The United Arab Emirates (UAE) has issued Federal Law No.

33 of 2021 (the New Labor Law), which will take effect Feb. 2,
2022, and will repeal UAE Federal Law No. 8 of 1980 (the
Current Labor Law).
Like the Current Labor Law, the New Labor Law will apply to
all companies and employees in the private sector in the
UAE, including its free zones, save for the Dubai International
Financial Centre and the Abu Dhabi Global Market, which
implement their own employment laws.
Application
The New Labor Law applies to any entities owned "in
conjunction with the federal or local government" unless the
entity's constituent documents state otherwise.
Fixed-Term Employment Contracts
Under Article 8 of the New Law, unlimited contracts are to be
abolished and replaced with work contracts of a fixed term
for a period of three years, which may be renewed on the
same conditions with the consent of both parties for a similar
period or less
All employees must be employed on fixed-term employment
contracts not exceeding three years, which may be extended
for the same or period. Employers will have 12 months from
Feb. 2, 2022, to transition all their employees onto new
contracts. 
4. EQUAL PAY FOR EQUAL WORK
In addition to articles prohibiting discrimination based on
race, sex, religion etc., the New Law explicitly affirms that all
provisions regulating the employment of workers without
discrimination shall apply to working women, with an
emphasis on granting women the same wage as men if they
perform the same work or other work of equal value.

Protections Against Discrimination

The law prohibits discrimination against persons specifically
on the grounds of race, color, sex, religion, national origin,
ethnic origin or disability. It remains to be seen how this
protection will be enforced in practice or what the remedy
will be for individuals who are victims of discriminatory
conduct.

Protection Against Harassment

The law expressly prohibits harassment, bullying, or any
verbal, physical or mental violence against employees. As
with the anti-discrimination provisions, it remains to be seen
how this protection will be enforced in practice or what the
remedy will be for individuals who are subjected to
harassment.
Flexible Working Models
Employees may undertake full-time, part-time, temporary or
flexible work. In practice, these "models" reflect the common
working modes already implemented by many UAE
employers
Template Employment Contracts for Flexible Working
Models
template employment contracts for each of the new flexible
working models. These templates are likely to be in the
relatively straightforward dual language format issued by the
Ministry of Human Resources & Emiratization (MHRE) and we
anticipate that companies will still want to issue their own
employment contracts containing more sophisticated terms
and conditions alongside the new template contracts being
introduced.
Termination by Employer During Probationary Period
Employers may terminate employment during probationary
period by giving 14 days' written notice.
Termination by Employee During Probationary Period
Employees who want to move to another employer in the
UAE during their probationary period may terminate their
employment by giving a least one month's written notice.
The New Labor Law states that, in this case, the employee's
new employer should compensate the old employer for
recruitment costs.
Employees who want to leave the UAE during their
probationary period may terminate their employment by
giving at least 14 days' written notice. The New Labor Law
states that if the employee returns to the UAE and obtains a
work permit issued by the MHRE with another employee
within three months of this departure, the employee's new
employer should compensate their old employer for
recruitment costs.
Termination on Notice
Either party may terminate the employment relationship for
"good cause" by giving written notice.
Notice Periods
Minimum notice periods are still 30 days but notice periods
are now capped at 90 days. This is likely to be an unwelcome
development for employers who need to deal with the
departure, replacement and recruitment of senior
executives, who typically have notice periods of six to 12
months.
Search for Work
When the employer issues notice, the employee will be
entitled to one unpaid day of leave per week during the
notice period to look for new employment.
Notice Periods for Current Unlimited Employment Contracts
Although unlimited contracts are to be replaced by fixed-
term employment contracts, rather unusually the New Labor
Law imposes minimum notice periods for the termination of
existing unlimited contracts, depending on the employee's
length of service: (i) 30 days if the employee's period of
service is less than five years; (ii) 60 days if the employee's
period of service is more than five years; and (iii) 90 days if
the period of service is more than 10 years.
Reasons for Termination
The scenarios in which an employee's employment may be
terminated have been expanded to include the permanent
closure of the employer, the bankruptcy of the employer and
the failure of the employee to satisfy the requisite
immigration requirements.

