The UAE is well-known for its advanced approach to everything, including its labor laws. The government’s ability to stay ahead of the curve and meet the changing demands of the employees as well as the employers makes it one of the top destinations for building a global career.
This year, the UAE has made significant amendments to its UAE Labor Laws intending to modernize and enhance various aspects of employment for both parties involved. What are these changes? Here’s a breakdown of all the fundamental changes for you and what they mean.
UAE Labor Laws
The UAE Labor Law, or Federal Law 8 of 1980, governs employment relationships and all surrounding aspects to ensure fair practices. The changes in the labor law create a balanced and fair working environment. Additionally, it encourages employers to adopt a competitive and flexible labor market which supports economic growth as well as protects an employee’s rights.
Here are some of the critical changes that have come through:
1. Salary During Employment Disputes
According to this change, the employer may have to continue giving their employees salary for up to 2 months while any employment disputes are being resolved. Moreover, if the dispute isn’t settled within 14 days, The Ministry of Human Resources and Emiratisation (MOHRE) has the power to refer the dispute to a competent court.
The idea is to provide financial stability to the employees during lengthy disputes and give them more power.
2. Flexible Working Arrangements
Previously, only full-time working employment was allowed in the UAE. Part-time working arrangements were introduced in 2019. However, it is now that employers can hire employees for temporary, flexible, remote working, and job-sharing roles. Moreover, they have the option of compressed workweek options.
Additionally, some of the key requirements of remote work provisions include:
- Mandatory written agreement
- Specific working hours
- Data security protocols
- Guidelines on performance monitoring
3. Revised Claim Value for Disputes
If the labor dispute claim value is under Dh 50,000, then The Ministry of Human Resources and Emiratisation (MOHRE) has the power to make binding decisions. If it exceeds the said amount, the MOHRE will continue acting as a mediator and may refer it to a competent court. This is done to streamline the disputes based on monetary values.
4. MOHRE Decisions Are ‘Writ of Execution’
With this amendment, the decisions of The Ministry of Human Resources and Emiratisation (MOHRE) become legally enforceable, strengthening the body’s authority.
5. Extended Time for Labor Claims
As per earlier labor laws, the employees had 1 year from the date of termination of the employment relationship to file a labor claim. Post amendments, employees now have a 2-year time frame from their date of termination to file any labor claims against their previous employer.
6. Increased Penalty for Violations by Employers
Besides having to pay wages for up to 2 months during a dispute, the amendments to the labor laws have increased the penalty for employer violations. These penalties can be anywhere ranging from AED 100,000 and AED 1 million, depending on the severity of the violation.
7. Extended Maternity Leaves
Earlier, female employees were only granted 45 days of maternity leave. With the amendments coming in, female employees will now enjoy 60 days of maternity leave
8. Increase in Emiratization
Emiratization is a program by the UAE government to increase the participation of UAE nationals in the private sector. As per the rules, if a private company has 50 or less than 50 employees, they need to have 1 Emirati. Similarly, if they have 51-100 employees, they need to have 2 Emiratis.
In 2025, this will increase to hiring 2 Emiratis for private companies with 20-49 employees. If they haven’t employed 2 Emiratis by 2025, the companies will have to pay a financial contribution of AED 108,000 to the government.
9. Non-Compete Restrictions
The latest amendments include specific rules for employee non-compete. The non-compete clauses must be necessary and limited in scope and duration. The new law states that the non-compete can exceed a duration of 2 years. Moreover, employees need to be compensated for agreeing to the non-compete clauses, which must be paid during the period the clauses are in effect.
Moreover, the employee can challenge the non-compete clauses if they are too restrictive or unreasonable. In such a situation, the labor court can review and invalidate the clause if deemed necessary.
How Can Employers Adhere to New Labor Laws?
Step 1 is ensuring that you adhere to new labor laws in 2025 and meet international standards to learn about their nitty-gritty in detail. Once you are equipped with all the knowledge, step 2 would be to review your existing employee contracts and make necessary changes to them to reflect the latest practices.
Consider including clauses for flexible working arrangements, salary continuation, and other aspects. As an employer, you need to develop clear policies addressing important topics such as harassment prevention, discrimination, as well as non-compete. Finally, informing your employees about the significant changes will help you stay compliant.
Conclusion
The new labor law focuses on further fine-tuning the work environment in the UAE, giving employees more power and helping employers retain top talent. It is aimed at creating a positive and fair work environment, which is globally appreciated and enhances a company’s reputation in the market.
If you need assistance in your HR operations or help with navigating the employee agreements, you can contact HRSG. Our cloud-based HRMS platform (Octofy) offers a comprehensive suite of services to streamline and enhance business operations. From AI-powered HR and payroll solutions to tailored talent consulting and rewards strategies, Octofy optimizes workforce and financial management.
