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New UAE labour rules in the UAE

Guiding Principle

The UAE-Ministry of Labour has issued a new set of rules through three new Decrees, which aim to regulate relations between employers and workers, and which should become effective January 1, 2016. These decrees are a big development in the Labour Law and deemed to clarify important issues of the Labour Law.

The UAE intends to enforce a new Labour Law at the start of 2016 to better regulate the relationship between employers and workers and curb violations of either parties’ rights. From January 1, 2016, the UAE will implement sweeping reforms to the existing Labour Law, plugging loopholes that will now make employees even more content and secure in their workplace. These rules will take the labour market to a new stage based on a strong and balanced relationship between all parties and on agreement and transparency in contracting to guarantee the rights of all parties

The new law includes three main rules governing labour contracts for workers from abroad, terminating contracts between the employers and workers and the issuance of a new work permit to a resident worker, as follows:

  1. Ministerial Decree 764: Standard Work Contracts
  2. Ministerial Decree 765: Termination of Limited Contract and Unlimited Contract
  3. Ministerial Decree 766: Granting of New Work Permits 

Ministerial Decrees 764, 765 and 766 pave the way for improved labour relations by securing more stable practices governed by regulations that protect workers who are legally sponsored to enter the UAE, the Ministry said.

  I. Standard work contract

The first rule in the new law requires the employer to issue a “clear and detailed” contract for the foreign workers employed from abroad, including all duties and rights for the two parties, the job terms and other requirements in a language understood by the worker.

The Ministerial Decree 764 of 2015 that governs the ministry-approved standard employment contracts states that a worker must be presented with an employment offer that conforms with the unified contract. Then the worker must sign the contract before it is submitted to the labour ministry for the issuance of a work permit, which must not be altered at any stage.

All contract renewals in force beforehand must use the new unified contract. The terms of the new contract, in addition to the employment offer, cannot be altered or substituted unless approved by the Ministry.

II. Terminating work contract

The second rule governs contract termination i.e.  the Ministerial Decree 765 of 2015 includes a series of articles outlining conditions when a contract can be terminated for term and non-term contracts.

  1. Under term contracts of no more than two years, an employee contract may be terminated
  • if the term of the contract expires,
  • if an employer and employee mutually agree to end the contract,
  • if either party acts unilaterally to terminate the contract or renewal, but complies with legal consequences of early termination including notification in writing at least one month in advance and no longer than three months.

A contract can also be terminated if a worker commits violations prohibited under Article 120 of the Federal Labour Law.

  1. Non-term contracts can be terminated
  • if both parties consent to termination,
  • if one party gives notice of termination at least one month in advance and not exceeding three months or
  • if one party unilaterally acts to terminate but bears consequences of early termination.

  III. Granting a new work permit

The new rules also cover new job contracts to workers whose contracts have expired or terminated by an agreement between the employer and the worker provided the worker has completed at last six months with his employer.

Under Article 1 of Ministerial Decree 766 of 2015, rules and conditions for granting a permit to a worker for employment by a new employer must meet a set of new rules. For both term and non-term contracts, a new permit may be granted upon termination of the workers employment when the term of the contract has expired. A new permit can be granted when both worker and employer mutually consent to terminating the contract during the term

  • if the worker has completed at least six months employment or
  • if workers qualify for a skill set series classified by the ministry.

The 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.

Meanwhile, 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.

October, 2015 Tarek Jairwdeh
Meyer-Reumann & Partners, Dubai Office
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