New UAE labour law: Up to Dh1 million fine for violating terms

Question:

My question is about the new employment law that goes into effect from February 2. Are all the changes applied to our existing contracts? Also, what should employees do if the firm does not follow the provisions? What’s the penalty for firms that break these rules and how does the ministry enforce them?

Response:

The Federal Law No. 8 of 1980 Regulating Employment Relations in the UAE (the ‘Federal Law No. 8 of 1980’) will be repealed and the provisions of the Federal Decree Law No. 33 of 2021 on the Regulation of Labor Relations (the ‘New Employment law’) are applicable with effect from February 2, 2022, with regards to employment matters in the UAE.

It should be noted that the existing employment contracts which are governed by the provisions of Federal Law No. 8 of 1980 may be applicable even after the New Employment Law comes into effect. However, the employer may amend the contract to adjust to the new provisions. But the amendments may only have such provisions which are more advantageous to the employees.

This is in accordance with Article 65 (5) of the New Employment Law, which states:

"The Employer may not review the terms and conditions of valid Employment Contract concluded with the employee prior to the promulgation of this Decree-Law, with the intent to apply the provisions hereof, unless such amendments are for the greater good and benefit of the employee. The Employment Contract may be updated after its expiration in accordance with the provisions of this Decree-Law."

Further, the employers may have to change the unlimited period of employment contracts to limited ones within one year from the effective date of the New Employment Law. This is in accordance with Article 68 of the New Employment law, which states:

“1. The provisions of this Decree Law shall apply to indefinite term Employment Contract concluded under the referenced Federal Law No. 8 of 1980.

“2. Employers shall, within one year from the date of entry into force of this Decree-Law, adjust their respective positions and change indefinite term Employment Contracts to definite term Employment Contracts, in accordance with the conditions, controls and procedures set forth herein. Such period may be extended by the Minister for other periods, as dictated by the public interest.

“3. Subject to paragraph (2) above, the Employer may calculate the gratuity in accordance with the provisions of the indefinite term Employment Contract sated in the referenced Federal Law No. 8 of 1980.”

The employer and employee may terminate the unlimited period of employment contract which are signed before the effective date of New Employment Law by serving stipulated notice period as mentioned in Article 65 (6) of the New Employment Law.

Article 58 to Article 64 of the New Employment Law states the penalties that need to be borne by the employer as well as the employee for breach of provisions of the new law. The employers may have to bear penalties ranging from Dh50,000 to Dh200,000 for violations of Article 60 of the New Employment Law. The violations include matters related to employing an individual without work permit, misuse of work permits, closures of the entity without payment of employees end of service benefits, recruiting an employee and not assigning him any work.

Additionally, Article 63 of the New Employment Law, states:

"Shall be sentenced to fine of no less than Dh5,000 and no more than Dh1 million whoever violates any of the provisions of this Decree-Law and its Executive Regulations and implementing resolutions.”

In the event the employer does not follow the provisions laid down in the New Employment Law, the employee may file a complaint with the Ministry of Human Resources & Emiratisation or relevant free zone authority.