The new Labour Law of the United Arab Emirates coming into force

The law reform aims to make local labour relations more flexible in order to allow international companies to continue to compete in the UAE. This is for example shown by the implementation of various work models such as part-time or project work. An adjustment of the employment contracts and ensuring compliance with the new law must be implemented by the employer within one year after the law came into force.

 

The new law already contains significant changes concerning a probation period that may have been agreed by the parties. Therefore, both parties must grant the other party with a 14-day notice period in the event of termi­nation within the probation period, which may even be 30 days under certain circumstances.

 

While the previous labour law provided fixed-term and unlimited employment contracts, the new law now only recognizes fixed-term employment contracts with a maximum contract term of three years, meaning that the employment relationship must be extended by the contracting parties after the agreed contract term. However, already under the previous legal situation the employment relationship was – at least indirectly – limited due to the connection between the employment contract and the residence permit, which was issued for a limited period. This clarifying regulation was missing in the previous law.

 

Compared to the previous legal situation, the law now no longer designates Friday as a mandatory weekly day of rest. The minimum requirement to be granted to the employee is only one day weekly of rest, which can be agreed individually. This is consequently in accordance with the change of the weekend for the public sector in the United Arab Emirates. The private sector is basically free to adopt this adjustment, so that labour law there­fore is now also in accordance with this adjustment of the working days.

 

With regards to annual leave, the legislator now expressly regulates the transfer of untaken annual leave to the following year. However, the Employee may not carry forward more than half of the annual leave to the follow­ing. Even the transfer of annual leaves were already common practice previously, it had to be individual arranged in employment contracts.

 

Through the fixed-term employment contracts with a maximum contractual term of three years with the exten­sion of these contracts, consequently, the contract can be terminated through an ordinary termination with a legitimate reason. The amount of the end of service gratuity in the event of a termination of the employment relationship will in future no longer depend on the party, who wants to cancel the employment relationship, so that the entitlement will also arise in full in the event of a resignation, provided that the employment relation­ship continues at least one year. This also applies in the event of a termination without notice.

 

To regulate the post-contractual rights and obligations of the parties, the law contains, among other things, amendments regarding non-compete clauses, which can now be limited to a maximum of two years.

 

As of the implementation of the law, employees are now exempted from judicial fees in all instances of legal proceedings, provided that the value of their claims does not exceed AED 100,000.

 

In addition, the law refers to the implementing regulations, which further specify and implement the statutory regulations in named subareas.

 

The Labour Law generally grants an implementation period of one year from its entry into force, so that, among other things, an adjustment of all employment contracts and agreements affecting the employment relation­ships must be made by the employer within this period.