LABOR LAW: WHAT IS CHANGING FROM 1 JANUARY 2016 FOR PRIVATE COMPANIES REGISTERED IN THE UNITED ARAB EMIRATES
In the interests of transparency and flexibility, the Ministry of Labor has introduced important changes in labor law for private companies registered in the United Arab Emirates, by issuing three Ministerial Orders nr. 764, 765, 766.
The Federal Law n. 8/1980, which regulates labor law in the UAE, has not been amended and therefore remains applicable.
Moreover, these new provisions are not directly applicable to companies registered in free-zone. It is however recommended to check with each free zone if and to what extent they have been transposed.
Three main axes are covered by ministerial orders.
1) Employment contract: Ministerial Order nr. 764 now requires the employer, prior to any hiring, to send an offer to the prospective employee containing all the conditions of the employment contract.
This offer must be signed by the candidate for acceptance. It will be followed by the signature of the employment contract which may not contain provisions different from those included in the offer unless they are more advantageous for the employee.
The offer and the contract of employment can not be prepared unilaterally by the employer but must be in accordance with the documents pre-established by the Ministry of Labor and registered with the same Ministry through the intermediary of the Tasheel.
2) Breach of contract of employment: Ministerial Order nr. 765 brings some novelties in terms of termination of the employment contract.
It should be noted, above all, that fixed-term contracts can now only be stipulated for a period of up to two years (up to 4 years).
The parties can now negotiate and stipulate in the contract an early termination clause of the employment contract, on the initiative of the employer or the employee, with a period of notice of between one and three months. The parties are obliged to respect their contractual obligations during the period of notice. For early retirement agreements, the early termination clause must also provide for compensation to the party who suffers the break up to a maximum of 3 months’ wages or 45 days if the breakdown is initiated by the employee .
This new compensation is not provided for early termination of a permanent contract.
For fixed-term contracts that have been renewed before the coming into force of the order, in the absence of agreement between the parties, the notice is considered 3 months and the compensation of 3 months of salary for the employee or 45 days For the employer.
The provisions of Federal Law 8/1980 in terms of termination and termination of contract remain unchanged and applicable. The contract can therefore be terminated following the expiry of the term for fixed-term contracts, for early breach of contract or for gross negligence (Articles 120 and 121 Labor Law).
3) Work permit: Ministerial Order nr. 766 deals with work permits and prohibitions (“ban”).
The principle is that following a termination or termination of the employment contract, the worker is entitled to a new work permit.
The Ministerial Order lists the cases where a new work permit must be guaranteed to the worker following an end of contract, in the event of a contractual or early breach of the contract and in certain special cases. The prohibition to work for a period of one year is therefore lifted if the worker falls into one of these categories.
In some cases such as early breach or early termination at the employer’s initiative, it is necessary to have worked for a period of 6 months in order to qualify for a new work permit. But this last provision does not apply to so-called “skilled” workers, for whom no minimum period of work is required.
For any additional information do not hesitate to contact us.
Joséphine D’Angelo
Paoletti Legal Consultant
T. +971 4 404 9670
E: [email protected]
www.paoletti.com