New UAE Labor Laws
By Amanda Lewis
UAE has flourished over the last 44 years. A significant increase in the workforce population has been noted over time as a result of increased investment opportunities and developmental projects. The workforce population in UAE is dominantly comprised of South Asians. With the onset of various projects, it is noted that more job opportunities are introduced which in turn satisfy the project requirements thus leading to a high influx of expatriates over the years.
In order to safeguard the interests of the workforce and outline uniform laws applicable to the employer employee relationship, three new Ministerial Decrees effective since 01 January 2016 have been introduced to provide clarity and ensure the rights of an expatriate employee are protected.
Federal Law No. (8) Of 1980 comprises of the rules and regulations pertaining to the UAE Laws. Most of the provisions remain the same, however, changes have been introduced to standardize employment contracts, define the termination policy and procedures as well as provide the conditions based on which new employment permits may be issued upon request by the new employer.
It was observed that an employee would accept an offer letter that was provided to him in his country of residence reflecting attractive terms and conditions. However, the finalized labour contract that would be presented on arrival would reflect different terms altogether. In order to reduce the disparity faced by workforce and ensure a decrease in labour disputes for such matters, new more defined decrees have been issued.
The Ministerial Decree (764) of 2015 ensures the protection of interests of the employee as it has made it a mandatory requirement such that when an offer is formally made, a signed copy needs to be duly submitted before registration of the employment contract with the Ministry of Labour. This has been adapted in order to ensure that the two documents reflect similar terms and conditions without any major variations detrimental to the interests of the employee. This rule is now applicable to both fixed term and unlimited contracts.
A standardized draft of the employment contract has now been introduced. This draft is applicable to the contracts already in existence and is mandatory to be adopted upon renewal. A new clause if compliant with the Labour Laws may be inserted in the standardized draft only if it is approved by the Ministry of Labour.
With the introduction of the Ministerial Decree (765) of 2015 the conditions pertaining to termination is more stringent. A fixed term and unlimited term Employment Contract may be terminated by the expiry of the contract and by mutual consent. It may also be terminated unilaterally if due notification is provided to the other party as per the contract. The minimum notice period is one month. However, in case the notice period has not been defined in the contract, then in this scenario the period will be three months.
With the complications arising out of a shift in job stagnating the growth of an employee even in case of default of the employer, the committee decided to address this situation and laid down rules wherein an employee may be granted permission without any ban or hurdles ahead to work with a new employer. The new Ministerial Decree 766 of 2015 paves a clear way as long as the termination of the fixed term and unlimited term contracts are in compliance with the new rules of termination.
It may be noted that an employee who unilaterally terminates the contract irrespective of the fact whether the employer has fulfilled all his obligations is now entitled to a new work permit only if completed a minimum of six months of employment. The same rule is applicable wherein the employee is terminated due to a default in payment.
In case the employer terminates the contract without any specific reason of non-compliance provided that the employee has completed the minimum of six months’ probation, then in this case the employee will be easily able to attain another work permit.
Another scenario wherein an employee may also be granted a permit is if the Ministry of Labour confirms that the employing company has been inactive and has thereby failed to generate any work for more than sixty days resulting in a company shut down.
In case an employee has filed a Labour case against the employer and thereby receives a judgement in his favor as a result of termination and failure to fulfill the financial obligations due towards the end of service.
The Decrees have been introduced with the aim to be compliant with the International Labour Organization and this indeed is a giant leap forward.
The introduction of the decrees is a stepping stone in the regulation and legislation of Labour in UAE.
With this introduction, the laws will be binding on both the parties. Interests are protected right from the beginning prior to entering the country up until the termination. This is a major development in the interests of the employment field altogether in UAE.
If you require future assistance on the matter, please do not hesitate to contact us at United Advocates.