Recent updates in UAE Employment Law
Emiratisation Targets: The Ministry of Human Resources and Emiratisation (MOHRE) has issued a public statement urging private sector establishments to meet Emiratisation targets for 2023 and beyond. Private sector companies with 50 or more employees are required to achieve a 2% annual growth rate in Emiratisation of skilled jobs by December 31, 2023, to avoid financial penalties. Furthermore, companies meeting this requirement will receive priority in government procurement contracts. From 2024 onwards, companies with 20-49 employees in specific sectors, such as information and communications, finance and insurance, and professional and technical activities, will need to hire at least one UAE national. MOHRE has already notified over 12,000 private companies about this expanded Emiratisation requirement starting in January 2024. Serious consequences await those found violating Emiratisation regulations, as evidenced by MOHRE’s actions in referring companies to the public prosecutor for fraudulent Emiratisation posts and circumventing Emiratisation targets.
New Alternative End-of-Service Gratuity Scheme: The UAE has introduced a voluntary alternative scheme for managing end-of-service gratuity payments for employees. Instead of paying a lump sum upon termination, private sector employers can opt to invest on behalf of their employees by making monthly contributions to a licensed investment fund. This initiative aims to safeguard employees’ end-of-service benefits against inflation, insolvency, and bankruptcy while offering savings opportunities and enhancing the labor market’s attractiveness and flexibility. Employers participating in this scheme must fulfill obligations related to selecting a licensed investment fund and providing necessary documents/information to both the fund and affected employees.
Employment Disputes: Changes have been made to the process for resolving individual labor disputes in the UAE Labor Law. Effective January 1, 2024, MOHRE will serve as a judge for employment disputes valued at less than AED 50,000. MOHRE’s decision will hold the same legal power as a final judgment issued by a first instance court, and dissatisfied parties can file an appeal with the Labor Court of Appeal within 15 working days. It’s important to note that this process primarily applies to onshore companies and employees in the UAE, as most free zones have their own initial dispute resolution mechanisms.
New Anti-Discrimination Law: Federal Decree-Law No. 34/2023 on Combating Discrimination, Hatred, and Extremism has been introduced, prohibiting contempt of religions, discrimination, and extremism. The law emphasizes that freedom of speech and opinion may not be exploited to incite defamation or disrespect of protected religions. It also prohibits hate speech and discrimination based on various factors, including religion, belief, race, gender, and ethnicity. This law applies to all employees in the UAE, including those in free zones like the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM), and carries potential criminal penalties for violations.
Updates to Existing Employment Contracts – Final Call: The deadline for updating existing employment contracts to comply with the new UAE Labor Law (Federal Decree-Law No. 33/2021) was extended to December 31, 2023. As of now, there are no indications of further extensions. Employers should ensure timely compliance with this requirement to avoid potential legal consequences.
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