The New UAE Labor Law Explained
The New Labor Law which came into force on February 2, 2022, and the Executive regulations, provide the employers and the employees with the laws and regulations that have to be followed in all private organizations in the UAE (except for the companies registered in DIFC and ADGM Free Zones) and give clarity on what changes have to be implemented in the employment contracts and internal company policies.
In the previous article The New UAE Labour Law Explained – Part 1 we have covered the scope of the New Labour Law related to types of employment contracts, termination of employment contract, non-compete clause, equality and nondiscrimination. In this article we will have a detailed look at all types of employment contracts, annual leave, sick leave, maternity and parental leaves, end of service gratuity, as well as fines for companies and employees.
New Models of Work
The New Labor Law introduces more flexibility in terms of models of work, considering the rapidly changing workplace amid technological advancements. Thus, Article 7 provides for various models of work including full-time work, part-time work, temporary work, flexible work (means with flexible working hours and working days).
Article 17 of the New Labor Law states that in case the employee wishes to work remotely, whether from inside the UAE or outside the UAE, and the employer approves so, then the employer may determine certain working hours. This provision allows greater flexibility, and upon mutual agreement of both parties, some employers and employees may choose to benefit from it.
The Executive Regulations of the Federal Decree Law No. (33/2021) on the Regulation of Labor Relations provides more details in addition to the Article 8 about models of work and type of employment contracts. Thus, the following types of contracts are permissible:
- Full-time employment contract
- Part-time employment contract
- Temporary employment contract
- Flexible work employment contract
- Remote work employment contract
- Job sharing employment contract
The employee is entitled to a fully paid annual leave which is not less than:
- 30 days for each year of his extended service;
- 2 days for each month in case the term of his service was more than 6 months and less than 1 year;
- Leave against the parts of the last year of work in case his service ended prior to obtaining his annual leave balance.
Article 29 of the New Labor Law and Article 19 of the Executive Regulations cover also the following provisions on annual leave:
- Upon the employer’s approval and in accordance with the regulations applicable within the company, the employee may carry no more than half of his annual leave to the next year or agree with the employer about compensation to be paid instead based on his salary received at the time of leave entitlement.
- The employee is entitled to his salary during the annual leave days.
- The employee shall be entitled to receive payment against the unused annual leave days in case he leaves work before availing them regardless of the number of those unused leave days.
- Part-time employees shall be entitled to an annual leave in accordance with the actual number of working hours spent at work. Article 18 of the Executive Regulations provides more details on the exact calculation of leave for part-time employees.
If the employee has completed his probation period, he is entitled to sick leave that shall not exceed 90 days in total within a year as follows:
- The first 15 days shall be fully paid.
- The following 30 days should be half paid.
- Any sick leave days afterward shall be unpaid.
During the probation period, an employee is not entitled to any paid sick leave, unless the employer decides to grant a sick leave based on a medical report issued by the medical authority stating the necessity for granting such sick leave.
New Categories of Leave
Under the New Labor Law, maternity leave is increased from 45 days to 60 calendar days: the first 45 days to be paid fully, and the rest 15 days to be half-paid. Article 30 specifies that after availing of the prescribed maternity leave, the female employee may go on unpaid leave for a period not exceeding 45 days, consecutive or nonconsecutive. The employer may not terminate a female employee or send her a warning for availing of maternity leave or being absent from work under the provisions of Article 30. After returning to work from maternity leave, the female employee shall be entitled to a period of no more than six months from the date of delivery to one or two breastfeeding breaks per day, the total duration of which shall not exceed 1 hour.
The New Labor Law has introduced several new leave categories, including parental leave, bereavement leave, study leave. Thus, Article 32 has provisions for bereavement leave for 5 days in case of the death of the spouse, and three days in case of the death of the mother, the father, any of the children, the brother, the sister, any of the grandsons, the grandfather or the grandmother starting from the date of death.
Parental leave is to be availed for 5 days, and it can be consecutive or nonconsecutive over a period of 6 months from the date of birth of the newborn. Both female and male employees are entitled to parental leave. Thus, besides maternity leave, female employees can also obtain parental leave.
Study leave can be availed by an affiliate student or a full-time student at an accredited educational institution inside the UAE for 10 days per year to take the exams, on the condition that an employee has completed a minimum of 2 years of service with his employer.
The Executive Regulations specify in the Article 21 that the bereavement leave, parental leave, annual leave and leave without pay may be taken in combination.
End of Service Gratuity
For full-time employees:
A UAE-national employee is entitled to end of service gratuity as per the UAE applicable laws that regulate social security and pensions.
Expatriate full-time employees who complete one or more years of continuous service are entitled to an end of service gratuity upon the end of their service, which must be calculated based on the last basic salary. Thus, the calculation shall be as follows:
- Salary of 21 calendar days against each of the first 5 years of service.
- Salary of 30 calendar days against each subsequent year of service.
The end of service gratuity of an expatriate employee may not exceed, in total, the salary of two years.
For employees under other work models:
- Article 52 of the New Labor Law states that the mechanism regulating the end of service gratuity for non-full-time employees shall be determined by the Implementing Regulations of this Decree-Law.
- Article 53 states that the employer shall pay the employee all his wages and other dues provided for in the New Labor Law, the Resolutions, the employment contract, or in the company’s bylaws, within 14 days after the expiration of the employment contract.
Fines for Companies and Employees That Violate the Law
The New Employment Law lays down the penalties for violating the law in Article 58 to Article 64, both on the part of the employer and the employee. Employers who violate Article 60 of the New Employment Law may be subject to penalties ranging from Dh50,000 to Dh200,000. A violation could be related to the employment of an individual without a work permit, recruiting an employee and leaving him without work, the closure of the entity without settling the employees` dues, employing a minor in violation of the provisions of the New Labor Law. The Article 59 provides a punishment by a fine from 20,000 AED to 100,000 AED to whoever provides false information or documents, discloses trade secrets or confidential information.
As per Article 62 the fine imposed on employers shall be multiplied by the number of employees in respect of whom the violation has occurred, subject to a maximum of 10,000,000 AED.
Article 63 states that whoever breaches any of the provisions of the New Labor Law, its Implementing Regulation and the Resolutions issued in implementation thereof, shall be punishable by a fine from 5,000 AED to 1,000,000 AED.
Administrative sanctions can be imposed in the case of violation of obligations subject to the provisions in the Articles 58, 59, 60, 61, 62, 63, and 64 of the New Labor Law.
What Are the Next Steps?
Both employers and employees must review very carefully all the changes implemented by the New Labor Law and the Executive Regulations. Thus, the companies are recommended to review their employment contracts, employment structures, HR-related procedures, employment policies, employee handbooks, end of service schemes to ensure compliance with the New Labor Law. One of the first steps to be considered is converting the unlimited employment contracts to limited contracts, for which the deadline is until 1st February 2023.
If you have any questions or need a consultation regarding the New Labor Law and the Executive Regulations, kindly contact the author of this article, our Senior Corporate Services Manager(LLM in International Business Law) – Svetlana Kursheva at [email protected] or drop a message at WhatsApp Business +971 52 777 0552 right away to avail the best advice.