Navigating UAE Employment Law: An Essential Guide for Employers and Employees

The UAE's new labor legislation, implemented in February 2022, makes significant modifications to the preceding Federal legislation No. 8 of 1980. This significant update intends to address the evolving needs of the modern workforce and the economic environment of the UAE, specifically focusing on private sector companies incorporated on the mainland. These regulations include changes to employment contracts, work formats, leave types, working hours, compensation, etc. The Ministry of Human Resources and Emiratisation (MOHRE) is in charge of enforcing these rules and mediating disputes between employers and employees.

Scope of the Law: Employees and employers in the UAE's private sector are subject to the law, with the exception of federal and municipal government employees, the armed forces, police and security services, and domestic employees.

Significance of new law for companies: Adhering to these legal requirements decreases risks by avoiding legal challenges and penalties that result from noncompliance, allowing the company to maintain its brand image. Furthermore, businesses can become more competitive in the labor market by offering fair and progressive working conditions that attract top talent and help keep skilled workers.

Employee Rights and Protections:

• Working Hours and Overtime: The law sets a maximum of 8 hours per day or 48 hours per week for normal working hours, with provisions for overtime. Overtime pay is calculated at least 25% above the basic wage for regular overtime hours, and it increases to 50% above the basic wage for work done between 10 pm and 4 am or on weekends.

• Leave Entitlements : The law provides for different types of leaves, ensuring employees have adequate rest and recovery periods. 
• Annual Leave: 30 calendar days after completing one year of service. For service less than one year but more than six months, employees are entitled to 2 days of leave every month.
• Sick Leave: 90 days of sick leave per year after completing a probation period and three months of continuous service. The first 15 days are fully paid, the next 30 days are half paid, and any subsequent days are unpaid.
• Maternity Leave: 60 days, including 45 days at full wage and the subsequent 15 days at half wage.
• Parental Leave: 5 days in the 6 months following the birth of the child.

• Equality and Non-discrimination Laws: Employees are guaranteed equality of opportunity and treatment in employment without discrimination based on race, color, sex, religion, national origin, or disability. The law explicitly mandates equal pay for equal work, addressing gender pay disparities.

Darwinbox simplifies HR processes by enabling quick customization and setup of leave policies, as well as customizable approval flows that adjust based on geographic location. The platform's leave policy engine allows for simple policy updates and automatic adjustments to local work week schedules, such as switching to a 4.5-day week.

The platform can also help organizations manage complex pay structures, ensure compliance with local minimum wage laws, and integrate overtime policies into payroll. The system also supports off-cycle payroll processing to accommodate unique scenarios, as well as automated alerts for managers when employees work overtime. 

Additionally, Darwinbox improves policy management by allowing organizations to easily create, distribute, and track policies using digital signatures and real-time reporting. This ensures consistent compliance as regulations change. The platform also supports anti-discrimination initiatives and facilitates quick resolution of harassment issues through mobile-enabled disciplinary workflows.

Employer Obligations:

• Employment Contracts: Employers must draft clear and fair employment contracts that include terms and conditions, job responsibilities, and legal requirements.

• End-of-Service Benefits: Employers must offer end-of-service benefits, calculated as 21 days of basic salary per year for the first five years of employment and 30 days per year thereafter.

• Termination Protocols: Employment contracts can be ended through mutual agreement, contract expiration, the death of either party, business closure, or other legal reasons. Notice periods of 30 to 90 days are mandatory, with penalties for non-compliance.

• Medical and Insurance Benefits: Employers must provide health insurance that complies with local regulations and covers all medical care costs.

Darwinbox's systems are highly configurable, easily adaptable to changes in end-of-service benefit calculations, and capable of managing a variety of notice periods. Customizable workflows tailored to specific needs make it simple to accommodate different notice periods for a diverse employee base based on tenure at Darwinbox.

The law establishes multiple work formats, such as full-time, part-time, temporary, and flexible, allowing employees to choose work arrangements that best suit their needs and lifestyles.

Types of Work Patterns:

The new law requires all employment contracts to be fixed-term, effectively abolishing unlimited contracts. Fixed-term contracts typically last two to three years, which corresponds to the validity period of expatriate employees' residence visas.

