Client Alert: New Labour Law
1. When did the Labour Law come into force?
The Labour Law came into force on the 2 February 2022.
2. What is the most significant change brought into by the Labour Law and the Implementing Regulations?
Fixed Term Employment:
Perhaps one of the most significant changes introduced by the Labour Law is that all employees must be employed on fixed term employment contracts. Employers have until 1 February 2023 to transition into fixed term contracts (Article 68.2 of the Labour Law).
Equality and Non-Discrimination:
The Labour Law introduced protected characteristics and prohibits discrimination (Article 4 of the Labour Law).
The Labour prohibits harassment such as bullying or any verbal, physical or psychological violence (Article 14.2 of the Labour Law).
Internal Policies and Procedures:
Employers with more than 50 employees must implement internal policies and procedures addressing issues such as working hours, holidays, grievance procedures, disciplinary sanctions and health and safety (Articles 14 and 24.6 of the Implementing Regulations).
Compensation for Workplace Injuries:
Compensation for workplace accidents has now been increased, along with an obligation by the employer to pay for all medical treatment (Articles 36 and 37 of the Labour Law).
3. Can notice for good cause be given under fixed term contracts?
Yes, either party may give notice for good cause, even a fixed term contract, under Article 43.1 of the Labour Law by giving notice in writing. First, the parties should decide on the period of the fixed term contract – not less than one (1) year and not more than 3 years. Secondly, they should decide on the Notice Period which should not be less than 1 month nor more than 3 months.
4. What should we do if we have an employee on the old form indefinite duration contract, whom we wish to terminate after 2 February 2022?
You can terminate an employee on old form indefinite duration contract post 2 February 2022 (and so can the employee) by giving notice as per Article 65.6 of the Labour Law, that is, if period of service is less than five (5) years, 30 days’ notice, if more than five (5) years but less than ten (10) years, 60 days’ notice, and if more than ten (10) years, 90 days’ notice.
5. Can employers and employees agree to shorter notice periods than the periods prescribed under Article 65.6 of the Labour Law?
Yes, employers and employees can of course mutually agree to a shorter notice at the time of termination (Article 42.1 of the Labour Law); the Courts tend to interpret legislation provisions generously in favour of employees and may allow them a shorter notice especially if the existing agreements expressly state this.
6. What are the changes made to severance pay or end of service gratuity (EOSB) by the Labour Law?
a) The other important change to the Labour Law is that the full severance pay is payable even if an employee is summarily dismissed or even if he/ she resigns:
• (21) working days’ wage for each of the first five years of service.
• (30) working days’ Wage for each subsequent year of service.
b) The reference to ‘working days’ rather than just ‘days’ requires clarification. It is now clarified that it remains as calendar days as with the previous Labour Law.
c) Payment of EOSB must be made within 14 days of the expiry of the contract as per Article 53 of the Labour Law.
d) If the Employer or Employee terminates an indefinite duration contract before 1 February 2023 in accordance with Article 65.6, he may use the previous Labour Law calculation formula (Article 68.3 of the Labour Law).
7. What kind of penalties can we expect to pay for violations of the Labour Law?
Penalties of at least Dhs 5,000 to Dhs 1,000,000 could be levied for violation of any provisions of the Labour Law as per Article 63.
8. Have there been any significant changes to working hours?
Working hours are stipulated to be the same as before, except provision can be made for Shifts for certain categories of employees (Article 18 of the Labour Law);