Summary Dismissal
Regrettably, the list of reasons permitting immediate or
summary dismissal has not been materially amended,
although the New Labor Law specifically requires a written
investigation and two written warnings to be given to an
employee before dismissing the worker for failure to perform
the employee's main duties.
Disciplinary Process
It is suggested that a disciplinary process will be contained in
the executive regulations.
Suspension
Suspension of up to 30 days with half pay will be permitted to
enable an employer to undertake a disciplinary investigation.
However, an employee will be entitled to be reimbursed all
pay that is withheld if the worker is ultimately cleared of any
wrongdoing. We therefore anticipate that most employers
will continue to suspend employees on full pay and benefits. 
Internal Policies and Procedures
Employers will be required to "put in place internal work
regulations" in accordance with the forthcoming executive
regulations. 
End-of-Service Gratuity Calculation
An employee's end-of-service gratuity is stated to be
calculated on the basis of working days, which would be a
significant change. 
Article 51 of the new labour law stipulates that an employee
who has completed one year or more of continuous service is
entitled to end of service gratuity of 21 calendar days’ basic
pay for each year of the first five years of service; and 30
calendar days’ basic pay for each subsequent year of service,
provided that the entire total remuneration does not exceed
two years pay.

For employees under unlimited contracts, Article 137 of the

old labour law says that those who choose to resign before
the end of the contract will be entitled to a 2/3 reduction of
gratuity if the period of their service is between one to three
years; 1/3 reduction if the period of service is between three
to five years; and no reduction if the period of service
exceeds five years.
End-of-Service Gratuity on Summary Dismissal
Employers do not have the right to withhold an employee's
end-of-service gratuity if the worker is summarily dismissed
(that is, if employment is terminated immediately without
notice). This is a significant development and reflects the
approach adopted by the Dubai International Financial
Centre in 2019.
Maternity Pay and Leave
Maternity pay is increased to 60 days (45 days' full pay, 15
days' half pay). There is no qualifying service requirement.
Employees will now be entitled to maternity leave and pay in
the case of stillborn babies and new-born deaths.
Employees will be entitled to additional unpaid leave of 45
days if they suffer a pregnancy-related illness. This period of
leave will not be included when calculating the employee's
end-of-service gratuity.
Parental Leave
Employees will be entitled to five days' paid leave in the six
months following the birth of their child. This leave will be in
addition to an employee's entitlement to maternity leave and
there is no qualifying service requirement. Parental leave was
introduced into the Current Labor Law in 2020.
Disability Leave
Employees with babies who have disabilities may be entitled
to an additional 60 days' leave on full pay.
Compassionate Leave
Employees will be entitled to five days' paid leave for the
death of their spouse and three days' paid leave for the
death of a parent, child, sibling, grandchild or grandparent.
There is no qualifying service requirement.
Study Leave
Employees with more than two years' service may be entitled
to 10 working days' study leave, although the New Labor Law
is silent on whether this leave will be paid or unpaid.
Sick Pay During Probation Period
Employees will not be entitled to any paid sick leave during
their probationary period.
Holiday
Employees will be required to take their holiday in the year it
falls due, although it is unclear what will happen to that
holiday if they don't.
Holiday Pay
Payment in lieu of holiday pay on the termination of
employment is to be calculated using basic pay only.
Deductions
Deductions from wages of up to 50 percent of the monthly
wage will be permitted.
Non-competition
Non-compete clauses must be no longer than two years,
although such a lengthy restriction is going to be difficult for
an employer to justify in most cases.
Certain positions will be exempt from non-compete
obligations, although this will be addressed in executive
regulations.
Frustratingly, other types of restrictive covenants, such as
non-poaching of employees or non-solicitation of clients and
customers, are not addressed in the New Labor Law.
Passports
Employers are expressly prohibited from retaining an
employee's passport.
Overtime
Overtime will be capped at 144 hours in every three-week
period and will be calculated according to basic salary only.
Overtime Exemption
The overtime exemption that applies under the Current
Labor Law, for employees in a supervisory or managerial
position, no longer applies, and the executive regulations will
determine new exemptions.

Rest Days
Weekly rest days no longer have to be on a Friday.
Entitlements on Death of Employee
Employers should pay a deceased employee's spouse or
children (as designated by the employee) all outstanding
wages and end-of-service benefits within 10 days from the
date of the employee's death. It is unclear how this
requirement will interact with other UAE inheritance laws.

