United Arab Emirates Payroll Outsourcing Alert

United Arab Emirates – New Labor Law Announced.

A new labour law will, Federal Decree-Law No 33 of 2021 on the Regulation of Labour Relations, will be replacing Federal Law No. (8) of 1980, effective from 1 February 2022.

New Employment Contracts

With the new law brought into effect from 2 February 2022, new employment contracts will need to be drafted by companies in the private sector. Accordingly, the private sector is required to replace all current employment contracts with MOHRE with new employment contracts being updated with law No. 33 of 2021 by 2 February 2023.

Unlimited Term Contracts Abolished

All unlimited term employment contracts must be replaced with fixed-term contracts which must be renewed with the mutual consent of the parties for a similar span of time or less.

Terminations During Probation Require Notice

As per the new law, all terminations during probation periods require 14-day advance notice.

Equal Pay

Article 4 of the new law, states that women have the right to equal treatment which also includes being paid the same as their male counterparts. This is also done regarding women performing the same work of equal value to that of which the male employees are performing to promote fairness and equality.

Non-Compete Restrictions

When signing an employment agreement that contains a non-compete clause, the term and conditions of the non-compete restrictions are enforced, as follows:

• The employee is not allowed to be employed by a direct competitor of the employer for 2 years after their end of employment.
• The employee also must make sure the location of the competing firm is at a distance from his previous employer and should not be close to the vicinity of his previous place of work

Working hours

• The maximum ordinary working hours shall be eight working hours a day or 48 working hours a week.
• The periods spent by the worker from the place of residence to the workplace shall not be calculated within the working hours, except for certain categories of workers according to the controls set by the Executive Regulations of the new labor law.
• The Executive Regulations shall determine the working hours of Ramadan.
• If the employee is not a full-time employee, the original employer, under the provisions of this Decree-Law may not require the worker to work for them more than the hours agreed upon in the employment contract without a written consent of the employee.
• With the consent of the employer, the worker can work remotely inside or outside the UAE for a selected number of working hours.

The worker should not work more than five hours straight without a single break. The break shall not be made in less than an hour and should not be calculated as part of the working hours. In addition, the employee breaks can be regulated by shifts regarding the nature of certain establishments as per the manpower classification specified in the Executive Regulations of this Decree-Law.

Mercans’ UAE Payroll Outsourcing Solutions

While Mercans’ UAE Payroll Outsourcing alerts will allow you to stay on top the latest development in UAE’s payroll regulations, you should still get in touch with Mercans’ UAE payroll outsourcing, compliance, PEO/GEO and BPO specialists for a free consultation on setting up fully compliant payroll and HR functions. Better yet, outsource your payroll and HR activities in UAE to Mercans and our UAE payroll outsourcing experts will ensure that your employees will always be paid on time and in accordance with the UAE regulations.

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