UAE Employment Law Changes For 2023

The new UAE labour law eliminates the idea of unlimited-term contracts and allows only fixed-term contracts (with a maximum duration of three years) to be issued. Businesses must transfer all current employees, who are on unlimited duration contracts, onto fixed term contracts by the 2nd of February 2023.

This shift ensures greater clarity in employment agreements and allows companies to better manage workforce planning. Employees should review their new contracts to understand the terms, renewal conditions, and notice periods applicable under this updated framework.

Further Reading: How HR Teams Can Improve Hiring & Compliance

While the new law maintains the six-month limit for probationary periods, it now mandates that:

•  Any party wishing to terminate employment during probation must give at least 14 days’ notice.
• Where an employee is joining another UAE-based company, they must give at least 30 days’ notice. 
• Additionally, employers have the right to demand payment from the new employer for the costs incurred in hiring the employee.

This provision in the UAE and Dubai employment law aims to regulate job mobility and prevent frequent job-hopping. In doing so, it will ensure a more stable workforce while still allowing career growth opportunities.

Further Reading: UAE Ministerial Resolution No. 279 of 2020: Employer Guidance

There are currently several new unconventional and flexible employment arrangements available in the UAE. These include:

• Job-Sharing 
• Flexible Work (where working hours and days can change depending on an employer’s demands)
• Temporary Work (for particular project-based work) 
• Part-Time Work (with benefits given on a pro-rata basis). 

The Ministry of Human Resources & Emiratisation (MOHRE) provides specific details regarding the changes to these working arrangements here. Companies should start adapting HR policies to accommodate these options as soon as possible. With the growing demand for flexible employment, businesses offering these arrangements will likely see increased job satisfaction, employee retention, and profitability.

Employers must give their workers at least one rest day on any day of the week. Fridays are now no longer the only day that must be designated as a mandatory rest day. However, there may be potential exceptions to these requirements under the Executive Regulations, which limit the working hours to no more than 56 hours a week. 

The maximum working hours remain at eight hours per day/48 hours per week (on a six-day working week). This should be clearly communicated through the company’s policies and HR system. 

Some industries are exempt from these restrictions, such as government and municipal workers, the armed forces, domestic servants, and agricultural workers. Employers operating in sectors with varying work schedules must ensure that any exceptions align with the official labour law regulations and are clearly outlined in employee contracts.

The UAE employment law outlaws discrimination based on:

• Race 
• Colour
• Sex
• Religion
• National Origin 
• Socioeconomic Origin
• Any handicap that would hinder an employee from obtaining employment and maintaining such employment. 

Workers will now benefit from enhanced protection from discrimination in the workplace. 

Employers must also ensure that hiring, promotions, and salary structures comply with these non-discrimination rules.

Although maternity leave and/or pregnancy are not mentioned as protected characteristics, employers are not allowed to fire (or threaten to fire) a worker because she is expecting a child or is on maternity leave. The law reinforces job security for women during pregnancy, discouraging unfair dismissal practices.

The new law also stipulates that men and women shall receive equal remuneration for the same work. An effective HR software in Dubai can help companies track employee benefits, ensuring that all staff are treated fairly. Businesses should conduct regular pay audits to identify and eliminate any gender pay gaps and remain compliant with these regulations.

Even though contracts are now fixed-term, the employment termination law in UAE allows for termination before contract completion under legitimate circumstances,  so long as the required amount of written notice, as stipulated under the employment contract, is given.

It is now acceptable to terminate an employee with notice, for reasons other than those relating to performance or behaviour. Perhaps the most notable change is that the concept of redundancy is now specifically recognised as legitimate grounds for termination. Similarly, bankruptcy, insolvency, and other economic or extraordinary circumstances are now also permissible reasons to end an employee’s contract.

Companies undergoing restructuring or financial difficulties can now rely on redundancy as a legally recognised reason for termination. This is hugely helpful for businesses trying to manage operational changes while maintaining compliance.

It is worth noting that the arbitrary dismissal compensation scheme (under the previous law) has been considerably scaled back. Workers are now only potentially eligible for compensation in two particular termination scenarios.

Employees should be aware of these changes when negotiating contracts and understanding their rights in the event of a termination. Employers should also ensure termination policies reflect the latest regulations to avoid legal disputes.

The revised UAE Labour Law introduces significant employment changes, particularly in contract structures, notice periods, discrimination protections, and termination rights. Businesses must ensure their employment policies and HR systems are updated to comply with these regulations. 

As MOHRE continues to refine guidelines, employers should stay informed about any further clarifications or updates. Employees should also be aware of how these changes impact their contracts and workplace rights. Those seeking further clarification can refer to the MOHRE website.