With the arrival of 2024, the labor laws in the United Arab Emirates (UAE) have undergone significant updates, impacting all businesses and employees directly. As professionals in the field of Human Resources (HR), understanding these new regulations and implementing corresponding strategic adjustments is crucial to ensure compliance with the law, safeguard employee rights, and maintain positive employment relationships. Below are the key changes in the 2024 UAE labor law:
1.Emiratization Policy:
In the 2024 updates to the UAE labor law, Emiratization, a policy focusing on increasing the employment rate of UAE nationals in the private sector, is a focal area of reform. Here are the details of this policy:
Scope: The Emiratization policy applies only to private sector companies registered with the Ministry of Human Resources and Emiratisation (MOHRE) and does not currently apply to entities within UAE free zones.
Employee Ratio Requirement: Under this policy, private sector companies must ensure that at least 2% of their employees are UAE nationals. This ratio increases by 2% annually starting from 2024 until reaching 10%. For example, if a company has 100 employees, it must have at least 2 UAE national employees, with this number increasing annually.
Implementation and Regulation: The MOHRE is responsible for overseeing the implementation of this policy and ensuring private sector companies comply with the mandated national employment ratios. Companies violating this policy may face legal consequences or fines.
Long-Term Goals: The aim of this policy is to promote the employment of UAE nationals in the private sector, reducing reliance on foreign labor and increasing the employment rate among citizens.
Impact on HR: This policy requires HR professionals to adjust recruitment and HR management practices to meet the new national employment ratio requirements. This may involve developing specific recruitment strategies to attract and retain UAE national employees.
Emiratization reflects the UAE government’s determination to increase the employment rate of its citizens in the private sector and may have significant implications for HR strategies of businesses operating in the UAE.
2.Introduction of Unemployment Insurance Plan:
In the 2024 updates to the UAE labor law, the introduction of an unemployment insurance plan is a significant new measure aimed at providing more economic security for employees in the private sector. Here are the details and impacts of the unemployment insurance plan:
Implementation Time: The unemployment insurance plan comes into effect from June 30, 2024, and applies to employees in the private sector. The plan aims to provide financial support to employees during periods of unemployment.
Insurance Costs: Depending on the employee’s monthly income, the unemployment insurance plan specifies different insurance premiums. Employees with a monthly income below 16,000 dirhams must pay a monthly premium of 5 dirhams, while those with an income above 16,000 dirhams must pay 10 dirhams.
Scope: While this plan applies to most private sector employees, those employed within free zones are currently not covered. However, this may change in the future.
Purpose of the Plan: The purpose of the unemployment insurance plan is to provide some level of financial support and protection for employees who lose their jobs, alleviating financial pressure while they search for new employment.
Impact on HR: HR departments need to ensure all eligible employees are enrolled in the unemployment insurance plan and that relevant insurance premiums are correctly handled in the employee compensation management system. Additionally, HR may need to communicate and explain this new policy to employees to ensure they understand their rights and obligations.
The introduction of the unemployment insurance plan is an important measure taken by the UAE government to enhance the resilience of the labor market and protect employee rights. It not only provides an additional safety net for employees but also may impact the HR and financial management strategies of companies.
3.Provision for Fixed-Term Contracts:
The provision for fixed-term contracts in the 2024 UAE labor law is a significant change with profound implications for the employer-employee relationship. Here are the details and impacts of fixed-term contracts:
Change in Contract Types: The new labor law provision abolishes the concept of indefinite contracts, mandating that all employment contracts be fixed-term. This means there will be a clear end date to the employment relationship between employers and employees.
Contract Duration: According to the new regulations, the duration of fixed-term contracts typically aligns with the validity period of the residence visa for expatriate employees in the UAE, usually ranging from 2 to 3 years. This requires employers to specify the start and end dates of contracts when signing them.
Contract Renewal: If both the employer and employee wish to continue the employment relationship, they must agree to renew the contract. If an employee does not wish to continue, they must provide the employer with non-renewal notice.
Contract Contents: Fixed-term contracts must clearly include details such as the start and end dates of the contract, job type, location, compensation, and contract duration.
Impact on HR: This change requires HR professionals to adjust in preparing and managing employee contracts. Particularly in the renewal and termination of contracts, HR needs to ensure all procedures comply with the requirements of the new law and that all relevant information is communicated clearly and accurately to employees.
Legality and Compliance: Ensuring the legality and compliance of contracts is crucial to avoid legal disputes. HR departments need to closely adhere to the legal requirements of contracts, ensuring contract contents fully comply with the new labor law regulations.
Through these provisions, the UAE labor law aims to increase transparency and predictability in employment relationships while ensuring that expatriate employee contracts align with the validity period of their residence visas. These changes require HR professionals to take proactive measures to adapt to the new labor law framework.