Darwinbox's HCM system is designed to meet the dynamic requirements of remote, on-site, and hybrid teams. It offers a unified platform for managing local and global compliance requirements, adapting to different employee types, and supporting a variety of operational tasks. Darwinbox makes it simple to configure weekly offs, policies, and shifts, allowing for customization to fit any work format. The Timesheets feature improves team productivity by tracking billable hours across multiple projects using precise activity tracking. Additionally, the system includes advanced time and attendance tools such as facial recognition, geo-tagging, geo-fencing, and IP restrictions to ensure accurate and secure monitoring of employee attendance, regardless of location.

Essential Contract Elements:

• Work pattern: Defines the employment type, such as full-time, part-time, temporary, or flexible, specifying the employee's work commitment.

• Working hours and leave entitlements: Outlines the daily and weekly working hours and details entitlements for annual leave, public holidays, maternity/paternity leave, and sick leave.

• Probation: Describes the probationary period, typically up to six months, with conditions for termination of employment during this period.

• Salary and allowances: Specifies the salary amount, payment frequency, and any additional financial benefits, such as housing or transportation allowances.

• Non-competition clause: Includes restrictions on the employee's engagement in competing activities after employment ends, detailing the duration and geographical scope.

• Termination clauses and notice periods: Lists conditions for contract termination by either party and the required notice periods, usually ranging from 30 to 90 days.

Darwinbox's contract management system can effectively manage contracts in accordance with the new guidelines. The system allows the setting of automatic triggers, which notify managers and senior HR management when important milestones are reached. This eliminates the need to keep offline records because everything is available in the system. Darwinbox automates contract renewals, which are critical to HR responsibilities and have significant legal and financial implications. This automation reduces risks and ensures that both the employer and the employee's interests are protected.

In case of conflicts, the law provides procedures for resolving labor disputes, ensuring employees have access to justice and fair treatment. It includes provisions for mediation and arbitration, aiming to resolve disputes amicably.

Overview of Labor Disputes

• Individual labor disputes in the UAE concern disagreements between a single employee and an employer, while collective labor disputes involve conflicts between a group of employees and the employer.

• Labor disputes in the UAE typically revolve around employment contracts, workplace rights, or termination issues.

Filing Labor Disputes

• Disputes must be initially filed with MOHRE, and employee must provide their employment contract, relevant communication, and evidence of the dispute.

Resolution Processes

• Mediation by MOHRE: MOHRE attempts to mediate disputes through negotiations between the parties. Successful mediation resolves the dispute amicably; unresolved cases may escalate to adjudication or court.

• Adjudication for Small Claims: MOHRE can render final judgments on disputes involving claims up to AED 50,000. Review of submissions and issuance of decisions based on provided evidence. Parties can appeal MOHRE’s decisions at the Court of Appeals within 15 working days.

• Labor Court Proceedings: Disputes exceeding the small claims threshold or unresolved in mediation are referred to labor courts. Hearings are scheduled, conducted, and decisions made within specified time frames. Court decisions are enforceable upon issuance, unless an appeal is pending.

Alternative Dispute Resolution

• Arbitration and conciliation are quicker, less formal alternatives to court proceedings, offering faster resolutions and helping preserve business relationships.

Conducting Thorough Employee Onboarding

• Employers should educate new hires about UAE employment laws, including their rights and responsibilities, and provide orientation on local culture to effectively integrate employees into the workplace.

Maintaining Accurate and Up-to-Date Employment Contracts

• Businesses must regularly review and update employment contracts to ensure clarity and compliance with current UAE labor laws. 

• In addition, contracts must be offered in both Arabic and English to accommodate all employees and ensure understanding.

Implementing Fair and Transparent HR Policies

• Develop and enforce HR policies that adhere to UAE laws on non-discrimination and equality.

• Set up clear grievance procedures to resolve disputes amicably and ensure transparency in promotions, rewards, and disciplinary actions.

• Align hiring practices with Emiratisation goals to actively recruit, train, and retain UAE nationals, boosting their workforce participation.

Regularly Reviewing and Updating Employment Practices

• Regularly review and update employment practices to keep pace with changes in UAE employment laws.

• Conduct frequent audits of HR practices to maintain compliance and rectify any discrepancies in employment policies.
  
  

VI. Recent Changes in Labor Regulations