Resignation Without Notice

Employees will only be able to resign without giving notice if
(i) in the case of an employer's non-compliance with their
obligations, the employee notifies the MHRE 14 days before
leaving and the employer fails to rectify the matter; and (ii) in
the case of harassment or violence, the employee notifies the
MHRE within five working days of being able to do so.
Currency of Salary Payments
Employees may be paid in currencies other than UAE dirham
if agreed in the employment contract, although it remains to
be seen how this would work in practice for employers who
are required to pay their employees via the Wages Protection
System.
Payment of Final Entitlements
Employers must pay their employees all their final
entitlements within 14 days of the termination of their
employment.
Retention of Employment Records
Employers are required to retain employment records for
two years after the termination of employment.
Fines
Fines of up to 1,000,000 UAE dirham (approximately 272,257
USD) may be imposed for breaches of the New Labor Law,
which may be multiplied in cases where numerous
employees are affected.

2. DEADLINE OF 1 FEBRUARY 2023 FOR THE DRAFTING OF

NEW EMPLOYMENT CONTRACTS
All employers in the private sector shall be required to
replace their current employment contracts with contracts
which comply with the New Law. Employers have a maximum
period of one Gregorian year from the date of the New Law’s
implementation in which to do this, i.e. 1 February 2023.
3. MINIMUM WAGE
Article 27 of the New Law will set a minimum wage, which is
an unprecedented move for the UAE. The minimum salary
amount shall be determined and announced by the UAE
Cabinet following a proposal by the Minister of Human
Resources and Emiratisation, in collaboration with the
relevant authorities.
5. NEW CATEGORIES OF LEAVE GRANTED TO EMPLOYEES
Employees shall have the right to request additional types of
leave under the New Law, including
(i) bereavement leave of three days following the death
of close family members,
(ii) parental leave of five days, to be taken intermittently
or consecutively within six months of the birth of a
child and
(iii) study leave of 10 days for an employee who has to
take exams, provided that they complete two years
of work with that employer.
(iv) Mothers will also receive longer maternity leave, with
45 days of full pay and the next 15 days with half pay.
7. ‘CONDENSED’ WORKING WEEK
The New Law also provides for the option of a shorter
working week via a condensed working hours model. Article
65 of the current law stipulates normal working hours for the
private sector are 8 hours per day or 48 hours per week.
The New Law gives the option for employers to allow their
employees to work for 40 hours in a week on a condensed
model, i.e. a 4-day week consisting of 10 hours per day. This
change is likely to have been made with the new 4 ½ day
working week for public sector employees in mind.
8. NON-COMPETITION CLAUSE
The New Law strengthens the non-compete protections
afforded to an employer by introducing a statutory
requirement for a Non-Compete Agreement to be executed
between the employer and employee. This Agreement must
stipulate its duration, geographical scope and the types of
work it applies to.
10. JUDICIAL FEES EXEMPTION
Under the New Law, employees or their heirs may file
petitions, pursue litigation or enforcement orders against
employers without incurring judicial fees at any stage of the
process, provided that their claim does not exceed
Dh100,000 in value.
The New Law also provides that the employer shall bear the
fees and expenses of recruitment and employment and may
not recover them directly or indirectly from the employee.

Action Points
All affected employers should consider the following actions
points:
1. Communicate to employees how they are going to be
affected by the New Labor Law.
2. Update template employment contracts to reflect the
requirement for all employees to be issued with fixed-term
contracts not exceeding three years.
3. Ensure that all existing employees employed on indefinite
employment contracts are moved onto fixed-term
employment contracts by no later than Feb. 2, 2023.
4. Amend or replace existing employment contracts or policy
documents that contain references to specific statutory
entitlements (for example, 45 days' maternity leave).
5. Amend current sick leave policies to reflect the fact that
employees are not entitled to take paid sick leave during
their probationary period.
6. Amend existing maternity and paternity leave policies to
reflect the different entitlements.
7. Consider implementing equal opportunities and anti-
bullying and harassment policies to reflect the new anti-
discrimination/bullying/harassment provisions.
8. Consider implementing a grievance policy to facilitate
employee complaints of discrimination, bullying and
harassment.
9. Update disciplinary policies to reflect (i) the expanded
number of reasons for termination; (ii) the fact that an
employee's end-of-service gratuity can no longer be withheld
in any circumstances; (iii) the prohibition on discrimination,
bullying and harassment.
10. Amend working time policies to reflect the cap on
overtime hours and the changes to the calculation of
overtime pay.
11. Implement a compassionate leave policy.