United Arab Emirates (UAE) recently announced a major overhaul of the labor law for the first time for more than 40 years. This new UAE labor law will not officially come into effect until early next year in 2023.

Federal Decree-Law No 33 of 2021 on the Regulation of Employment Relationships (the New Law), which will be replacing Federal Law No. (8) of 1980, is due to take effect from 2 February 2022. It is a full year notice to every employer in the country to get their policies and practices aligned with the new changes.

I will give a brief overview of some of the changes below and you can read the full regulation on the official Ministry of Human Resources and Emiratization website here.

• No More Unlimited (Permanent) Contracts: What used to be called ‘permanent contracts’ will be 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.

• Discrimination, Bullying, and Harassment: The new law has introduced anti-discrimination clauses to fight against discrimination based on race, color, sex, religion, national origin, ethnic origin or disability, and provides employees with protection against inequality of treatment or opportunities in the workplace.

• End of Service Gratuity: Upon implementation of the new law, there will be no provision for end of service gratuity reductions in the event an employee resigns. In other words, any employee who opts-in for voluntary separation will be entitled to the full end of service gratuity payment, provided that they have completed at least one year of continuous service with their employer.

• Maternity Leave: The new maternity leave entitlement has been increased to 60 calendar days. The first 45 days is on full pay and the remaining 15 days will be paid on half pay.

• Probationary Period: The new changes state that the probationary period must not be more than six months in duration and that should either party (the employer or the employee) choose to separate during the period of probation, there is a requirement of at least 14-days’ notice period.

The new labor laws are as good as the extent to which they are enforced and managed ethically with integrity. If the rules do not apply equitably to everyone, they will lose their value and become part of a ‘good to have’ company policy as opposed to ‘must have’ policies.

SHUJA RABBANI – SHRM-SCP, SPHRI, EXECUTIVE COACH – JOHN MAXWELL TEAM

The list goes on to further details on multiple layers of the aforementioned points and other clauses that include, for example, non-compete clause.

While these new amendments to the law were much needed for a while and though I do not think they are generous enough in some areas, however, they are still better than the status quo. The changes have been officially announced and every employer is expected to comply by February 2023, next comes the governance and enforcement of these laws.

What Good Are These Laws If They Are Not Enforced?

Having read the official document regarding the new labor laws, the one thing that keeps playing in my head is how would these changes be actually implemented.

Take discrimination as an example: Having worked in one of the ‘best of the best’ companies in the region, it is not uncommon to go through an entire recruitment process for different roles only to find out in the end that the hiring manager is going to hire someone they had in mind from the get-go for whatever the reason (personal preferences, nepotism and connections, or other reasons unbeknownst to HR. If you are a highly competent and experienced candidate in such cases (which happen in many other companies and countries around the world too), how do you prove that you have been discriminated against?

It is almost impossible to prove discrimination in such cases because if the court was to order an audit trail, everything would have been conducted as ‘per the company process and policy’. The interview notes, the e-mails, the choice of the ‘best candidate’ – it is next to impossible to prove such cases.

While it is great to see the doors open for employees to lodge official complaints, we are bound to see cases that will come to courts only to be thrown out because ‘according to the company policy’, the plaintiff would have been through a due process.

Another example I would like to touch on is the end of permanent contracts. Take two people (Employee A and Employee B) who join a workplace at the same time and both come onboard on a 3-year contract. After the initial 3-year contract, they notice that one of them (Employee A) has been given a 1-year contract while the others’ contract (Employee B’s contract) continues to renew for an additional 3-years. Beyond reasons such as performance management, how will the company be able to provide justification for not giving Employee A an additional 3-year contract? If employers are unable to provide reasonable justification to employees for such cases, it is bound to increase uncertainty about their future in the business and decrease trust. This will have a net negative impact on employee engagement which will impact the bottom line of the business.

The new labor laws are as good as the extent to which they are enforced and managed ethically with integrity. If the rules do not apply equitably to everyone, they will lose their value and become part of a ‘good to have’ company policy as opposed to ‘must have’ policies. Hence, a strong framework of governance for enforcement of these new labor laws in the UAE are a priority well before the implementation date of February 2023.

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