12 months. Therefore, Companies in the private sector have to change all the existing unlimited contracts to limited contracts by 1st February 2023.
As per the new regulations, all the labor contracts will be limited-term contracts, the period of which may not exceed three years, and can be renewed an unlimited number of times for either the same length period or a shorter period. (Ref. Article (8))
An employer may terminate the employment contract during the probation period by providing at least 14 days written notice to the employee.
As per the new labor regulations, an employee will be able to resign without giving notice if:
As per the new labor law regulations, it is mandatory for the employer to enter into a non-competency agreement with the employees if the employer intends to protect the business interest. The non-competition period shall not be more than 2 years from the expiry date of the contract.
Payment towards a final settlement to an employee must be made within 14 days from the end date of the contract term.
Employers are prohibited from confiscating employees' official documents and workers should not be forced to leave the country following the end of their work term. (Ref. Article (13))
Any person who violates the provisions of the law may face fines a minimum of AED 20,000/- and up to AED 1,000,000/-. Such fines would vary according to the multiplicity of employees who are affected by such breach and it may go up to a fine of a maximum of AED 10 Million. ( Article 59 to 62)
Emirates Chartered Accountants Group is a one-stop solution for all your business needs! An ISO certified Chartered Accountants Firm and our Audit Division [United Auditing] and Consultancy Divisions are listed in major banks, approved in all the free zones, and listed with different government departments. A registered Tax Agency [Emirates International Chartered Accountants Co.] under the Federal Tax Authority providing exclusive Tax Agency Service to businesses in the UAE. Being in the service industry for more than a decade, we house the best professionals to provide quality service aiming at precision.
We await the official publication of the New Law and the accompanying Executive Regulations and will provide a further update on these changes in due course.