Impactful Changes with the New UAE Labor Law In Force

The Ministry of Human Resources and Emiratisation has announced the new labor laws in UAE. The new UAE Labor Law came into effect on 2nd February 2022. The main focus of this new law is to bring a change in the work environment, align UAE labor relations with international practices, and recognize the need for flexible working structures. The new labor law, Federal Decree by Law. (33) Of 2021 (2021 law) has introduced significant changes that were enforced on the 2nd of February 2022. It addresses several issues such as part-time and flexible working arrangements, 3-year contracts, discrimination, equal pay, and many more.

Part-time and flexible working arrangements

Since the Covid-19 pandemic, everybody started working from home. The new UAE Labor Law policy allows the employees to work part-time or temporarily where time is the determining factor for the length of the employment period. It would have similar arrangements provided by the fixed-term contract. They will also offer flexible work hours where the work depends on the employer's workload and economic as well as operational variables.

Three-year contract 

The contract periods earlier, were in full force and effect unless they were terminated. These fixed-term contracts are concluded at the end of the agreed term unless renewed by the parties. However,  thenew UAE labor law requires the employees to enter a fixed-term contract for three years. On the expiry of the contract, it can either be renewed or extended for a similar or a shorter period. If the contract is not restored or extended, the parties will continue to operate the same as the contract stated. For employees who are currently on a limited-term contract basis, the new law will automatically apply from the effective date when the employers are required to convert the unlimited term contract to a fixed-term contract within one year.

Payment of end service

Previously, there were no timeframes under the existing law to pay employees end of service entitlement. The new UAE labor law states that the payment should be initiated within 14 days from the termination date at the end of service. Failure to do this will cause a 5000 to 10 lakh AED penalty. However, no compensation is payable to the employee that the time frame is not compiled.

 Discrimination and equal pay

According to the 2021 law, the provision of equal pay for men and women for the same work is included under protection from discrimination in the event. But the new law protects the employees from discrimination in the workplace based on race, color, sex, religion, national origin, social origin, or any particular disabilities. Employers are prohibited from terminating an employee if they are pregnant or on maternity leave. While no specific penalties are attributed to discrimination or sexual harassment, the employer may be liable for a fine between 5000 to ten lakh AED for breaches of the law.

 Maternity parental and additional leave

Previously the existing maternity leave provided 45 calendar days of full pay, and on expiry, employees were entitled to a further hundred days of consecutive or intermittent maternity sick leave. If they are suffering from any condition related to pregnancy or delivery that prevents them from resuming work, they are allowed to have two extra breaks. Now the maternity leave has been increased to 60 calendar days, with the first 45 days fully paid while the remaining 15 days are half spent. These are some of the many impactful changes seen after the new UAE labor law came into force.

How FlyingColour helps in business setup

The new laws have changed the dynamics. If you want to set up a new business based on these laws, FlyingColour can help you set up a company in the UAE, USA, and Canada. Along with business setup, we also provide accounting and VAT services. We are a business advisory firm with top-notch advisory management services to government, non-government, private, and academic sectors. Since new laws are implemented, it is necessary to build a business according to these laws. We help you build your business based on the latest rules and simplify your business setup process.