The New UAE Labour Law Shifts National Employment Framework

March 29, 2024 thehrobserver-hrobserver-labourcourt

The United Arab Emirates (UAE) has recently undertaken reforms in its employment legislation, signifying a pivotal shift in the employment framework that governs our labour market.

These reforms embody the country’s commitment to fostering an advanced, equitable labour environment, aligning with global best practices and reinforcing our position as a beacon for talent and enterprise.

The UAE has made it a point to ensure that their laws maintain a level of fairness and clarity for a population that is ever growing. The impact of these reforms and amendments has been a positive one overall making the country attractive to foreign talent.

Revolutionising employment dispute resolution

Commencing January 1, 2024, revisions to UAE Labour Law usher in an expedited process for resolution of individual labour disputes for claims not exceeding AED 50,000. This reform mandates that the Ministry of Human Resources and Emiratisation (MOHRE) adjudicate such disputes, with its decisions holding the same weight as judgments issued by the Court of First Instance. 

This streamlined mechanism, primarily aimed at onshore companies and their employees, introduces a swift and efficient avenue for dispute resolution. An appeal against MOHRE’s decisions is permissible within a fifteen-day period, enhancing procedural fairness while maintaining efficiency.

Unemployment insurance scheme: a safety net for employees

The UAE has demonstrated its approach to employee welfare with the initiation of an unemployment insurance scheme. 

This scheme ensures employees receive up to 60% of their last salary for a duration of three months in the event of job loss, providing a cushion that brings both financial security and peace of mind.

This initiative is a testament to the UAE’s commitment to nurturing a supportive and resilient labour market.

Innovative end-of-service gratuity scheme

The introduction of this novel voluntary scheme marks a progressive step away from the traditional end-of-service gratuity framework, offering employees a safeguard against economic volatilities and the potential financial instability of employers. 

The scheme permits private sector employers, with the exception of those working in DIFC and ADGM free zones, to opt for monthly contributions towards their employees’ end-of-service benefits via licensed investment funds.

This approach enhances the predictability of gratuity payments and is designed to embed a stronger culture of saving and financial planning within the workforce.

Strides towards equality: anti-discrimination legislation

A landmark in the UAE employment legislation is the introduction of laws criminalising discrimination, hatred and extremism.

This legislation enforces a stringent zero-tolerance stance against any form of disrespectful actions or speech targeting religions, race, gender or ethnic origin, applicable across the entire UAE, including free zones. 

Such measures are pivotal in ensuring a respectful, inclusive work environment, underscoring the UAE’s dedication to upholding the highest standards of equality and respect.

This raft of forward-looking enhancements of employment laws are a clear reflection of our nation’s resolve to advance its labour standards, ensuring a more secure, adaptable, and inclusive professional landscape. 

These legislative milestones not only reinforce the UAE’s appeal as a premier destination for global talent and investment but also underscore our commitment to the well-being and development of our workforce.

It is imperative for both employers and employees to familiarise themselves with these changes, to fully embrace the opportunities and adhere to the new regulatory standards set forth.

Ahmad Al Khalil

Partner, Crimson Legal

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