UAE Labour Law Updated: What You Need to Know

Unlimited Employment Contracts

Within one year of the Decree’s implementation date, unlimited employment contracts must be turned into fixed-term employment contracts for a maximum of three years. Therefore, by mutual consent of both parties, the contract may be extended or renewed for similar durations, or for shorter or longer periods depending on their agreements.

Non-compete Clause in New UAE Labour Law

The Executive Regulations clarify the implementation of a non-compete provision in an employment contract. There are circumstances where a non-compete clause is not applicable for instance in case an employment contract is terminated due to the employer’s breach of the contracts.

The non-compete clause can also be removed in the contracts in writing by both parties in a mutual agreement after the contract has expired.

Additional employment contract cases where an employee is exempted to comply with a non-compete clause:

• If the employee or new employer pays compensation of no more than three months’ salary (plus any allowances) of the employee’s previous salary and the old employer agrees in writing.
• Another case is when a labour contract is terminated during a probation period.

Apart from these cases, the Ministry can also exclude specific types of professionals from their employment contract’s non-compete restrictions.

Types of Work Permits in UAE

When it comes to working permits, there are different work permits that employees are required to have. However, the most important one is obtaining a work permit from the ministry because it is not permitted to work in the UAE and an employer is not allowed to recruit a worker unless they have this work permit as per the provisions of this Decree-law.

New work permits introduced in this new labour law include:

1. Temporary Work

This work permit allows employers to hire workers for a fixed period that lasts for a small-time or on a project basis.

2. Part-Time Work

Based on a fixed number of hours or days, this permit allows employees to work for more than one company.

3. Juvenile Work Permit

The new law has allowed employees to hire juveniles between the ages of 15 to 18 under proper guidelines mentioned in the law, like taking permission from their parents or guardians.

4. One-Mission Work

This work permit is for international employees. With the one-mission permit, establishments and companies in UAE can recruit employees from abroad to work on specific projects or to work temporarily for a definite period of time.

5. Freelancer Work Permit

This authorization allows self-sponsored expats who wish to provide services or complete some work for a fixed time to work for companies without requiring any contracts or sponsorships.

6. UAE/ GCC National Work Permit

This applies when employers hire a UAE and GCC nationals.

7. International Worker Permit

It is a permit that is required from an employee who is hired outside of the UAE.

8. Transfer Permit

In order to transfer one expatriate worker’s employment from one company registered in the ministry to another, this permit is required.

9. Student Training Permit

This permit authorizes employers and establishments to recruit and train teenagers aged 15. Although some regulations are to be followed to ensure a healthy work environment.

10. Golden Visa Permit

This permit is issued when employers recruit a golden visa holder.

11. National Trainee Permit

A license that permits companies and industries to train nationals in the UAE according to their fields and qualifications.

12. Sponsored by Family

This permit is for expats who are sponsored by their families.

Working Hours in UAE Employment Contract

The updated UAE labour law states that time spent by an employee going from their home to their workplace shall be considered as working hours in these cases:

• Because of unexpected bad weather or response to any National Center of Meteorology alerts about weather changes and circumstances.
• Time spent by the employee in the employer-provided mode of transportation in the case of a traffic accident or emergency
• If both parties have agreed on this in their labour contracts.

The new labour law in UAE also validates that daily working hours would be shortened by two hours during the holy month of Ramadan.

Working hours in the new UAE labour contract are limited to eight hours per day or 48 hours per week. An employer may ask an employee to work additional hours above the maximum working hours, as long as they do not exceed two hours per day unless the work is required to avoid the circumstances of a major loss or accident or to get rid of or reduce its consequences. In any case, the total number of working hours per three weeks cannot exceed 144.

The following types of employees and work will be exempted from the new labour Law’s stating the daily maximum number of working hours:

• Certain individuals such as members of the board of directors and Chairpersons.
• Individuals in supervisory roles, if such positions give them powers of the employer.
• Employees on naval vessels and at sea who are subject to unique and special types of employment.
• Technical employment that necessitates continuous labor in successive shifts, provided that the average weekly working hours do not exceed 56 hours.
• Preparatory or supplementary work that has to be completed outside of the working hours designated for work at the employee’s establishment.

New Work Models

These new models introduced by the New UAE Labour Law are dedicated to providing employees more flexibility and freedom. Therefore, these new models give employees the independence to work in their own hours, under some restrictions.

Employees can join more than one job model, considering they don’t work for more than 144 hours every three weeks and 48 hours a week. The models are:

• Remote work model is also introduced in the revised laws. It allows all full-time and part-time employees to work away from the office either partially or completely.
• A shared job model has also been introduced that allows employees to split their responsibilities and share payment among them. This is sanctioned after agreement with the employer. This contract is based on the part-time job regulations.
• Full-time model
• The part-time model where a person can work in multiple jobs
• Temporary model in which an employee is recruited for a small amount of time.

Probation period

In the New UAE Labour Law, it states:

• An employer is required to appoint a worker under a probationary period that allows them to evaluate their performance. Though, this period should not exceed more than 6 months after the date of commencement.
• It is not allowed to employ the same worker under a probationary period at the same company more than once.
• If an employee wishes to move to another company during their probationary period, they are required to notify their employer a month before their termination. The employer is instructed similarly if they wish to terminate an employee’s work, they must give at least a 14-day notice and the notifications are to be provided in written form.

Notice Period

As mentioned above, a notice period of at least 14 days is to be served by an employee on probation. However, there are some regulations imposed in the UAE Labour Law about the existing unlimited contract employees.

• If your employees are working for less than five years, they are subjected to serve a notice period of 30 days.
• If the service period of employees is more than five years, they are to serve a 60-days’ notice period.
• If an employee’s service is of more than ten years, then they are to serve a 90-days’ notice period.

Termination of Employment Contract

The New UAE Labour Law has shortened the employee contract within a company. Now, establishments are required to get their employees to sign a maximum of a three-year contract. This contract can be renewed as many times as they want. They also expanded their reasons for terminating employees and now they include:

• Termination in case the employer is permanently closed
• Termination at the hand of the bankruptcy of the employer
• An employee fails to satisfy the requisite immigration requirements.

Other termination regulations include:

• Employees who want to leave an employer to move to another employer during their probation, they are required to serve a notice period of at least one month. The new employer of the employee is also required to compensate the recruitment costs of the previous employer.
• If an employee decides to leave the UAE during their probation, they are required to serve at least a 14-days’ notice period.

Annual Leave for Part-Time Workers

In the New UAE Labour Law, it states that part-time workers are entitled to annual leaves. They will be calculated according to their actual working hours. These will be defined in the employee contract and will be according to the stipulated agreement.

Calculation of Wages in UAE

According to the agreed contract among employees and employers, workers can be paid an hourly wage, a daily wage, a per piecework wage or a monthly wage. In accordance, all salaries are to be given on the due date and calculated correspondingly.

Final Thoughts

The UAE Labour Law is changing according to the changing workplace environment around the world. In order to provide their employees more freedom and independence, they are moving towards more technological advancements and having an enhanced and flexible workplace.

However, you need not worry about the labour laws at all when you get your company formed by us. At Avyanco Business Setup, we have a team of lawyers and experts who stay updated with the revised laws and policies of all labourers. Get in touch with us today and we’d ensure forming your company keeping your labour laws in consideration.