Understanding the New Labour Contract in the UAE to Stay compliant

Understanding the New Labour Contract in the UAE to Stay compliant

The United Arab Emirates (UAE) has recently released a new set of labour laws governing private-sector employment relations. On February 2, 2022, Federal Decree Law No. 33 of 2021 came into effect and replaced the earlier Federal Law No. 8 of 1980 entirely.


The labour law changes necessitate corrections to existing employment contracts and modifications to the various policies and procedures to hire new employees for future agreements. The UAE government is also in the right direction to issue executive regulations on the new laws.


Employers and employees are subjected to make necessary corrections to the employment contracts to comply with the new law. Recruiters, on the other hand,  must not waste time but modify all the policies and procedures regarding labour contracts before they hire new employees.


However, staying compliant with all the rules and regulations can be a challenging task. Here’s a friendly guide you can look up to.


First, understand what Labour Contract is in the UAE

A labour contract is nothing but an official employer agreement which is an official document signed by both parties(employee and employer). After the signing is done, the document legally directs both parties to remain faithful to the terms of the agreement.


Labour contracts contain the details of timeframes, work expectations and schedules. A labour contract not only orders employees to follow the rules, but it also binds the employer. The employer is subjected to meet all the terms of payment and dispense benefits that are supposed to be given to his employees.


Types of Employment Contracts

The latest UAE labour contract law enables varied types of employment contracts. Below are the important employment contract categories:

  • Unlimited (flexible)
  • Limited (fixed-term)
  • Special employment
  • Full-time
  • Part-time
  • Temporary
  • Job-sharing

Requirements of A Labour Contract Under Federal Decree-Law No. 33

Federal Decree-Law No. 33 set down various changes to UAE employment contracts. These newly made modifications leave a significant impact on the rights and obligations of both employees and employers.


Requirements for Probationary Period Notice for Employment Contract 

As per the new law, as an employer, you have the right to place an employee on probation due to his poor performance for up to six months but not any longer. And, for new employees, employers may also need an initial probational period.  Employers are bound to give at least 14 days’ notice to the employee before terminating him. Likewise, the employee is also subjected to give at least 14 days’ notice while being on probation before leaving the UAE. In case, an employee decides to leave the current job and join a new employer, he must show a notice before 30 days of resigning. 


Currency Agreements

Both parties, that is employers and employees, can come into a mutual consent to payment in any currency. However, you must keep in mind that the Wages Protection System is not responsible for handling currencies other than UAE Dirham.


UAE Fixed-Term Contract Requirements

This newly introduced law systemise and mandates the employees to shift to fixed-term employment contracts. If you are an HR professional, then you must take action to make it happen. As an employer, you have the time frame until February 2023 to switch your workforce to fixed-term employment.


Leave Entitlements

Employees must use the leave within the year they earn it. In case, they do not use the leave within the same year, they will be entitled to encashment by the end of the year.


For the first six months, employees have the right to take leave at a rate of two days each month. Most interestingly, employers have the legal right to take a leave up to 30 days if they’ve provided their service to an employer for one year. 


The leave categories are-

Compassionate leave- 3-5 days of paid leave for the death of a family member.

Maternity leave- 45 days of full pay, and 15 days at half pay.

Study leave-Study leave is unpaid. If you want to take study leave, you must work for at least 2 years for the employer.


Rest Day Agreements

Employers are now legally bound to implement a rest day for their workers every week. However, there is no such regulation that the rest day must be on Friday.  If any worker works on a rest day, employers must offer compensation to this employee as overtime pay.


Final Words

Apart from the above-mentioned things, there are also rules and regulations that apply to Flexible Arrangement Contracts, Non-Compete Restrictions, Contract Termination Requirements, workplace policies, and more.


If you’re planning to set up a business in Dubai or any other region in the UAE, it’s important you understand the New Labour Contract in the UAE. 


We at Probity Corporate Services provider (PCS) can help you. Our experienced business professionals can help you stay in compliance with the new law of labour contracts in the UAE. 


Schedule a free consultation today!

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