New UAE Labour Law explained: What happens after an unlimited work contract is terminated?

In the UAE, employers and employees must adhere to the latest changes that the government makes to laws and regulations. One of the most recent changes in the UAE Labour Law is related to the notice period, compensation, and more. The legal rights that employees have after unfair dismissal were also taken into account when the authorities made these important changes.

In this article, you will learn everything you need to know about the latest updates on the UAE Labour Law. We will explain to you what happens after termination of an unlimited work contract and everything related to this case. In this way, you will be able to comply with the new rules, whether you are an employer or an employee.

  1. What are the most recent changes to the UAE Labour Law?
  2. Does the new law make the termination of work contracts more flexible?
  3. Why is a written contractual agreement important in the UAE?
  4. How many vital facets of the new UAE Labour Law should you be aware of?
  5. Are there any other recent news you should know about the UAE Labour Law? 
  6. How can Connect Resources help you stay compliant with the new UAE laws?

1. What are the most recent changes to the UAE Labour Law?

Recently, the UAE authorities announced the implementation of a new Labour Law, and our experts will now explain them for you. In fact, top legal experts in the country have explained some of the most important aspects of the recent changes. For example, employers cannot dismiss employees without a notice period and providing legitimate reasons and conducting a thorough internal investigation.

If an employer decides to terminate a labour contract without giving a legitimate reason, it will be considered arbitrary. Moreover, as per the new law, the employer will have to compensate the employee with up to three months’ salary. This was explained by the first appeal judge and head of the technical office of the Labour Court, Dubai Courts, Judge Dr Ali Muhammad Al Hosani.

According to Al Hosani, the reasons for dismissal can be if the employee:

  • Submits false documentation.
  • Fails to follow the employer’s instructions.
  • Fails to perform their duties.
  • Reveals the employer’s business secrets or confidential information to third parties.

In addition, employers can also dismiss employees if they:

  • Are under the influence of certain psycho-active substances, such as alcohol and illegal drugs at work.
  • Commit immoral activities at their workplace.
  • Abuse their employer or colleagues verbally or physically.
  • Are absent from work for 7 consecutive days or 20 non-consecutive days.

On the other hand, employees can also terminate the contract without notice in case their employer:

  • Does not fulfill the conditions laid down in the employment contract.
  • Assaults them.
  • Assigns them other duties or work without their consent.

In case the employer does not serve the notice period to their employee, it will be mandatory to provide monetary compensation. Furthermore, it is against the new UAE Labour Law to dismiss an employee for filing a complaint against the employer.

2. Does the new law make the termination of work contracts more flexible?

Besides the details we previously mentioned, Al Hosani also explained some other important elements of the new UAE Labour Law. Al Hosani spoke at the second forum for employers (organized by the LSDA or Labour Standards Development Authority in Sharjah). This insightful session was attended by more than 300 establishment owners and managers.

One of the things that he mentioned was that the new law gives more flexibility to both parties in terminating the relationship. Furthermore, he also explained that it does not require the completion of the contract term. The law also allows both parties to terminate the relationship by giving two warnings by the law’s regulation.

It is worth mentioning that the Federal Decree Law No. 33 of 2021 on the regulation of labour relations in the private sector came into force on February 2, 2022. According to the government, the new Labour Law will enhance employment rights. Besides, it will also boost the competitiveness of the Emirates as a place to live and work.

As a result, it will help the region to attract and retain world-class talent. Furthermore, the new UAE Labour Law makes provision for companies to put in place part-time and flexible working arrangements.

3. Why is a written contractual agreement important in the UAE?

The most recent UAE Labour news include that Al Hosani outlined some of the most important points of the new law. For instance, he explained the causes and effects of termination of work relationships, as well as written contractual agreements. He emphasized why it is essential for an employer and employee to have a written contractual agreement.

More precisely, he said that both parties need to know and write down the conditions for employment and termination. Al Hosani said that it will help both of them since the foundation of the law is based on trust.

On the other hand, he also added that -sometimes- cases are filed without a proper labour contract. He outlined that the law is in favor of both parties (employees and employers) and the aim is to achieve a balanced work environment.

Legal experts in the United Arab Emirates have stated that the WPS (Wage Protection System) is tampered with in some cases. There are cases in which the salary is deposited via the WPS and withdrawn from the employee’s account in one minute. And as per the UAE Labour Law, this is an illegal practice and a clear misuse by employers. Learn more about the UAE’s payroll law here.

