INTRODUCTION
The United Arab Emirates (UAE) lately revealed its new Federal Labour Regulation No. 33 of 2021 (New Regulation), which repeals Federal Labour Regulation No. 8 of 1980 (Earlier Regulation). The New Regulation comes into impact on 2 February 2022 and introduces modifications, a few of that are more likely to have a major influence on present employment preparations. We set out beneath an summary of a few of the key modifications, their influence and subsequent steps that employers ought to take into account.
APPLICATION
The New Regulation applies to all present and future employment relations within the non-public sector onshore within the UAE, and in addition in free zones that should not have their very own labour legal guidelines. The New Regulation won’t apply to employment relations within the Dubai Worldwide Monetary Centre or the Abu Dhabi International Market as they’ve their very own labour regulation regimes.
Govt rules (Govt Laws) are anticipated to be issued by the Cupboard upon the proposal of the Minister of Human Assets and Emiratization, which is able to hopefully present a lot wanted readability on the implementation of the assorted new provisions and modifications launched by the New Regulation.
WORK MODELS
The New Regulation units out the completely different “fashions” that events could conform to, which embrace:
- Full-time – Working for one employer on a full-time foundation.
- Half-time – Working for a number of employers for a particular variety of hours or days.
- Short-term work – Work that’s carried out throughout a particular time frame and that entails a particular process and ends with its completion.
- Versatile working – Work that entails altering working hours or days relying on the workflow and operational and enterprise wants of the employer. An worker may match for an employer on a versatile working association relying on the circumstances and necessities of the work.
The appliance of sure facets of the New Regulation to the completely different new work fashions (resembling extra time and severance pay) stays to be seen. It’s anticipated that the Govt Laws will shed some mild on the relevant situations and necessities for every work mannequin and the respective obligations of the employer and worker.
EMPLOYMENT CONTRACTS
A key change launched by the New Regulation is the requirement to have employment contracts with mounted phrases. This can be a main shift from the place below the Earlier Regulation, the place it was potential for the events to enter into limitless time period employment contracts, a construction that many corporations adopted for his or her workers within the UAE.
The New Regulation additional states that the time period of mounted employment contracts should not exceed three years. The time period could also be prolonged or renewed, any variety of instances, for comparable or shorter phrases. Any extension or renewal of the time period will probably be added when calculating an worker’s interval of steady service (i.e., with respect to calculating any relevant finish of service gratuity). The place events don’t expressly renew or prolong the time period however proceed performing the contract, the time period is deemed robotically prolonged on the identical phrases and situations.
Employers can have till 1 February 2023 to make the mandatory modifications to their employment contracts and employment insurance policies, together with changing any limitless time period employment contracts to mounted time period contracts with the related authority. The Minister of Human Assets and Emiratization could prolong this era.
TERMINATION DURING PROBATION
Underneath the Earlier Regulation, the employer was in a position to terminate an worker throughout the probation interval with out giving any discover. The New Regulation introduces a discover interval of 14 days’ prior written discover for terminating an employment contract by the employer throughout the probation interval (which is capped at six months).
An worker, then again, should present at the least one month’s prior written discover to the employer in the event that they intend to terminate the employment contract throughout the probation interval to work for an additional employer within the UAE. On this case, the brand new employer should compensate the primary employer for any incurred recruitment prices, until agreed in any other case.
The place an worker desires to terminate the employment contract throughout probation with the intention of leaving the UAE, the worker should present the employer with at the least 14 days’ prior written discover. If such an worker returns to the UAE and obtains a piece allow from one other employer inside three months from the date of leaving the UAE, the brand new employer should compensate the unique employer for the recruitment prices incurred after they employed the worker (until agreed in any other case).
