Changes to the way employment in the private sector in the UAE are now in force – the first substantial update of the region’s labour laws in the last 40 years. On Tuesday, 2 February, Federal Decree-Law No 33 of 2021 replaced Federal Law No 8 of 1980.
The new law is wide ranging with only two exceptions to its overarching application. The first is in the Dubai International Financial Centre, which is a separate jurisdiction with its own employment legislation. The second is the Abu Dhabi Global Market which also has its own employment legislation.
Gulf News reported on this back in November last year when the planned new law was announced by the Minister of Human Resources and Emiratisation during a media briefing in Dubai. In a statement the Minister explained the aim of it - ‘to enhance the elasticity, resilience, and sustainability of the labour market nationwide, as well as ensure protection of workers' rights’.
Since that announcement our team in Dubai has been advising clients, helping them to prepare for a significant raft of changes. Ruth Stephen is one of our team of lawyers in the region and she joined me by video-link from Dubai to discuss the new laws. I started by asking if it means new contracts will need to be drafted:
Ruth Stephen: “Yes, absolutely. So, currently under the law there are two types of employment contract, a fixed term employment contract and an unlimited term employment contract. The new changes mean that all employees in the private sector will have to be employed under a fixed term contract of three years which can be renewed successive times. So, that's something that HR and compliance are going to have to get to grips with. There is a grace period of one year for the new employment contracts to be signed. so there is a bit of time, but we are waiting to see what form of template employment contract that employers and employees will need to sign.”
Joe Glavina: “Tell me about contract duration because, as I understand it, under the new law, there will be no more unlimited contracts.”
Ruth Stephen: “The new law doesn't provide for unlimited term employment contracts, however, and despite the fact that the new fixed term contracts or for validity period of three years, they can be renewed on successive occasions and continuity of service will be preserved. So arguably, it still has a lot of the flavours of an unlimited term employment contract. Equally, there is the ability to serve notice of termination which there wasn't under the current law whereby a fixed term contract cannot be terminated early by serving notice.”
Joe Glavina: “What about non-compete clauses, Ruth? There will be tighter regulation – what’s happening there?”
Ruth Stephen: “So post termination, restrictive covenants, or PTRs as they're commonly known, have always been in the labour law, employers have always been enabled to protect their business interests by putting in non-compete restrictions in employment contracts. However, the new law says that the duration of the limitation, so the duration that the employee cannot do these competing activities for, cannot be in excess of two years. Now, whether that will be enforceable really ties back to the employer having a legitimate reason and the timeframe being reasonable to protect their business interests. So while we have this upper limit of two years, in reality, the restrictive period might only be three months or six months.”
Joe Glavina: “Can I turn to discrimination, harassment and equal pay? So there are some significant changes here – a closer alignment with the EU’s Directives”
Ruth Stephen: “Yes, it's really great. So, something that the new law does is it reflects a lot of other international jurisdictions and it gives employees these added protections thereby promoting business and employment in the UAE overall. Disability is one of the protected characteristics under the law together with six other protected characteristics under the non-discrimination provisions which is really excellent. Together with that there's anti-harassment and bullying, so employees are now protected from these activities in their work under the law. As for equal pay, it has always been there in the law, there's always been the requirement for employees, male and female, to be paid equal value for equal work, however, the law arguably has some more bite because it is legislated for.”
Joe Glavina: “The Minister talked about changes to some of the family-friendly forms of leave. He mentioned maternity leave and parental leave. Tell me about that.”
Ruth Stephen: “So maternity is a great example of the UAE showing how it is more in line with international jurisdictions. Maternity pay has been increased from 45 days to 60 days. The first 45 are on full pay and the remainder are at half pay and there is no minimum period of service to qualify for this paid leave, which is excellent. Parental Leave has been in the law for the past year or so, but it now clarifies that this is an entitlement for both female and male employees. So, on top of maternity leave, female employees can always benefit from this parental leave.”
Joe Glavina: “Tell me about the new models of working that they’re talking about So, full time work, part time work, temporary flexible working, and even the chance to work a shorter week.”
Ruth Stephen: “So there's been limited ability for atypical types of working in the UAE. There have been some resolutions that have been set out there about the fact that it is now legislated for so that employers can hire employees on a part time basis whereby employees will be able to work for one or more employer, which is really significant. Also, the temporary working, which is usually tied to a project duration for a short period, arguably it's not too dissimilar to what we had under the fixed term contracts in the 1980 Law. Also, there's this concept of flexible working and this really ties in with the objectives of the law which is to promote business in the UAE and to reflect the current and modern ways of working under the flexible arrangements. It’s really going to be up for the employer and employee to agree, subject to the business needs, the hours of work and the days of work. There could be at scope for an employee, depending on the business needs, to perform all of their weekly work in a condensed week. So that may be a three day week, but this will be down to the terms and conditions in the employment contract.”
The new law is called Federal Decree - Law No.33 of 2021 came into force earlier this week, on 2 February. The Dubai team have written about it in some detail – that’s ‘UAE Labour Law revamp will help businesses in talent war’ and is available now from the Outlaw website.