4.Adjustments to Work Modes:
In the 2024 updates to the UAE labor law, adjustments to work modes are a significant aspect aimed at providing more flexibility and adaptability for different types of work. Here are the details of these updates and their impacts:
Types of Work Modes: The new labor law specifies various work modes, including full-time, part-time, temporary, and flexible work. Such categorization allows employers and employees to choose the most suitable work mode based on job requirements and personal circumstances.
Full-Time Work: Full-time work entails employees working for the employer during all working hours of the workdays. This is the most traditional work mode, typically involving fixed working hours and full employee benefits.
Part-Time Work: Part-time work allows employees to work for one or more employers with limitations on working hours or days. This work mode provides greater flexibility in terms of time and is suitable for employees needing to balance work with other life responsibilities.
Temporary Work: Temporary work involves employment for a specific period or task, terminating once the task is completed. This mode is suitable for seasonal or project-based work, ending the contract upon task completion.
Flexible Work: Flexible work mode allows for adjustments in working hours and days based on workload and employer operational needs. This mode offers greater adaptability for both employers and employees, especially in addressing evolving work demands.
Impact on HR: These adjustments in work modes require HR professionals to make corresponding adjustments in recruitment, contract management, and employee benefits strategies. HR needs to ensure all employment contracts and policies align with the new work modes and clearly communicate the characteristics and conditions of various work modes to employees.
These changes reflect the UAE labor market’s demand for diversity and flexibility while also requiring employers and HR professionals to pay closer attention to employees’ individual needs and work-life balance.
5.Provision for Notice Periods for Termination:
In the 2024 updates to the UAE labor law, the provision for notice periods for termination is a key change directly impacting the termination process for employers and employees. Here are the details of the notice period provisions and their impacts:
Notice Period Requirement: The new law mandates that both employers and employees must adhere to the notice period specified in the employment contract before terminating the contract. This requires employers to provide written notice before terminating employees and abide by the contractually agreed notice period.
Minimum and Maximum Notice Periods: According to the new regulations, the minimum notice period for termination is 30 days, and the maximum period cannot exceed 90 days. This means employers must provide at least 30 days’ notice to employees before termination, but this period cannot exceed 90 days regardless of the reason for termination.
Consequences of Non-Compliance with Notice Periods: If either party fails to comply with the specified notice period, they must pay compensation equivalent to the notice period or its remaining portion. This provision ensures that employees have sufficient time to find new employment when terminated while also protecting the interests of employers.
Impact on HR: HR departments need to ensure all employment contracts clearly specify the notice period for termination and strictly adhere to these provisions when implementing terminations. Additionally, HR needs to provide appropriate support and guidance during the termination process to ensure compliance with legal requirements and minimize negative impacts on both the organization and employees.
Management of Termination Process: Ensuring transparency and fairness in managing the termination process is essential for maintaining a positive work environment. HR needs to ensure the termination process is fair, complies with legal requirements, and considers the rights of employees and the reputation of the company.
These provisions regarding notice periods for termination reflect the UAE government’s efforts to balance the rights of employers and employees while enhancing transparency and fairness in the termination process.
6.Changes in Labor Dispute Resolution:
In the 2024 updates to the UAE labor law, changes in labor dispute resolution are an important aspect aimed at modernizing and improving the efficiency and fairness of resolving labor disputes. Here are the details of these changes and their impacts:
Enhanced Decision-Making Authority: The updated labor law grants greater decision-making authority to the Ministry of Human Resources and Emiratisation (MOHRE), particularly in handling small-value labor disputes. If a dispute involves a claim amount not exceeding 50,000 dirhams, the MOHRE can make the final decision.
Quick and Effective Decision-Making: MOHRE decisions now have the force of execution, providing stronger legal grounds for enforcing these decisions. Dissatisfied parties still retain the right to appeal to the relevant courts within 15 working days, ensuring a transparent and accountable process.
Referral of Disputes to Courts: If a resolution cannot be reached within the designated timeframe or if the dispute exceeds the MOHRE’s jurisdiction, the department may refer the dispute to the relevant courts. This includes providing memoranda summarizing the dispute, arguments from both parties, and MOHRE recommendations to facilitate a comprehensive understanding of the case.
Disputes Regarding Wage Payments: If a dispute results in the suspension of wage payments, the MOHRE has the authority to instruct the employer to continue paying the worker’s wages for up to two months. This provision aims to ensure financial stability for workers during the dispute resolution process.
Impact on HR: HR departments need to understand these new regulations and closely collaborate with the MOHRE in possible labor disputes to ensure adherence to new procedures. HR also needs to ensure employees are aware of their rights and available resources during dispute resolution processes.
The 2024 updates to the UAE labor law mark a significant shift in the labor market and employment environment. As HR professionals, we must maintain flexibility and adaptability to ensure our organizations can smoothly adjust to these new legal frameworks. This involves not only compliance with the law but also maintaining a fair, transparent, and competitive work environment to support the continued growth of our employees and businesses. Let us work together to embrace the new opportunities brought about by these changes and thrive in this ever-progressing labor law environment.
