UAE Labor Law Update 2024: HR Needs to Pay Attention to This Part
With the year 2024 just around the corner, the UAE's labor laws have undergone a series of major updates that have a direct impact on all businesses and employees.
As a human resources (HR) professional, understanding these new regulations and adapting strategies accordingly is essential to ensure that your company complies with the law, protects employees, and maintains good employment relationships. Here are the key changes to the UAE labor law in 2024:
1. Emiratization (Localization Policy).
In the 2024 UAE labor law update, emiratization (localization policy) is a key area of reform aimed at increasing the employment rate of UAE nationals in the private sector. Here are the details of this policy:
1. Scope of application: The emiratization policy only applies to private sector companies registered with the Ministry of Human Resources and Emiratisation (MOHRE), while entities located in the UAE Free Zone do not apply to this policy for the time being.
2. Employee ratio requirements: Under this policy, companies in the private sector must ensure that at least 2% of their employees are UAE nationals. This proportion will increase by 2% per year from 2024 until it reaches 10%. For example, if a company has 100 employees, it needs to have at least 2 UAE nationals, and this number will increase year on year.
3. Implementation and monitoring of the policy: The Ministry of Human Resources and emiratisation will be responsible for overseeing the implementation of this policy and ensuring that private sector companies comply with the prescribed national employment ratio. Companies that violate this policy may face legal consequences or fines.
4. Long-term objectives: The aim of this policy is to promote the employment of UAE nationals in the private sector, thereby reducing dependence on foreign labor and increasing the employment rate of UAE citizens.
5. Impact on HR: This policy requires HR professionals to make adjustments in recruitment and human resource management to meet the new national employment ratio requirements. This may include developing specific recruitment strategies to attract and retain UAE national employees.
The emiratization policy reflects the UAE's determination to increase the proportion of its citizens in private sector employment and is likely to have a significant impact on the HR strategies of businesses operating in the UAE.
2. The introduction of the unemployment insurance scheme
In the 2024 update of the UAE labor law, the introduction of the unemployment insurance scheme is an important new measure aimed at providing more economic security for employees in the private sector. Here are the details and implications of the unemployment insurance program:
1. Implementation time: The unemployment insurance scheme will take effect from June 30, 2024 and will apply to employees in the private sector. This program is designed to provide financial support to employees during periods of unemployment.
2. Insurance premiums: According to the monthly income of employees, the unemployment insurance plan stipulates different insurance premiums. Employees earning less than AED 16,000 per month are required to pay AED 5 per month, while employees earning more than AED 16,000 are required to pay AED 10.
3. Scope of application: Although this program is applicable to most private sector employees, employees of companies in free zones are not currently covered by this program. However, this may change in the future.
4. The purpose of the insurance program: The purpose of the unemployment insurance program is to provide a certain degree of financial support and protection to those employees who have lost their jobs, reducing their financial pressure during the period of finding a new job.
5. Impact on HR: HR departments need to ensure that all eligible employees are enrolled in the unemployment insurance plan and that the relevant insurance premiums are properly handled in the employee compensation management system. At the same time, HR may need to educate and explain this new policy to employees to ensure that employees understand their rights and obligations.
The introduction of the unemployment insurance scheme is an important step taken by the UAE** to strengthen the resilience of the labour market and protect the rights and interests of employees. Not only does this provide an additional safety net for employees, but it can also impact a company's HR and financial management strategies.
3. Provisions for contracts with a limited duration
The provision for limited-term contracts in the UAE labor law in 2024 is a significant change that has a profound impact on the employment relationship between employers and employees. The following are the details of the limited-term contract provisions and their implications:
1. Change in the type of contract: The new labor law stipulates that the concept of indefinite contracts has been abolished, and all employment contracts must be fixed-term contracts. This means that the employment relationship between the employer and the employee will have a definite end date.
2. Contract duration: According to the new regulations, the duration of a limited-term contract is usually consistent with the validity period of the foreign employee's residence visa in the UAE, which is generally 2 to 3 years. This requires the employer to specify the start and end dates of the contract when signing the contract.
3. Contract renewal: If both the employer and the employee wish to continue the employment relationship, they must agree to renew the contract. If an employee does not wish to continue the employment relationship, they must submit a non-renewal notice to the employer.
4. Contract content: A limited-term contract must clearly contain a series of details, such as the start and end dates of the contract, the type of work, the place of work, the salary and the duration of the contract.
5. Impact on HR: This change requires HR professionals to make adjustments in the preparation and management of employee contracts. Especially in the renewal and termination of contracts, HR needs to ensure that all procedures comply with the requirements of the new regulations and that all relevant information is clearly and accurately communicated to employees.
6. Legality and compliance: Ensuring the legitimacy and compliance of the contract is essential to avoid legal disputes. HR departments need to pay close attention to the legal requirements of the contract to ensure that the content of the contract is fully compliant with the new labor law provisions.