4. How many vital facets of the new UAE Labour Law should you be aware of?

Besides the previously mentioned details of the new UAE Labour Law, there are some other ones you should know about, including:

  • Employers cannot keep the passports of their employees since it is illegal.
  • Employers must pay for recruitment, visa and work permit, in addition to other legal costs of hiring new employees. Therefore, the employer cannot cut these expenses from the employees’ salaries.
  • The company must pay for medical treatment expenses and insurance fees.
  • The experience certificate must be non-biased. Besides, it must not be written in a manner that jeopardizes future employment options for the employees.
  • When it comes to paying salaries, there cannot be delays. Late payment of salaries can bring negative consequences, including fines and other penalties.
  • Employers are not allowed to force employees into doing work or completing duties they are not comfortable doing.
  • It is illegal for employers to force employees to work long hours. In case employees work overtime, they must get fair compensation as per the law.
  • The law will not tolerate bullying, harassment, and emotional and sexual abuse in the workplace. An example of emotional abuse can be if an employer says ‘your value is nothing to me’ to an employee.
  • There is a minimum notice period of 30 days. Nonetheless, there is now a maximum notice period of 90 days. For those employees who leave while still employed on unlimited term contracts, minimum notice periods apply of:
    • 30 days for employees who have worked for the company for up to 5 years.
    • 60 days for employees who have worked for the company between 5 and 10 years.
    • 90 days for employees who have worked for the company for 10 years or more.

4.1. Other essential details of the new UAE Labour Law

  • Those employees summarily dismissed are not entitled to a notice period or end-of-service gratuity. However, there are two additional rules to the old Labour Law, which are abusing the position to obtain personal profits and gains. And the second one is joining another establishment without complying with controls and procedures in place.
  • A written investigation, as well as written warnings, must be provided before an employee is dismissed.
  • Before terminating an employee’s contract, they must conduct an inquiry.
  • The employer must give two warning letters to the employee before terminating their contract. Plus, the employer must also provide an apparent reason for dismissal before terminating the contract.
  • An employee cannot be dismissed for consuming alcohol and other substances. However, they can fire them for consuming them during work timings. It also includes working remotely or while on an official videocall o remote meeting.
  • Another reason for terminating a work contract can be cursing or bad-mouthing.
  • Employees who are summarily dismissed lose their entitlement to their notice period. Nonetheless, they now retain entitlement to an end-of-service gratuity payment. No reductions apply where an employee resigns.
  • Employees who have worked for a company for more than one year will be entitled to gratuity. This payment will be calculated on the same basis previously mentioned.
  • Employers must process payment of employee compensation together with all other termination payments within 14 days of the termination date.
  • Employers cannot stop employees from taking their annual leave.
  • Lastly, employers cannot terminate the contract of pregnant women as per the new UAE Labour Law.

5. Are there any other recent news you should know about the UAE Labour Law? 

Besides the labour contract and employment termination, the new law also includes significant changes related to leave and salaries. More precisely, there are new things that you should know about annual, sick, and maternity leave. Below, we will briefly explain each of these elements that employees in the UAE can get as benefits:

5.1. Annual leave

There are new rules related to annual leave, which include more rights for employees in the UAE. However, basic entitlements regarding this type of leave remain the same. During the first year of employment, employees can have two days per month.

5.2. Sick leave

When it comes to sick leave, employees can have 90 days per year, but only after the probation period. The salary payment for sick leave includes 15 days of 100% pay, 30 days of 50% pay, and 45 days of unpaid leave.

5.3. Maternity leave

The new UAE Labour Law includes new provisions regarding maternity leave. For example, there is an increase in maternity leave to 60 days. Besides, female employees do not need to comply with a minimum qualifying requirement.

6. How can Connect Resources help you stay compliant with the new UAE laws?

If you live and work in the UAE, you must be aware of the UAE latest news and official announcements. This is true especially when it comes to the most recent changes or modifications that the government makes to the Labour Law. Therefore, you should contact our team so you can get the guidance you need to remain compliant.

Furthermore, our specialists will also provide you with the best consultancy services in case you are operating a UAE company. In this way, you will be able to adhere to the new UAE laws and help your business stay out of any legal complications.

Our team can, additionally, offer you a variety of HR services and e-services that will allow your company to grow exponentially and efficiently.

Do you wish to contact Connect Resources to learn more about the new UAE Labour Law announced by the authorities? By keeping in touch with our experts, you will receive information about the most recent changes in UAE laws. Also, we will explain to you every detail there is to know, so you can easily understand the new regulations. Make sure to call us at +971 43 316 688 or send an email at contact@connectresources.ae to get the information you require.

Would you like to easily find the best job opportunities in the United Arab Emirates or even join our team? The platform thetalentpoint.com will help you when it comes to exploring the most convenient job offers in the country. In case you desire to submit your application and resume, make sure to send an email at contact@thetalentpoint.com and one of The Talent Point‘s experts will provide you with information and tips.

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