Employment Laws in Dubai: A Guide for Business Owners

The year 2023 brings significant revisions to employment laws in Dubai, United Arab Emirates (UAE), impacting both employers and employees in the private sector. These changes, introduced through the newly enacted labor law for 2023, are poised to reshape the landscape of employment regulations in the region. While these modifications affect most companies, certain exceptions apply to those operating within the ADGM and DIFC-free zones. It is imperative for recruitment agencies to stay abreast of these developments to ensure compliance and remain competitive in the evolving employment landscape of Dubai.

New Labor Law UAE 2024: Understanding Employment Laws in Dubai

The new labor law in Dubai introduces some adjustments to work arrangements as follows:

  • Full-time – Working full hours daily for a single employer.
  • Part-time – Working specified hours or days for one or more employers.
  • Temporary – Fixed-term engagement lasting for a defined period or until completion of a particular task.
  • Flexible – Working hours and days vary based on the employer’s workload, operational, and economic factors.
  • Foreign employees are entitled to paid annual, bereavement, maternity, paternity, and study leave. Annual Leave – 30 calendar days of paid annual leave accrued per year of service.
  • Maternity Leave – 60 calendar days of paid maternity leave, with full salary for the first 45 days and half salary for the remaining 15 days, available to pregnant employees after 6 months of pregnancy.
  • Sick Leave – 45 calendar days of paid sick leave.
  • Bereavement Leave – 3 calendar days for immediate family, 5 calendar days for spouse.
  • Study Leave – One study leave annually for up to 5 days for employees enrolled in UAE educational institutions after 2 years of service.

UAE labor law changes

UAE labor law changes

Several monumental developments will directly impact the UAE labor market in the coming year. Thus, familiarity with basic employee rights and company obligations under the new labor law is critical. The key aspects of the updated regulations are as follows:

Compliance Deadline – Private sector entities must implement employment contracts with defined terms by February 1, 2023, when the new law takes effect, though contract durations remain unlimited.

Emiratization – Starting in 2022, private sector companies registered with the Ministry of Human Resources and Emiratization (MoHRE) must ensure that at least 2% of their workforce comprises UAE nationals, increasing by 2% annually up to 10%. Free zone companies are currently exempt.

Unemployment Insurance – From June 30, 2023, private sector employees must enroll in the unemployment insurance scheme, contributing AED 5 per month for salaries under AED 16,000 and AED 10 above. Free zone company employees may be exempt temporarily.

Article 31 – Sick leaves

Should a worker contract an illness not attributable to a work-related injury, the worker is required to inform his employer or the designated representative of the employer within a maximum timeframe of three working days and submit medical documentation from a healthcare institution detailing the worker’s condition.

For the duration of the probationary period, a worker is not entitled to any paid sick leave; however, contingent on a medical report issued by a healthcare institution confirming necessity, the employer has the discretion to grant the worker unpaid sick leave.

Once a worker completes the probationary period, the worker shall be eligible for sick leave, comprising both paid and unpaid components, for a combined maximum duration of 90 days per service year, allocated in the following manner: the first 15 days of sick leave are compensated at the worker’s full pay rate; the next 30 days of sick leave are compensated at half of the worker’s pay rate; any remaining sick leave days beyond the initial 45 days will be uncompensated. 

In situations where the worker’s illness directly results from his misconduct, as defined in the Executive Regulations of the Decree-Law, no wage compensation will be paid for any of the sick leave days, irrespective of the total leave duration.

In the event a worker does not return to duty after exhausting the sick leave entitlements specified here, the employer reserves the right to terminate the worker’s employment; however, the worker will retain all end-of-service benefits to which he is entitled under the provisions of this Decree-Law and associated Executive Regulations.

Redundancy UAE labor law 2024

The Employment Laws in Dubai do not incorporate the concept of redundancy, as there are no legal definitions, mandatory consultation requirements, or notification obligations to the Ministry of Labor preceding termination notices on the grounds of redundancy. However, an employee may contest an employer’s decision to layoff by claiming arbitrary dismissal.

