Navigating The New UAE Labour Laws: A Comprehensive Guide

The UAE is known for its commitment to growth and innovation and this commitment is clearly reflected in the recent updates to its labour laws. With the introduction of Federal Decree-Law No. 33 of 2021 and the subsequent amendments in Federal Decree-Law No. 20 of 2023, the country has made significant strides in ensuring employers and employees operate within a fair, transparent and efficient framework. These Laws are designed to protect workers' rights, support businesses and enhance the overall working environment in the UAE. Here's a detailed breakdown of what these Laws mean for you.

1. Purpose and Scope of the Law

The new Labour Laws are not just about setting rules—they're about creating an environment where businesses can thrive and employees can grow. The Labour Law aims to ensure that the UAE's labour market remains efficient and attractive to top talent worldwide. By clearly defining the rights and obligations of both employers and employees, the Law supports the UAE's vision of becoming a global hub for talent and investment.

This Law applies to all private-sector establishments, employers and employees in the UAE. However, it excludes employees of federal and local government entities, armed forces, police, and domestic workers. The amendments introduced by the 2023 decree further reinforce the Law's application, particularly by enhancing the dispute resolution process.

2. Key Definitions and Clarifications

Understanding the Law begins with understanding the key terms it uses. The Labour Law defines important terms like "worker," "employer", "private sector" and "employment contract." For instance, a "worker" is any natural person authorised by the Ministry of Human Resources and Emiratisation (MOHRE) to work for a licensed establishment. The Law also categorises employment into different patterns, such as full-time, part-time, temporary, and flexible work arrangements. This clear definition helps eliminate any ambiguity regarding rights and responsibilities in the workplace.

The 2023 amendment didn't change these definitions but added more clarity to the processes related to disputes arising from these employment relationships.

3. Commitment to Non-Discrimination and Equal Opportunities

One of the new Law's most progressive aspects is its strong stance against discrimination. The UAE is committed to ensuring that everyone has an equal opportunity to succeed, regardless of their background. The Labour Law explicitly prohibits discrimination based on race, colour, sex, religion, national or social origin, or disability. This ensures that all workers are treated fairly and that there is no bias in hiring, promotion, or compensation.

Moreover, the Law mandates equal pay for men and women performing the same work or work of equal value. This is a significant step forward in promoting gender equality in the workplace, ensuring that women receive the same recognition and reward for their contributions as their male counterparts.

4. Employment Contracts and Work Patterns

The structure and content of employment contracts have seen significant changes under the new Law. Unlike the old Law, where contracts could be open-ended, the new Law mandates that all employment relationships must be formalised through written contracts. These contracts are now required to be fixed-term, with a maximum duration of three years, though they can be renewed by mutual agreement.

This Law also introduces flexibility by recognising different work patterns, including full-time, part-time, temporary, and flexible work arrangements. This allows both employers and employees to choose arrangements that best suit their needs. For example, a company might employ part-time workers to handle specific projects or during peak business periods, while employees can benefit from flexible work patterns that allow them to balance their professional and personal lives more effectively.

The Law also clearly defines the probationary period, which can be a maximum of six months. During this period, either party can terminate the contract with proper notice. However, the rights and obligations of both parties are clearly defined.

5. Working Hours, Overtime, and Breaks

Balancing work and personal life is crucial, and the new Labour Law reflects this by setting out clear rules for working hours, overtime and breaks. The standard working hours remain at eight hours per day or 48 hours per week. However, the Law allows for adjustments in certain sectors where operational needs may require different working arrangements.

Employees are entitled to a break after five consecutive hours of work. This ensures that workers are not overworked and have adequate time to rest and recharge during the day. The Law also sets strict guidelines for overtime. Overtime is capped at two hours per day, and any work done beyond the standard hours must be compensated at a higher rate. For work done between 10 PM and 4 AM, the Law mandates an even higher compensation rate, reflecting the additional burden of working during these hours.

The Law also provides specific provisions for working hours during Ramadan, reflecting the month's cultural and religious significance. This demonstrates the UAE's commitment to accommodating the diverse needs of its workforce.

6. Leave Entitlements and Provisions

One of the most significant improvements in the new Law is the enhancement of leave entitlements. The Law recognises that workers need time off to rest, recover and take care of personal matters. It provides for various types of leave accordingly.

Under the new Law, employees are entitled to 30 days of annual leave after one year of service. For those who have worked for less than a year, leave is calculated on a pro-rata basis. In addition to annual leave, the Law provides for public holidays, maternity leave, sick leave and other special leaves.

Maternity leave, in particular, has been significantly extended. Female workers are now entitled to 60 days of maternity leave—45 days at full pay and 15 days at half pay. If a mother needs additional time off due to health reasons related to pregnancy or childbirth, she can take up to 45 days of unpaid leave. The Law also introduces five days of parental leave for both mothers and fathers, which can be taken within six months of the child's birth. This reflects the UAE's commitment to supporting families and promoting a healthy work-life balance.