With these provisions, UAE labor law aims to increase transparency and excellence in the employment relationship, while ensuring that foreign employees' contracts are consistent with the validity of their residency visas. These changes require HR professionals to take proactive steps to adapt to the new labor law framework.
Fourth, the adjustment of the working mode
In the 2024 UAE labor law update, the adjustment part of the work model is an important content, aiming to provide more flexibility and adaptability for different types of work. Here are the details and impact of this part of the update:
1. Types of work modes: The new labor law provides for a variety of work modes, including full-time, part-time, temporary work, and flexible work. Such a classification allows employers and employees to choose the most suitable way of working based on job needs and personal circumstances.
2. Full-time work: Full-time work means that employees are required to work for their employer during all working hours on a working day. This is the most traditional mode of work and usually includes fixed working hours and full employee benefits.
3. Part-time work: Part-time work allows employees to work for one or more employers, but there are restrictions on the number of hours or days they can work. This work model offers greater time flexibility and is suitable for employees who need to balance work and other life responsibilities.
4. Temporary work: Temporary work is a work mode that is terminated within a specific period of time or after completing a specific task. This mode of work is suitable for seasonal or project work, where the contract is terminated once the task is completed.
5. Flexible work: The flexible working model allows working hours and days to be adjusted according to the workload and the operational needs of the employer. This model provides greater adaptability for both employers and employees, especially when it comes to responding to changing job demands.
6. Impact on HR: These adjustments to work models require HR professionals to make corresponding adjustments in recruitment, contract management, and employee benefits strategies. HR needs to ensure that all employment contracts and policies are in line with the new work model and that the characteristics and conditions of the various work models are clearly communicated to employees.
These changes reflect the need for diversity and flexibility in the UAE labour market, while also requiring employers and HR professionals to pay more attention to the individual needs and work-life balance of their employees.
5. Provisions on the notice period for dismissal
In the 2024 UAE Labor Law Update, the provision for the notice period for dismissal is a key change that has a direct impact on the dismissal process for both employers and employees. The following are the details of the dismissal notice period provisions and the related implications:
1. Notice period requirements: The new law stipulates that either the employer or the employee must comply with the notice period specified in the contract before terminating the employment contract. This requires the employer to provide written notice before terminating the employee and to comply with the notice period agreed in the contract.
2. The minimum and maximum period of notice period: According to the new regulations, the minimum period of notice period for dismissal is 30 days, and the maximum period shall not exceed 90 days. This means that employers must give employees at least 30 days' notice regardless of the reason for dismissal, but this period cannot exceed 90 days.
3. Consequences of failure to comply with the notice period: If either party fails to comply with the prescribed notice period, that party must pay a salary equivalent to the notice period or the remainder thereof as compensation. This provision ensures that employees have enough time to look for a new job when they are dismissed, while also protecting the interests of the employer.
4. Impact on HR: HR departments need to ensure that all employment contracts clearly stipulate the terms of the dismissal notice period and strictly follow these provisions when implementing termination. In addition, HR needs to provide appropriate support and counsel during the termination process to ensure compliance with the law and minimize the negative impact of the termination on the organization and employees.
5. Management of the dismissal process: Transparency and fairness in the management of the dismissal process are essential to maintaining a good working environment. HR needs to ensure that the dismissal process is fair and reasonable, in accordance with the law, and that the rights of the employee and the reputation of the company are taken into account.
These provisions on notice periods for dismissal reflect the UAE**'s efforts to balance the rights and interests of employers and employees, while also increasing the transparency and fairness of the dismissal process.
6. Changes in the handling of labor disputes
Changes in the settlement of labor disputes are an important aspect in the 2024 UAE Labor Law Update, aimed at modernizing and improving the efficiency and fairness of labor dispute resolution. Here's a breakdown of the changes and their implications:
1. Enhanced decision-making power: The updated labor law gives the Ministry of Human Resources and Emiratisation (MOHRE) greater decision-making power, especially in dealing with petty labor disputes. If the dispute involves a claim amount not exceeding AED 50,000, Mohre can make a final decision.
2. Fast and effective decision-making: Mohre's decisions now have the force of an executive order, providing a stronger legal basis to enforce those decisions. The dissatisfied party still reserves the right to appeal to the relevant court within 15 working days, guaranteeing a transparent and accountable process.
3. Referral of the dispute to the court: If it is difficult to reach a settlement within the specified time, or if the dispute is beyond the jurisdiction of Mohre, the department may refer the dispute to the relevant court. This includes providing a memorandum summarizing the dispute, the arguments of both parties, and Mohre's recommendations to facilitate a comprehensive understanding of the case.
4. Disputes during the payment of wages: If the dispute results in a suspension of wages, Mohre has the right to direct the employer to continue paying the wages of the worker for up to two months. This provision is intended to guarantee the financial stability of workers in the dispute resolution process.
5. Impact on HR: HR departments need to be aware of these new regulations and work closely with Mohre in possible labor disputes to ensure that the new procedures are followed. HR also needs to ensure that employees are aware of their rights and available resources during the dispute resolution process.