In the UAE context, arbitrary dismissal refers to termination where the stated reason does not pertain to the employee’s work performance or conduct, implying that valid grounds for termination are limited to poor performance or misconduct. Nevertheless, UAE courts have upheld employers’ rights to restructure and downsize their businesses, leading to workforce reductions.

redundancy UAE labor law 2024

UAE courts do impose a substantial evidentiary burden on employers to provide justified reasons for redundancies, scrutinizing business rationales behind job cuts.

While employees are not entitled to written explanations for termination, employers who do not furnish redundancy rationales in writing will be ill-positioned to contest arbitrary dismissal claims, as the burden of proof lies with the employee.

The Dubai International Financial Centre free zone, home to many financial sector employees, maintains separate employment regulations. However, the concept of redundancy is similarly absent, yet oddly, provisions exist granting reasonable time off for terminated employees to seek new positions.

annual leave UAE labor law 2024

Employees are entitled to paid annual leave based on their length of service:

  • Employees who have completed one year of service are eligible for 30 days of paid annual leave.
  • Employees who have completed at least six months but less than one year of service are eligible for 2 days of paid annual leave per month worked.
  • If an employee’s service ends before they have used all of their accrued annual leave, they will receive payment for the unused leave based on the portion of the year worked.

Part-time employees are entitled to annual leave proportional to their actual hours worked, as specified in their employment contract and per the Executive Regulations of the Labour Law.

Rules regarding using annual leave:

  • Employees should use their annual leave within the year it is accrued. The employer can set leave dates in consultation with the employee based on business needs, providing at least one month’s notice.
  • With employer approval, employees can carry over up to 2 years’ accrued leave. If an employee works during annual leave, they will receive payment for the days worked based on their basic salary.
  • Upon termination, any unused annual leave will be paid out based only on the basic salary amount.
  • Official holidays and any sick leave falling within annual leave will count toward the annual leave period unless otherwise specified in the employment contract or company policy.
annual leave UAE labor law 2024

 Download The UAE New Labor Law 2024 pdf

For a comprehensive understanding of the Employment Laws in Dubai 2023, download the full PDF version using the direct link below:

The UAE’s new labor law PDF provides comprehensive information to help employees understand their rights and responsibilities under the updated regulations. It covers key details on working hours, leave entitlements, termination policies, and dispute resolution procedures.

Overall, the Employment Laws in Dubai 2023 represent a major advancement in workers’ rights in the country. The reforms strengthen employee protections, increase transparency, and bring the UAE’s labor regulations more in line with international standards.

With this new law, the rights of employees in the UAE have progressed significantly. The Employment Laws in Dubai 2023 are undoubtedly a positive step forward for the continued evolution and growth of the UAE. By better informing both employers and employees on the regulations, the new labor law PDF empowers people to exercise their rights and meet their obligations to build a fair, equitable, and progressive labor environment.

UAE labour law article 44

An employer may terminate an employee’s services without notice for the following reasons:

  • The employee falsifies identity documents or credentials.
  • The employee’s actions, whether deliberate or through gross negligence, cause substantial material loss or damage to the employer.
  • The employee violated documented safety instructions, provided the instructions were properly communicated.
  • The employee fails to perform basic contractual duties despite receiving two written warnings.
  • The employee discloses confidential business information leading to losses, missed opportunities, or personal gain.
  • The employee is found intoxicated or under the influence of drugs at work or engages in immoral conduct at the workplace.
  • The employee assaults the employer, manager, or colleagues at work.
  • The employee is excessively absent without excuse – over 20 intermittent days or 7 consecutive days in a year.
  • The employee illegally exploits their position for personal gain.

The employer must inform the Ministry of Human Resources and Emiratisation within 7 days of becoming aware of the incident. Termination without notice may only occur after the employer conducts a written investigation.

Article 132 UAE labour law

article 132 UAE labour law

As per Federal Law no. 12 dated 29/10/1986, employees who have completed one or more years of continuous service are entitled to an end-of-service gratuity when their employment ends. Periods of unpaid leave are excluded from the calculation of total service.

The gratuity payment is calculated based on the employee’s wages as follows

  • 21 days of wages for each of the first 5 years of service.
  • 30 days of wages for each additional year of service beyond 5 years. The total gratuity payment cannot exceed the equivalent of 2 years of wages.

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