Understanding the New UAE Labour Law 2024: Impact on Employers, Employees, and Foreign Workers

The UAE has recently introduced significant amendments to its labour laws, particularly through the Federal Decree-Law No. (33) of 2021, which came into effect in 2024. These changes have far-reaching implications for both employers and employees across various sectors, including the private sector where a large proportion of the workforce comprises foreign nationals. Understanding these updates is crucial for maintaining compliance and protecting your rights as an employee.

Key Changes in the 2024 UAE Labour Law

Transition to Fixed-Term Contracts:

One of the most notable changes is the abolition of unlimited-term contracts. Employers are now required to convert and issue only fixed-term contracts, which must have a clear start and end date, usually aligned with the validity of the employee's residence visa (typically 2-3 years). This move is made to seek enhancement of job security and to provide clarity regarding the terms of employment for both parties.

Enhanced Employee Rights and Protections:

The new labour law places a strong emphasis on safeguarding employee rights. It introduces stricter measures to prevent discrimination and harassment in the workplace, ensuring that all employees, especially foreign workers, are treated fairly. The law also empowers employees to seek assistance from the Ministry of Human Resources and Emiratisation (MOHRE) in resolving disputes, thereby providing a more structured and accessible means of addressing grievances.

Updated Notice Periods:

The law mandates that notice periods for contract termination must be mutually agreed upon and clearly outlined in the employment contract. During the probation period, employees are required to provide a 14-day notice if they wish to terminate the contract. After probation, the notice period can range between 30 to 90 days, depending on the agreement. This change introduces more structure and predictability in the termination process.

Flexible Work Arrangements:

In response to the evolving nature of work, the UAE labour law now accommodates various work models, including temporary, flexible, remote, and job-sharing positions. These arrangements offer employees greater flexibility in managing their work-life balance, while still enjoying the same legal protections as full-time employees.

Extended Maternity Leave:

Female employees are now entitled to up to 60 days of maternity leave, an increase from the previous 45 days. This extension allows more time for childcare and recovery, reflecting the UAE’s commitment to supporting working mothers.

Dispute Resolution and New Legal Penalties:

Courts of Appeal will refer employment-related requests, disputes, and grievances to the Court of First Instance, effective from the decree's implementation date, except for cases already adjudicated or reserved for judgment. Furthermore, the law introduces hefty fines ranging from AED 100,000 to AED 1 million for violations such as employing workers without proper permits, fictitious recruitment, including fake Emiratisation practices, and misusing work permits. Employers can settle these cases before sentencing by paying at least 50% of the minimum fine and refunding any financial incentives received. Criminal proceedings for fictitious employment can only be initiated by the Minister of Human Resources and Emiratisation or their representative.

The updated UAE labour law not only seeks to streamline dispute resolution processes but also enforces strict penalties for non-compliance. MOHRE now handles claims up to AED 50,000 directly, while disputes exceeding this amount may be referred to court. If there’s a disagreement with MOHRE’s ruling, it must be taken to the Court of First Instance, and any claims filed more than two years after employment termination will be dismissed.

Regulated Working Hours: The law now specifies that the maximum working hours for employees in the private sector should not exceed 8 hours per day, totalling 48 hours per week. Variations may apply depending on the specific sector. Furthermore, employees are required to take a break of at least one hour after working for five consecutive hours. It is important to note that these breaks are not included in the total working hours. Additionally, during Ramadan, the law provides for a reduction in working hours by two hours daily, limiting the workday to six hours. These provisions aim to safeguard employee well-being by ensuring adequate rest periods and respecting cultural practices.

Salary Continuation During Disputes: Salary continuation during employment disputes was adopted by the MOHRE to give workers greater control. Payments to employees will be required of employers for a maximum of two months while disputes are being settled. This amendment is sought to strengthen the commitment to equitable treatment at work and assist employees in achieving financial stability during dispute settlement.

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What Does This Mean for You as an Employer?

As an employer in the UAE, these legal changes required a proactive approach to aligning your business practices with the updated labour law. The transition to fixed-term contracts mandates that all employment agreements be clearly defined, which could impact your workforce planning and contract management. Enhanced employee rights, particularly around discrimination and harassment, require you to implement stricter workplace policies and training programs to ensure adherence and create a fair work environment.

The updated notice periods for contract termination and regulated working hours will also require adjustments in your HR processes and scheduling practices. Additionally, the introduction of flexible work arrangements presents an opportunity to adapt your business to modern work trends, potentially improving employee satisfaction and retention.

Employers must also be aware of the increased legal penalties associated with non-compliance. Fines for violations such as employing workers without proper permits or engaging in fake Emiratisation practices have been significantly raised, and criminal penalties can be severe.

In conclusion:

The updated UAE labour law seeks to create a more balanced and equitable work environment for all employees, particularly those from foreign backgrounds. Staying informed about your rights and responsibilities under this new legal framework is essential to making the most of your employment experience in the UAE.

Understanding and implementing these new regulations effectively can help you create a more stable, motivated, and legally compliant workforce, as well as position your company as a responsible and competitive employer in the UAE's evolving labour market.