7. End of Service Benefits and Gratuity

End-of-service benefits, commonly known as gratuity, are an essential aspect of employment in the UAE. The new Law ensures that employees who have completed at least one year of continuous service are entitled to a gratuity based on their basic wage.

For the first five years of service, employees are entitled to 21 days' pay for each year. For each year of service beyond five years, the entitlement increases to 30 days' pay. However, the total gratuity cannot exceed the equivalent of two years' wages. This ensures that employees are rewarded for their loyalty and service, providing them with financial security upon the termination of their employment.

The Law also clarifies how gratuity is calculated for workers in different employment patterns, such as part-time or temporary workers. This clarity ensures that all workers, regardless of their work pattern, receive fair compensation for their service.

8. Termination of Employment Contracts

The Law provides clear and fair procedures for terminating employment contracts, protecting the rights of both employers and employees. Employment contracts can be terminated by mutual agreement, at the expiry of the contract term, or for legitimate reasons such as the employee's inability to perform their duties due to health reasons.

However, the Law also addresses wrongful termination. If an employee is dismissed unfairly—such as for filing a complaint or for reasons that are not legitimate under the Law—the employer may be required to pay compensation of up to three months' wages. This provision ensures that employees are treated with respect and fairness and that they are protected from arbitrary dismissal.

The Law also outlines the process for handling resignations and dismissals during the probation period, including compensatory provisions for unfair dismissals.

9. Worker Protection and Safety Measures

The safety and well-being of workers are of paramount importance in the UAE, and the new Labour Law reflects this by mandating comprehensive safety measures. Employers are required to provide a safe working environment, conduct regular safety training, and ensure compliance with health and safety regulations.

Employers are also responsible for covering the costs of medical care for work-related injuries and diseases. In the unfortunate event of a work-related death, the Law provides for compensation to the worker's family, calculated based on the worker's basic wage and capped at AED 200,000. These provisions highlight the UAE's commitment to maintaining high standards of worker safety and welfare.

The Law also includes specific provisions for preventing harassment, bullying, and any form of violence in the workplace, ensuring that all workers are treated with dignity and respect.

10. Penalties for Non-Compliance

To ensure that these Laws are taken seriously, the UAE has introduced strict penalties for violations. Employers who fail to adhere to the provisions of the Law may face fines ranging from AED 20,000 to AED 1 million, depending on the severity and nature of the violation.

The Law also empowers the Ministry of Human Resources and Emiratisation (MOHRE) to conduct inspections and take necessary actions against non-compliant establishments. Repeat offenders may face harsher penalties, including imprisonment and the doubling of fines, ensuring that employers are held accountable for their actions.

These stringent penalties serve as a strong deterrent against violations, ensuring that both employers and employees adhere to the rules and maintain a fair and just working environment.

11. Amendments Introduced by Federal Decree-Law No. 20 of 2023

The 2023 amendments bring significant improvements to how disputes between employers and employees are handled. Dispute resolution is crucial in maintaining harmony in the workplace, and the amendments to Article 54 focus on making this process more efficient and fair.

• Enhanced Dispute Resolution Mechanism: The Ministry of Human Resources and Emiratisation is now empowered to render final judgments on disputes where the claim value does not exceed AED 50,000 or where an amicable settlement is not complied with. This streamlines the dispute resolution process, reducing the need for prolonged litigation and ensuring that small claims are resolved quickly.
• Appeal Process: Either party may appeal the Ministry's decision to the Court of Appeals within 15 working days. The court is required to schedule a hearing within three working days and adjudicate within 15 working days. This ensures that disputes are resolved swiftly, maintaining fairness while minimising disruption.
• Time Limits on Claims: The amendment introduces a one-year limit for filing claims related to employment disputes, after which the claim cannot be heard. This encourages timely resolution of disputes and provides certainty to both parties.

These amendments reflect the UAE's commitment to creating a fair and efficient system for resolving workplace disputes, ensuring that justice is accessible to all.

Conclusion

The introduction of the Labour Law, along with its subsequent amendment, marks a significant shift in the UAE's approach to labour relations. These Laws are not just about setting rules—they're about creating a balanced, fair, and dynamic working environment that benefits everyone involved.

By aligning with international best practices and addressing the evolving needs of the workforce, the UAE is ensuring that it remains a top destination for talent and investment. These comprehensive legal frameworks protect workers' rights, support business growth, and contribute to the sustainable development of the UAE's economy.

Whether you're an employer looking to attract the best talent or an employee seeking fair treatment and opportunities, these Laws provide the foundation for a thriving, equitable, and forward-looking labour market in the UAE.