If both social gathering terminates the employment contract with out complying with the provisions of the New Regulation, the terminating social gathering should pay the opposite social gathering compensation equal to the worker’s primary wage plus allowances due below the related discover interval or the rest thereof. An worker who leaves the UAE with out complying with the provisions regarding terminating a contract throughout the probation interval won’t be granted a piece allow to work within the UAE for a interval of 1 12 months from the date they depart the nation.
NON-COMPETE CLAUSES
As with the Earlier Regulation, the New Regulation permits employers to agree on non-compete clauses with their workers. Nevertheless, the New Regulation supplies readability as to the situations for such clauses to be enforceable. As an illustration, non-compete clauses are solely enforceable for a most of two years after the expiry or termination of an employment contract. Non-compete clauses should additionally specify the place and sort of labor, to the extent needed, to guard the legit enterprise’ pursuits of the employer.
The statute of limitation to file a declare for breach of a non-compete clause in an employment contract is one 12 months from the date on which the breach is found.
The Govt Laws are anticipated to comprise extra provisions regarding non-compete clauses and any talent ranges or positions that will not be sure by non-compete restrictions.
CASES OF END OF EMPLOYMENT CONTRACTS
The New Regulation supplies an inventory of occasions that may terminate an employment contract. These embrace (with out limitation):
- The mutual written settlement of the events.
- Expiration of the time period of the contract (until it’s renewed or prolonged).
- Upon the choice of both social gathering topic to the necessities regarding termination and see intervals.
- If the worker is convicted by a ultimate order to a custodial penalty for a time period of not lower than three months.
- The everlasting closure of the institution or if the employer turns into bankrupt, bancrupt or unable to proceed the enterprise for any financial or distinctive causes. These causes are to be thought of in accordance with the situations, controls and procedures to be set by the Govt Laws and relevant laws in drive on the time.
TERMINATION WITH NOTICE
Both social gathering could terminate the employment contract for a legit cause by giving the opposite a previous written discover, offered that such discover shouldn’t be lower than 30 days and no more than 90 days.
The New Regulation additionally supplies that events to a limiteless time period employment contract that was entered into earlier than the New Regulation comes into impact could terminate such contract for a legit cause by giving the opposite:
- 30 days’ written discover if the interval of providers is lower than 5 years;
- 60 days’ written discover if the interval of service exceeds 5 years; and
- 90 days’ written discover if the interval of service exceeds 10 years.
TERMINATION WITHOUT NOTICE
The New Regulation supplies an identical record of termination with out discover occasions that had been current within the Earlier Regulation with some variations. As an illustration an employer could terminate an worker with out discover:
- After the employer notifies the Ministry of Human Assets and Emiratization inside seven working days from when the employer turns into conscious that the worker precipitated a fabric loss to the employer. The discover interval was 48 hours below the Earlier Regulation.
- If the worker fails to carry out their duties in accordance with their employment contract, they usually fail to treatment this regardless of being knowledgeable of this by the employer and after receiving two written warnings.
The New Regulation additionally introduces two new circumstances that permit the employer to terminate an worker with out discover. These embrace:
- If an worker abuses their place with the intention to acquire private achieve.
- If an worker turns into employed by one other employer with out complying with the related processes and rules.
DISCIPLINARY SANCTIONS
The New Regulation additionally modifications a few of the disciplinary sanctions and procedures that an employer could take towards an worker if they’re present in breach of the New Regulation or the Govt Laws. These embrace a written discover drawing their consideration to any breach, a written warning, deducting as much as 5 days’ wage in a single month, suspension from work for as much as 14 days with out pay, denying any wage improve for one 12 months if the employer has a periodic wage improve coverage in place and the worker is entitled to such improve below their contract or the corporate’s bylaws, denying an worker a promotion for a most of two years, and at last dismissing the worker with cost of severance pay.
Moreover, the New Regulation seems to have disbursed with the discover necessities regarding an inside investigation, which had been in place below the Earlier Regulation. It stays to be seen if this would be the case after the issuance of the Govt Laws.
