Browse through brief employment and labor law updates from around the globe. Contact a Littler attorney for more information or view our global locations.

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Unemployment Scheme Came Into Effect January 1, 2023

New Legislation Enacted

Author: Dr. Luisa Rödemer, Senior Associate – vangard | Littler

On January 1, 2023, the UAE’s unemployment insurance came into effect. The social security program will provide compensation to private and public sector employees in the mainland, both Emiratis and foreign nationals, in the event of unemployment. Under the Unemployment scheme, employees are eligible to 60% of their previous earned basic salary (max. Dh20,000) for a maximum of three months following an involuntary loss of employment.

The participation in the unemployment insurance scheme is mandatory and employees must register themselves by June 30, 2023, to avoid fines. Employees are further obliged to cover the contribution for the social security program themselves.

New Regulatory Decisions

New Order or Decree

Authors: Sara Khoja, Partner, and Sarit Thomas, Knowledge Management Counsel – Clyde & Co.

The Ministry of Human Resources and Social Development has issued a decision supplementing Ministerial Decision 105576 publishing an official procedural guide for employees that work through participatory electronic platforms.

Additionally, Decision No. 13957/1444 was issued on the Application of the Provisions of the Implementing Regulation for Levying Zakat. This decision revolves around the implementation of ZATCA Ministerial Decision No. 2216, which regulates the disclosure and submissions from entities. This Cabinet Decision provides a list of rules and regulations for entities to follow.

Further, Decision No. 231/1444 on Setting a General Rule on How to Treat Employees and Workers in the Sectors Targeted for Transformation was issued. The decision revolves around the entities that were subject to the general rule on how to treat employees and workers in sectors targeted for privatization, and the entities that are not subject to privatization, and the entities that are subject to the privatization but have not yet implemented the changes as per cabinet decision No. 616 to issue a new organizational structure.

Ministry of Human Resources and Social Development Procedural Guide for Transferring Recruitment of Employees

New Regulation or Official Guidance

Authors: Sara Khoja, Partner, and Sarit Thomas, Knowledge Management Counsel – Clyde & Co.

The guide sets out the process for terminating and transferring the employment of employees who have been reported as absent from work and terminated.

Removing Three Year Cap on Limited-Term Contracts

Upcoming Deadline for Legal Compliance

Author: Dr. Luisa Rödemer, Senior Associate – vangard | Littler

Federal Decree-Law No. (14) of 2022 amended the new UAE Labor Law that came into force in February 2022 and removed the three-year cap on limited-term contracts. Following the concern of both employees and employers that the significant limitation in the duration of employment contracts may complicate to attract and retain talent, the government reacted and removed the cap only seven months after the implementation of such.

Even though the new arrangement reflects more closely unlimited employment contracts, as they could have been concluded prior to the new labor law, the restriction on limited-term contracts remains. Therefore, all employees must be transitioned onto limited-term employment contracts before February 2023.

Failure to Meet the Emiratization Percentage Subject to Fines

Upcoming Deadline for Legal Compliance

Author: Dr. Luisa Rödemer, Senior Associate – vangard | Littler

From the beginning of this new year 2023, mainland companies in the private sector failing to reach the Emiratization percentage will be subject to fines of Dh 6,000 per month per quota position not filled correctly by an Emirati. Companies exceeding 50 skilled employees are required to increase their headcount of Emirati employees by 2% per year, until a final headcount of 10% Emirati employees is met in 2026.

In order to further boost the integration of UAE nationals into the private and banking sectors, the UAE government announced additional expansion of the salary support to Emiratis under the UAE national Salary Support Scheme. Such financial support depends on the actual offered or earned base salary as well as the university degree or diplomas the Emirati holds.