UAE Labour Law revamp will help businesses in talent war

Dubai-based Luke Tapp of Pinsent Masons, the law firm behind Out-Law, was commenting after Federal Decree - Law No.33 of 2021 on the regulation of labour relations in the private sector was issued. The new law – the first substantial update of UAE labour laws since 1980 – will take effect on 2 February 2022.

Tapp said: “It is an extremely positive and exciting development for both international and regional businesses operating within the UAE and will be a welcome development for all stakeholders within the UAE private sector. This is a major milestone development for the UAE and will only increase and improve working arrangements within the UAE and help the region to attract and retain world class talent. The law will develop key provisions regarding family leave entitlements, laws against discrimination and the provisions relating to termination of employment.”

In a statement, the UAE Ministry of Human Relations and Emiratisation said the new law “seeks to enhance the elasticity, resilience and sustainability of the labour market nationwide, as well as ensure protection of workers' rights”. The Ministry said it had consulted with stakeholders in federal and local government as well as business representatives in relation to the reforms.

According to the Ministry, the law stiffens protections against mistreatment of staff, including with regards to sexual harassment and physical or psychological abuse. It further prohibits “prohibits all forms of discriminations based on race, colour, sex, religion, national or social origin or disability that would scale down the possibilities of equal opportunity, prejudice equal access to or continuation of employment and enjoyment of rights.”

The new law also makes provision for part-time and flexible working arrangements to be put in place by businesses. Details of the conditions and control of work patterns and the obligations arising from each worker and employer are to be set out in executive regulations that are currently being drafted by the Ministry.

In the same way as the 1980 Labour Law, the  new law allows employers to implement ‘non-compete’ clauses in their employment contracts to protect against the risk of employees leaving for rival companies and taking confidential information with them. However, the Ministry confirmed that strict conditions will apply to their use, including that such clauses can only stand for a maximum of two years whereas the 1980 law is silent with respect to the period of the restriction.

Further restrictions will apply to the use of fixed-term contracts. A maximum term of three years will be able to be set for fixed-term contracts, though it will be open to employers and employees to extend or renew the contract “for a similar or lesser duration once or more”, the Ministry said. All employment contracts that have an unlimited duration will be converted into fixed-term contracts that are subject to the new restrictions, it said. “How this is implemented in practice will be a key question and task for HR professionals and in-house lawyers alike,” said Ruth Stephen of Pinsent Masons.

A new right to paid compassionate leave will be introduced and the new law clarifies that the five days’ paid parental leave applies to both women and men. Previously there was some discussion as to whether this was exclusively for men in the form of ‘paternity leave’.

Among the other provisions, the new law also “regulates the controls and conditions for terminating work contracts in a way that guarantees the rights of both parties”, the Ministry said. Significantly, the new law provides for a maximum notice period of 90 days.