The United Arab Emirates had issued Federal Law No. 33 on December 7, 2021, which will repeal UAE Federal Law No. 8 of 1980 once it comes into effect on February 2, 2022. The New Labor Law will apply to all companies in the UAE, both private and public sector, except for those in Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market, as they have their own labour laws. The new set of laws introduce several unexpected changes and aims to create a flexible work environment in the country. It can be inferred that these new regulations are also in response to the post-Covid-19 labour market and is in line with the UAE’s recent reforms that are aimed at attracting and retaining talents from around the world.

From new work models, innovative gratuity schemes to increased leaves, the law’s provisions balance the different needs of both employees and employers, drive innovation, and harness a diversity of talents in the labour market. Much of the detail in the New Labor Law has been outsourced to executive regulations. Here are some of the important changes that will come about in the labour laws, subject to changes being made to existing employment contracts, policies and practices.

Flexible Work Models

Employees may undertake part-time or temporary jobs besides their existing full-time jobs and may even opt for flexible work models to accommodate the changes in their schedule. They do not have to seek the employer’s permission but are required to acquire a temporary work permit for the same. In any case, they will not be allowed to work more than 144 hours every three weeks to avoid burnout and ensure wellbeing.

Innovative Gratuity Schemes

Companies will have an array of gratuity calculation options to choose from depending on the work model adopted. This shift is aimed towards attracting talents and increasing competitiveness in the labour market.

Easily Shift Between Jobs

The new laws prohibit employers from retaining employees’ documents and forcing them to leave the country after the cancellation or expiry of the visa. They will be allowed to stay in the country until they can start the other job. In addition, the new employer will have to bear the recruitment costs without deducting anything from the employee, directly or indirectly.

Prohibition of Unlimited Contracts

The new law will also prohibit “Unlimited Contracts” completely. Those companies currently taking part in unlimited contracts with an employee has to transfer those contracts to Limited contracts of no more than 3 years before February 2nd, 2023. Furthermore, these contracts can be renewed at the end of the term.

Minimum Wage

For the first time in its history, the UAE will introduce a minimum wage for private-sector employees. The minimum wage amount will be detailed in the Executive Regulations. Previously, there was no provision for minimum wage set beyond a broad definition stating that salaries must cover the basic needs of the employee. The minimum wage will protect the rights of low-skilled workers by setting a minimum wage threshold for employers to adhere to.