United Arab Emirates Payroll Outsourcing Alert

United Arab Emirates – The Federal Decree Law no. 33 of 2021 concerning the regulation of labour relations (the “New UAE Labour Law”) will take effect on February 2, 2022.

Fixed-Term Employment Contracts

All employees must be employed on fixed-term employment contracts not exceeding three years, which may be extended for the same or period. Employers will have 12 months from Feb. 2, 2022, to transition all their employees onto new contracts.

Probationary Period

1. The employer may appoint the worker under a probationary period not exceeding (6) six months from the date of commencement of work.
2. The employer may terminate the service of the worker during this period after notifying the latter of the same in writing fourteen (14) days at least before the date specified for the termination of service.
3. If the worker wishes to move during the probationary period, to work for another employer in the State, he shall notify the original employer of the same in writing within not less than one month from the date of his wish to terminate the contract. Then, the new employer shall compensate the original employer for the costs of recruitment or contracting with the worker, unless otherwise agreed upon.
4. If the foreign worker wishes to terminate the employment contract during the probationary period, to leave the State, he shall notify the employer of the same in writing not less than fourteen (14) days from the date specified for the termination of the contract. If he wishes to return to the State and obtain a new work permit within (3) three months from the date of departure, the new employer shall pay the compensation stipulated in Clause (3) of this Article, unless in case of an agreement between the worker and the original employer to the contrary.
5. If either party terminates the employment contract without taking into consideration the provisions of this Article, it shall pay to the other party compensation equal to the worker’s wages for the notice period or the remaining period of the notice period.
6. If the foreign worker leaves the State without abiding by the provisions of this Article, he shall not be granted a work permit to work in the State for one year from the date of leaving the State.

End of Service Benefits for Full-Time Workers

1. The UAE national worker shall be entitled to end of service benefits at the end of his service, in accordance with the legislation regulating the pensions and social securities in the UAE.
2. The full-time foreign worker, who completed a year or more in continuous service, shall be entitled to end of service benefits at the end of his service, calculated according to the

Basic wage as per the following:

• A wage of (21) twenty-one days for each year of the first five years of service.
• A wage of (30) thirty days for each year exceeding such period.
• The foreign worker shall be entitled to a benefit for parts of the year in proportion to the period spent at work, if he completed one year of continuous service.

3. The end of service benefits shall be calculated according to the last basic wage the employee was entitled to. Unpaid days of absence from work shall not be included in the calculation of the end of service benefits.
4. End of service benefits for the foreign employee in its entirety does not exceed two years’ wage.

Mercans’ UAE Payroll Outsourcing Solutions

While Mercans’ UAE Payroll Outsourcing alerts will allow you to stay on top the latest development in UAE’s payroll regulations, you should still get in touch with Mercans’ UAE payroll outsourcing, compliance, PEO/GEO and BPO specialists for a free consultation on setting up fully compliant payroll and HR functions. Better yet, outsource your payroll and HR activities in UAE to Mercans and our UAE payroll outsourcing experts will ensure that your employees will always be paid on time and in accordance with the UAE regulations.

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Mercans Statutory Alert New Labor Law effective 02 February 2022

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