This year the United Arab Emirates has imposed a new law regulating the Labour (Federal Decree-Law No. 33 of 2021) & replacing the existing labour law (Federal Law No. 8 of 1980) which comes into effect on 02nd February 2022. This law is supposed to strengthen the position of the UAE Labour market as one that is aligned with the global Labour Laws & offers a greater level of flexibility, efficiency and increase incompetencies.
Following are the areas which have seen a noticeable change under the new law:
1) Term of contract:
Under the new law, a company cannot draw up contracts for an unlimited period. Contracts can only be for a fixed term not exceeding 3 years.
2) New work models:
A variety of different models have been introduced by the new labour law such as temporary working, flexible working and part-time work. These new models also cover the shared jobs model & condensed working weeks.
Following are the areas which have seen a noticeable change under the new law:
- Part-time working – Under the new law, an employee can work for 2 different employers at the same time provided he obtains a part-time work permit from the Ministry Of Human Resources & Emiratization which is valid for 1 year. The holders of part-time work permits are allowed to work for the current company as well as another company for less than 8 hours per day.
- Temporary working – Refers to work that is linked to a particular project or a job & which concludes with the completion of the job or the project.
- Flexible working – Gives employees the discretion to work at different times as per the conditions and requirements of the job based on a contract that covers hours, days and duties required.
- Full–time working – Employees only work for one employer for a full workday.
- Shared jobs model – gives the flexibility of splitting job responsibilities & pay among more than 1 employee based on an agreement with the employer. The contracts of employees following this work model are governed by part-time job regulations.
- Remote working model – The model enables full-time and part-time employees to work completely or partially outside the workplace should the nature of their work allow it.
3) New Work Permits:
The U.A.E Labour Law provides the following work permits
- Temporary Work Permit: This will enable employers to acquire the services of any employee for a specific project or a specific period.
- Mission Permit: This allows companies and organizations to hire any employee from abroad who will be temporarily employed on a specific project and for the duration of its completion.
- Part-time work permit: This enables an employee to work for more than one employer for specific hours and days.
- Juvenile Permit: With the help of this permit employers will be able to acquire the services of youth between the ages of 15 and 18 under the conditions stipulated in the relevant law.
- Student Training Permit: Through this permit companies and institutions will be able to provide recruitment & training to youths between the age of 12 to 18. This recruitment and arrangement will be done according to the relevant rules and regulations.
- Emirati GCC Citizen Permit: This permit will be issued when Emirati and GCC citizens are recruited.
- Golden Visa Holder Permit: This will be issued while hiring Golden Visa holders.
- National Training Permit: Through this, companies and institutions will be able to provide training to Emirati citizens as per their qualifications and sector
- Freelance Permit: It will be self-sponsored and issued to an ex-pat through which they will be able to provide services to any person or company for a specific task or a particular period. They won’t need company sponsorship or a contract.
- Employment Work Permit: It will be possible to get the service of a worker from abroad.
- Transfer Work Permit: This will allow the services of a foreigner to be transferred from one institution registered with the Ministry to another
- Family Work Permit: This will be for foreigners whose family has sponsored.
4) Maternity Leaves
The new UAE labour law grants maternity leaves of up to 60 days out of which 45 days are paid leaves & 15 days will be at half pay. Additionally, if there are any post-partum complications or ailments in the newborn then a further 45 days of unpaid leave will be granted after the conclusion of the initial maternity leaves. They will have to provide
For mothers of infants with special needs, 30 days of extra paid leave along with further 30 days of unpaid leave is granted over & above the initial maternity leaves.
5) End-of-service gratuity
Employee’s end-of-service gratuity under the revised labour law will be calculated as follows:
- If the employee has worked for more than 1 year & less than 5 years, the gratuity is calculated based on 21 days of a month.
- If an employee has worked for more than 5 years in a company then he/she is entitled to gratuity on 30 days basis.
6) Bullying & Sexual harassment
The newly passed law imposes strict prohibitions against bullying & sexual harassment of employees. Additionally, employers are prohibited from threatening and forcing employees to perform services against their will. Bullying & sexual harassment do not have specific penalties, but in violation of the law, an employer may face a fine between AED 5,000 to AED 1,000,000.
7) Probationary period
If an employer hires an employee & assesses them on a probationary basis, the following rules need to be kept in mind:
- In case the employer wishes to terminate the employee in their probationary period, the employer should provide the employee with a 14-Day termination notice.
- In a case where the employee resigns while working for an employer (current employer) in the probationary period & if the employee wishes to work for another employer (new employer) then the employee should provide a minimum notice of 1 month. The new employer will also have to compensate the current employer for the recruitment costs incurred by them.
- In case the employee is leaving UAE after his/her resignation during the probationary period, the employee should provide a minimum notice of 14 days. If the employee returns to UAE within 3 months of their departure for employment elsewhere in UAE then the new employer will have to compensate the existing employer for the recruitment costs incurred.
All of these changes in law have a significant effect on how a company will account for salaries, gratuities & provisions in their books of accounts. We at Oxford Auditing aim to simplify these procedures in accounting & bookkeeping for our clients.
