New UAE Labor Rules Take Effect on New Year’s Day

Among highlights are regulations meant to stop contract substitution and address issues on employment bans

Dubai: In an apparent move to address concerns surrounding the current labor situation in the United Arab Emirates, the Ministry of Labour (MoL) has come up with sweeping reforms that will take effect on Jan. 1, 2016.

Among highlights are regulations stopping contract substitution and addressing issues on employment bans.

The new rules, recently unveiled by Labor Minister Saqr Ghobash, seeks to enhance the labor market by guaranteeing transparency and allowing workers more freedom to transfer to new employers as mandated under the latest decisions to the labour policy initiative in 2011 regarding labor mobility.

Specifically, Ministerial Decrees (MDs) 764, 765 and 766 secure more stable practices governed by regulations that protect workers who are legally sponsored to enter the UAE. The decrees will create a new unified, standard labor contract aimed at, among others, eliminating contract substitution.

“The new rules will also bring greater transparency, clarity and tighter monitoring of labour contract conditions and ensure both employer and employee enter into fully voluntary relationships,” MoL said in a statement.

Salient points of the new rules are:

  • A worker must be presented with an employment offer that conforms with the unified contract then signed by him or her as stipulated under MD 764 of 2015 on ministry-approved standard employment contracts.
  • All contract renewals in force beforehand must use the new unified contract, in addition to the employment offer, the terms of which cannot be altered or substituted unless approved by the ministry.
  • No clauses can be added to any contract unless compliant with and approved by the labour ministry.
  • MD 765 meantime stipulates that an employee contract, which covers not more than a two-year term can only be terminated if: 1) The term of the contract expires; 2)  The employer and employee mutually agree to end the contract; 3)  Either party acts unilaterally to terminate the contract but complies with legal consequences of early termination including notification in writing at least one month in advance and not longer than three months.
  • A two-year contract can also be terminated if a worker commits violations prohibited under Article 120 of the Federal Labour Law.
  • Non-term contracts can be terminated if: 1) Both parties consent to termination; 2) one party gives notice of termination at least one month in advance and not exceeding three months; 3)  if one party unilaterally acts to terminate but bears consequences of early termination.
  • The non-term contract can also be terminated if an employee violates labour law rules under Article 120.
  • Article 1 of MD 766 of 2015, which covers rules and conditions for granting a permit to a worker for employment by a new employer stipulates that a new permit can be granted when both worker and employer mutually consent to terminating the contract during the term, provided that the worker has completed at least six months employment or if workers qualify for a skill set series classified by the ministry.
  • The same decree also notes that a new permit can be issued for a worker whose employer terminated him or her without reason provided the worker has completed six months.
  • The six-month rule is waived if the worker has skill levels classified by the ministry as 1, 2, and 3 meaning those who hold a university degree, post secondary diploma or high school diploma, respectively.
  • Term contracts can be terminated with notice periods of between one and three months if the terminating party continues to honour contractual obligations for the term duration or if the terminating party indemnifies the other party in the amount not exceeding the equivalent of three month’s gross wages.
  • A worker may be granted a work permit for all term and non-term contracts if it is determined that the employer has failed to meet legal and contractual obligations, including but not limited to when the employer fails to pay the worker’s wages for more than 60 days.
  • A worker may also be granted a permit if the labour ministry confirms that the employing company has not provided work due to the firm being inactive for more than two months and if the worker reports to the ministry during the company shutdown.
  • Work permits may also be issued in cases in which a labour complaint is referred by the ministry to the labour court and final ruling in favour of the worker who is terminated early or is owed outstanding wages less than two months of dues for end of service.



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