Deadline nears for UAE employment contract changes

Employers must switch workers on to limited-term contracts by February 1

Employment contract changes will affect most workers in the Emirates. Amr Alfiky / Reuters

Latest: Firms 'scrambling' to meet UAE employment contract deadline

Two key employment law deadlines are looming for UAE companies, with the first in just over a week.

According to the latest labour law, all employers must transfer contracts by Wednesday, February 1, unless they are in The Abu Dhabi Global Market and Dubai International Financial free zones.

Families employing domestic workers are also exempt from the changes.

Businesses that fail to update employment contracts risk a fine or penalty — although authorities have yet to reveal what the penalty will be.

With the lifting of the cap of three years for a limited-term contract, this arrangement more closely reflects an unlimited-term employment contract than a true fixed-term employment contract

Shiraz Sethi,
Dentons

The legislation may not affect your day-to-day employment,but it is part of a bigger overhaul of the private sector work landscape and a law first brought in in 1980.

The change will allow firms and staff to agree on part-time work, job-sharing and project-based tasks with more ease.

A federal decree issued in October removed a planned three-year cap on contracts, so it is up to employers to agree a term with the employee. Companies that already updated contracts, after the original decision last February but before the decree in October, may need to do so again.

Shiraz Sethi, a lawyer in Dubai who specialises in UAE labour law, said only time would show how the new rule affects the labour market.

"It is of paramount importance that employers in the private sector are advised to review and amend employment contracts if they are currently on an unlimited time frame by February 1, 2023 to avoid possible fines or sanctions," said Mr Sethi, regional head of employment at Dentons.

UAE salaries at a glance - in pictures

TEACHER/LECTURER: The average salary in UAE is Dh9,000 with lows of Dh4,000 and highs of Dh21,000. Headteachers earn an average of Dh46,000 with highs of Dh75,000. University staff are typically well paid, with assistant professors and full lecturers earning between Dh20,000 and Dh40,000. AFP

FLIGHT CREW: Salaries for cabin crew and aircraft technicians range from Dh6,000 to Dh23,000. Pilots can usually secure between Dh20,000 to Dh60,000, depending on experience. EPA

FOOD AND DRINK: The average salary for a bartender, waiter or supervisor is Dh4,000 to Dh5,000, rising to Dh7,500 to Dh8,500 for managers. Chefs and head chefs can expect to take home between Dh6,000 to Dh38,000. Hotels often provide staff accommodation. Hollie Adams / Getty Images

ACCOUNTING AND AUDITING: A flooded market with basic accountants often earning Dh5,000 to Dh10,000. Senior auditors can earn Dh30,000 or more. Accountants who move into finance and management can expect significantly higher salaries. Getty Images

CONSTRUCTION: Engineering jobs have been hit hard by a downturn in the sector, but it remains a skilled and respected profession. Junior salaries for site inspectors and engineers begin at a few thousand dirhams, rising to Dh45,000 or more for construction managers. Gulf Talent says salaries in Saudi are higher than the UAE in some roles. Sammy Dallal / The National

NURSES: The true heroes of the pandemic, these professionals worked around the clock to treat patients and save lives. Salaries range between Dh4,000 to Dh14,500 and can be higher for senior nurses in higher-end private hospitals. AFP

HEALTH AND SAFETY: Health and safety has become a key priority. Junior roles in this sector can take home, on average, about Dh5,500 a month. That rises to Dh22,500 for managerial positions. Victor Besa / The National

HOSPITAL ADMINISTRATOR: Non-medical staff are currently in demand as the role of managing patients, their documents, payment and test results is increasingly crucial. Salaries vary but can be in the same region as nurses. Reem Mohammed / The National

CYBERSECURITY: The threat posed by cybercrime has never been more real, with the sale of financial assets, documents and medical records a lucrative business. Systems analysts and software engineers can earn Dh25,000 or more, rising significantly for those with high-end cybersecurity experience. Unsplash

HR, MARKETING AND FINANCE: Senior roles in these managerial classes vary significantly, but are generally well paid and often come with performance-related bonuses. Gulf Talent lists HR manager and HR business partner salaries at up to Dh42,500. An HR director of a major firm can earn twice that. Getty Images

SALES AND MERCHANDISING: As the economy slowly picks up, the retail sector will be looking to fill key roles again soon. Gulf Talent lists sales staff salaries from Dh1,500 to Dh3,500. A sales merchandiser can take home twice that each month. Paulo Vecina / The National

HOTELS: A duty manager at a hotel can earn anywhere from Dh6,000 to Dh26,000 per month. Front of house staff, including concierge, can take take home between Dh1,500 to Dh9,000. Staff accommodation is typically provided. Sarah Dea / The National

LEGAL: Lawyers and legal advisors can earn between Dh7,500 to Dh37,500. That rises to more than Dh53,000 for legal counsel positions, though the average sits at about Dh20,500. Jeff Topping / The National

OFFICE ADMINISTRATION: Jobseekers for secretarial and receptionist roles can expect salaries ranging from Dh2,500 to Dh8,000. Personal assistants and office managers fare better, from Dh4,500 up to Dh22,500 for higher-end firms. Getty Images

"With the lifting of the cap of three years for a limited-term contract, this arrangement more closely reflects an unlimited-term employment contract than a true fixed-term employment contract.

"Only time will tell how this new requirement will play out in practice and how it will impact the labour market in the UAE."

The way private sector businesses operate will change to accommodate more flexible working and job-sharing.

Most of those in the private sector will work shorter, fixed-term contracts and be allowed to stay in the country for up to 180 days after leaving a job, under rules introduced last February.

In an update issued in October, the government lifted a three-year cap on the duration of fixed-term employment contracts in the private sector.

Under the new amendments, employment contracts must cover a defined term but the law will no longer set a cap on how long the contract can be.

Students and those returning to the workplace after a period away are most likely to benefit from more flexible working arrangements.

It will allow people to work for more than one employer for a specified number of working hours or days and also work on a temporary basis to complete a set contract.

A reminder was issued to employers, advising them to review their employment contracts and amend them where applicable to avoid fines or sanctions.

Unemployment insurance

The deadline for residents in the UAE to register for the unemployment insurance is also approaching.

All employees working for a company subject to the Ministry of Human Resources and Emiratisation must register by June 30.

The insurance scheme came into effect from January 1.

It will cost workers only Dh5 to Dh10 per month. If they lost their job, they could receive thousands of dirhams per month for three months to tide them over.

A full breakdown of the costs is here.

"Whilst employers are not obligated to register for their employees, they are able to if they would like to offer this as an additional benefit to their staff," said Mr Sethi.

"Employers should, however, continue to remind their employees of the need to register and encourage them to do so within the deadlines provided, otherwise face fines and penalties once the deadline has lapsed, similar to fines having already been issued to some companies who have failed to meet their Emiratisation quotas."

The social security support programme is a welcome financial safety net that will pay Emiratis and residents a cash sum for three months if they lose their jobs.

The system will ensure the sustainability of a decent life for Emiratis and residents during their unemployment period and will reduce business risks, the ministry said.