There are nonetheless areas of uncertainty on how a few of these provisions will apply to the assorted work fashions and the Govt Laws are anticipated to supply steering on making use of the sanctions listed within the New Regulation.
SEVERANCE PAY
The New Regulation clarifies {that a} overseas worker who completes at the least one 12 months of steady service will probably be entitled to severance pay, which is calculated on the idea of their primary wage. The New Regulation expressly supplies that the fundamental wage excludes some other allowances or advantages. Calculation of the severance pay can be barely modified because the New Regulation refers to “working” days. That’s, the place an employer terminates the employment contract, for yearly of service, the worker is entitled to 21 working days’ primary wage for the primary 5 years of service and 30 working days’ pay for every extra 12 months of service. The full severance pay should not exceed two years’ wage (which incorporates the fundamental wage plus any allowances or advantages).
One other key change is that the New Regulation removes any discount to severance pay the place an worker terminates the employment contract. Underneath the Earlier Regulation, the place the worker terminated the contract, the worker was entitled to one-third of the severance pay for providers between one to a few years and two-thirds of the severance pay for service between three to 5 years, and the complete quantity of severance pay for greater than 5 years of service.
The New Regulation supplies that the Govt Laws will decide the mechanism regulating severance pay for overseas workers who’re employed below different work fashions (i.e., part-time or versatile working preparations) as that is presently not offered for within the New Regulation.
In contrast to the Earlier Regulation, the New Regulation doesn’t make provisions for circumstances below which an worker could be disadvantaged of their severance pay.
SPECIAL LEAVE
The New Regulation introduces 5 days of paid bereavement go away for the dying of a partner and three days for the dying of a dad or mum, baby, sibling, grandchild or grandparent, commencing from the date of dying.
Parental go away can be supplied for each dad and mom for 5 days for baby care. That is along with the mom’s maternity go away, which has been barely adjusted to incorporate 45 days with full pay and 15 days with half pay. The New Regulation additionally states {that a} feminine worker will probably be entitled to her maternity go away as stipulated if supply takes place six months or extra after being pregnant, even when the kid is stillborn or is born alive however dies.
The New Regulation doesn’t make provisions for Hajj go away. This will likely, nevertheless, be offered for within the Govt Laws, together with any set public holidays.
OTHER CHANGES
- Except agreed in any other case, if an employer outsources a number of of its primary actions, the entitlements of any outsourced workers will stay the duty of their primary employer.
- The New Regulation expressly prohibits sexual harassment, bullying or any verbal, bodily or psychological abuse towards workers by their employer, supervisor or colleagues.
- In respect of extra time, the New Regulation made some slight modifications. As an illustration, the New Regulation expressly states that any extra time will probably be calculated based mostly on the fundamental wage (which excludes any allowances or advantages), whereas below the Earlier Regulation, extra time was calculated based mostly on the wage together with any allowances or advantages. The New Regulation additionally caps the variety of extra time hours at 144 hours in any three-week interval. The Govt Laws will decide any classes of workers that will probably be exempt from provisions regarding working hours.
- The New Regulation will apply to all limitless time period contracts entered into below the Earlier Regulation.
NEXT STEPS
The modifications launched by the New Regulation should be fastidiously thought of and revisited as soon as the Govt Laws are revealed. A variety of key issues stay topic to additional steering by the Ministry of Human Assets and Emiratization.
Current employment buildings will must be amended to adjust to the provisions of the New Regulation. Employers can have till 1 February 2023 to make the mandatory modifications to their employment contracts and employment insurance policies, together with changing any limitless time period employment contracts to mounted time period contracts.
This consumer alert shouldn’t be supposed to supply a complete abstract of the entire modifications launched by the New Regulation. We advocate consulting along with your legal professionals to debate the New Regulation and the Govt Laws (when revealed), and their influence on present employment preparations to be able to collaborate on aligning such preparations with the labour regulation regime within the UAE.
