The UAE, which is the second-largest economy in the Arab world, has implemented various economic, legal, and social reforms over the years to improve its business environment. It has acted to encourage foreign direct investment, attract skilled workers through new visa programs, and incentivise companies to establish or expand their operations.
This article will cover the UAE’s latest labour market legislative initiatives and how we can assist with relocating or employing employees/contractors in the UAE. Since the UAE attracts thousands of ex-pats each year who join the job market, job seekers and employers must stay informed of the latest labour market changes to ensure compliance and focus on increasing revenue.
Several vital developments will affect the UAE labour market in 2023, which we have summarised below:
- The new UAE Labour Law, which took effect on February 2, 2022, mandates that all private sector company employees (excluding those in the DIFC and ADGM) must have fixed-term employment contracts. The deadline for transitioning employees to the necessary fixed-term employment contracts is February 1, 2023.
- The 3-year cap on the fixed-term, which the new UAE Labour Law initially imposed, was lifted in October 2022, allowing parties to agree on whatever fixed-term length they prefer (although fixed-term employment is still mandatory).
- Starting January 1, 2023, at least 2% of a company’s workforce must comprise UAE nationals. Emiratisation applies only to private sector companies registered with the Ministry of Human Resources & Emiratization (MoHRE) and not to entities in any of the UAE’s free zones. A company’s mandatory Emiratisation quota will increase by 2% annually until 10% of its total skilled workforce comprises UAE nationals. Companies failing to comply with the compulsory Emiratisation percentage will be fined AED 6,000 per month for each outstanding UAE national employee, with fines increasing by AED 1,000 annually.
- In October 2022, the UAE government announced the introduction of an unemployment insurance scheme. From June 30, 2023, all private sector employees in the UAE, excluding those in free zones (although this may change), must register with the scheme. Employees earning less than AED 16,000 per month must pay AED 5 per month into the scheme, while those earning more than AED 16,000 per month must pay AED 10 per month. An employee must have been enrolled in the scheme for at least 12 months and received 12 months’ worth of contributions made by their employer to be eligible for unemployment benefits under the scheme.
- Eligible employees are entitled to receive 60% of their registered monthly salary, up to a maximum of AED 20,000, for three months after termination. Although employers are not required to ensure that employees register and make contributions, they are encouraged to do so.
Useful Links:
- Protection of workers’ rights
- Employment laws and regulations
- Employment contracts: duration and models in the private sector
How can we help?
To avoid wasting valuable time learning about all the new legislative initiatives, you can contact us at Access Financial for advice and assistance. We have a local office in Dubai with specialists who continually monitor information related to labour and corporate law changes in the UAE.
At Access Financial, we have a dedicated team of expert R&D and immigration specialists who specialise in tax & legal compliance, work permits and business visa processing. We have broad experience onboarding and relocating employees/contractors to the UAE.
Access Financial offers the following solutions/services in the UAE:
- Company Formation
- Contract Administration
- Payroll Outsourcing
- Employer of Record (EOR) & PEO services
- Work Permits/Immigration Assistance
Benefits of working with Access Financial in the UAE:
Trusted partner: Twenty years of profitable operations.
Fast onboarding: By working with us, you ensure all your full-time employees or contractors are ready to work in a matter of days.
Invoices and payments: We take care of all your employees/contractors, ensuring they receive their payments in due time with total accuracy.
Employment law compliance: We ensure both parties make the most out of the contracts; while complying with the country’s labour laws.
If you would like to discuss how Access Financial can help in the UAE, don’t hesitate to get in touch with us:
Tel: +971503075121
Email: [email protected]