Imminent Changes to the UAE Labor Law
December 1, 2021, Covington Alert
A new UAE Labor Law will come into effect on February 2, 2022. Affected employers will generally need to be in compliance with the new law by this date (subject to a few exceptions) and should therefore start reviewing existing employment contracts, as well as local policies and practices, now.
Who Is Affected?
The UAE Cabinet has recently approved a new Federal labor law, Federal Law No. 33 of 2021 (the “New Law”). This will come into force on February 2, 2022 and replace the current labor law, Federal Law No. 8 of 1980 (the “Current Law”), in its entirety.
As with the Current Law, the New Law will apply to all companies and employees in the private sector in the UAE, including its free zones, with the exception of the Dubai International Financial Centre and the Abu Dhabi Global Market free zones which have their own employment laws.
Employment relationships subject to the employment laws of these free zones will therefore not be affected by the changes, but organizations with employees based elsewhere in the UAE will likely need to take action in the coming months.
Why Is This Important?
At first glance the New Law may seem like an overhaul of the regulation of employment in the UAE. On a closer look, however, the New Law serves principally to consolidate many of the changes made in recent years, often through numerous supplemental regulations.
That said, there are a few noteworthy changes (some of which were expected and others were not), including:
- Removal of the Concept of “Unlimited” Term Employment;
- Introduction of Flexible Working Models;
- Enhanced Protection against Discrimination and Harassment;
- Changes to Termination Provisions and Post-Termination Restrictions;
- Changes to Minimum and Maximum Notice Periods;
- New Provisions relating to Parental and Other Leaves; and
- New Provisions regarding Collective Claims by Employees.
At this point, it is unclear how certain provisions of the New Law will operate in practice, as much of the detail will be contained in forthcoming executive regulations setting out further explanatory provisions to the New Law, as well as specific frameworks on certain matters (the “Implementing Regulations”).
This structure will provide the Ministry of Human Resources and Emiratisation (“MHRE”) with more flexibility in the regulation of employment, thus (a) enabling the MHRE to respond more effectively to future changes in working patterns and practices and (b) facilitating the more extensive reform of employment regulation that is expected in the coming years.
What Next?
The Implementing Regulations are not expected until 2022 but, even if they do ultimately provide the clarification needed in certain areas, employers will likely still need to revisit their local employment contracts, policies and practices in order to ensure compliance with the New Law from February 2022 onwards.
At a macro level, the New Law represents the most important development in the UAE’s regulation of employment relations since the introduction of the Current Law in the 1980s – and is one of many legal reforms the UAE has enacted to mark its 50th anniversary.
Together with the introduction of the UAE’s first-ever comprehensive data protection law (see here), the New Law is a clear indication that the HR-Legal landscape in the UAE is in a state of evolution – and perhaps in the region more broadly with many other Gulf states already considering updates to decades’ old employment regimes as we emerge from the COVID-19 global pandemic.
To receive updates on the legislative developments discussed in this alert, as well as invitations to our on-demand series of briefings which will look more closely at the changes in the New Law and how affected employers should address these, please contact our events team.
If you have specific questions concerning the material discussed in this client alert, please contact the members of our Employment and Benefits team.
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