A number of changes were introduced across the Gulf Cooperation Council states during the course of 2022 (several of which have now been implemented, while some are due to take effect later in 2023). In this article, the first of a short series covering those changes, we provide a brief summary of the key employment developments that are expected to affect employers in the UAE.
Discrimination / Bullying and Harassment
On 2 February 2022, Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (the UAE Labour Law) came into force in the UAE. This prohibits discrimination on the basis of race, colour, sex, religion, national origin, social origin or disability that would impair equal opportunities for an employee or prejudice an employee from gaining and/or continuing employment. In a significant change, the UAE Labour Law also now prohibits sexual harassment and/or any verbal, physical or psychological form of bullying against an employee, by the employer or the employee’s supervisor/colleagues. Employers may be found liable for fines for both one-off and multiple acts for breaches of the law, starting from AED5,000 to AED1 million. It is therefore very important to ensure that all employees and management are aware of the changes. In particular, this may be a good time to review policies and provide training on equality, diversity and dignity within the workplace.
Fixed Term Contracts
- The UAE Labour Law set an original deadline of February 1 for private sector businesses registered outside the DIFC and ADGM to convert all unlimited-term employment contracts to fixed-term contracts. The Ministry of Human Resources and Emiratization (the MoHRE) has now issued Ministerial Resolution No. 27 of 2023, which provides for an extension until December 31 this year. The extension of the deadline is welcomed as affording additional time for employers to ensure their employees’ contracts are compliant with the UAE Labour Law.
- While the MoHRE’s announcement allows employers an extra breathing space, companies should be mindful of the potential exposure to fines or penalties if these changes are still not effected by December 31. Employers that have not yet taken the requisite action should work towards reviewing and revising their existing contracts and engaging with affected employees in good time ahead of the extended deadline since it is very unlikely to be extended again. It may also be prudent for employers to align the issuance of new fixed term contracts with any of their employees’ forthcoming visa renewal dates this year.
Enhanced Protection Against Work Injuries and Occupational Diseases
- As of January 3 this year, employers with 50 or more employees must implement a system that monitors work injuries and occupational diseases and must also establish preventative tools and periodic health examinations for their employees. In addition to this, the UAE Labour Law clearly sets out that employees shall be compensated for work-related injuries and permanent disabilities, and confirms that their families are entitled to compensation if the work-related injury results in the death of the employee
Unemployment Insurance Scheme
- First announced in October 2022, the UAE unemployment insurance scheme is designed to provide financial support to employees who lose their job.
- Enrolment into the scheme is mandatory for all onshore employed employees in the federal government and private sector with the exception of investors, domestic helpers, part-time employees, retirees who have a retirement pension and those under the age of 18.
- Compensation shall be paid for a maximum of three months from the date of the employee’s job loss at 60 per cent of their previous basic salary with a maximum payment entitlement of AED20,000 (US$5,445/£4,500) per month.
- Monthly employees with a basic salary of AED16,000 or less will have a monthly insurance cost of AED5. Those whose salary exceeds AED16,000 will have a monthly insurance cost of AED10.
- Employees are eligible for the unemployment payment if they have worked and subscribed for at least 12 months to the insurance scheme and provided that their employment was not terminated for disciplinary reasons or because they resigned. Employees who work on a commission basis may also subscribe to the scheme. Insured employees are not eligible for the payment if they left the country or immediately started a new job.
- Employees who have a labour card issued before January 1 2023 have until June 30 to subscribe; otherwise they will be subject to a AED400 fine
- Employees who have a labour card issued after January 1 2023 have four months from the date of the labour card, following which they would be subject to the same penalty
- While employers are not required to register their employees in an insurance scheme and not required to pay any contributions to a scheme, from an employee relations perspective, employers are advised to remind their employees of their obligation to register.