Employers need to change work contracts warns UAE

Changes in labour law require employers to transfer their employees to limited-term contracts. Employer who fails to comply will face penalties and fines

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The United Arab Emirates (UAE) has recently announced a change to its labour law, requiring employers to transfer their employees to limited-term contracts. The deadline for this transfer is set for February 1st, and employers who fail to comply will face penalties or fines.

In addition to this change, the UAE has also announced that private sector gratuity will no longer include unpaid leave days. According to the Ministry of Human Resources and Emiratisation (MoHRE), the end-of-service gratuity will now be calculated based solely on the employee’s final basic salary.

The recent decision by the UAE cabinet to increase the percentage of citizens employed in the private sector, while intended to benefit locals, may have an unintended negative impact for both expatriates and companies in the country. 

UAE employees will also have to pay a hefty penalty amount if they don’t register in the involuntary loss of employment scheme. From January 1, 2023, workers in the United Arab Emirates can register themselves under the insurance scheme.

All workers are required to register themselves for the involuntary loss of employment scheme. Employees working in the private and federal government sectors, both Emiratis and foreign nationals, must register for the involuntary loss of employment scheme.

It’s worth noting that companies based in the Abu Dhabi Global Market (ADGM) and the Dubai International Financial free zones are exempt from these changes. Also, there is no information available yet regarding the specifics of the penalties and fines for non-compliance with the new labour law.

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