New UAE labour rules: 3 key changes to paid leaves, gratuity, benefits

In a first-of-its-kind move, the UAE has unified leaves and gratuity for the federal government and private sector, bringing key changes to previous laws.

Starting from February 2, 2022, employees in federal entities and private firms will be entitled to the same rights under new labour regulations that aim to establish an integrated, flexible and attractive work environment as the UAE ushers in its next 50 years.

Dr. Hasan Elhais, legal consultant at Rowaad Advocates, said the new regulations, under Federal Decree Law no. 47 of 2021, extended federal government’s leaves and amended end-of-service benefits to match that of the private sector.

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He added that the unified regulations also give the flexibility to private firms and government entities to adapt to the new workweek, while reserving the rights of employees against any potential misuse. “At setting a maximum of 48 working hours a week for both sectors, the regulations are balancing between the business interests of employers and the wellbeing of employees,” said Elhais.

The regulations also reserve the rights of employees in the flexible, temporary and part-time work models by specifying annual leaves and end-of-service gratuity on a pro-rated basis.

A major highlight is that starting from February 2 next year, only limited contracts will be issued in both the public and private sectors. Employers are required to replace the existing unlimited contracts within one year of the law enforcement.

Here are the 3 key changes under the new labour regulations:

1. Annual leave of 30 days for both sectors

Full-time government and private sector employees are entitled to 30 days of annual leave every year under the new regulations.

Previously, public sector employees in senior positions used to get 30 days of annual leave, while other positions in the public sector were entitled to 22 days of leave each year. Private sector employees were given 30 days each year.

The new regulations unified the annual leaves to 30 days for all employees in the federal government regardless of positions.

2. End-of-service benefits changed for public sector

Previously, expats in the federal government were entitled to one-month basic salary for each year in the first five years of service and one-and-a-half-month basic salary per year for the second five years of service, calculated on the basis of the last five-year average.

From February 2, 2022, expat public sector employees will receive the same gratuity of the private sector, which is 21-day basic salary for each year during the first five years of service and 30-day basic salary for each year of the following years.