Background

The UAE’s labor laws and regulations have undergone immense changes in the past few years that cater to the ever-growing market demands and its accompanying legal framework.  Federal Decree by Law. (33) of 2021 (“2021 law”) which repeals Federal Law No. 8/1980 Concerning the Regulation of Labor Relations has introduced significant changes entering into force on the 2nd of February 2022. One of such changes introduced under 2021 Law is regarding the notice periods which is the period that both parties to the contract shall abide by in the event that either of them wishes to terminate the employment contract.

2021 Law adopts the same provisions under Article 43 (2) as the previous law which states that either party to the employment contract may terminate the contract for any legitimate reason, provided that the other party is notified in writing for a period not less than (30) days, and not more than (90) days. Therefore, an employment relation is deemed to have ended without following due process when either the employer or employee terminates the employment relation without complying with legally mandated procedures.

Should a Notice Be Served During the Probation Period?

Although the time period under probation has not been amended under the 2021 Law as it remains to be for a period not exceeding 6 months. However, a significant provision introduced in 2021 Law is the probationary notice period under Article 9 in which both employees and employers must now serve a notice period during probation. Under 2021 Law, the employers will have to serve a 14 days’ notice while employees shall serve a 30 days’ notice if they wish to join other employers and a 14 days’ notice if they intend to leave the state for more than three months.

Could Employment Contracts Be Terminated Without a Notice?

The 2021 law comparable to its preceding legislation grants both employers and employees the right to terminate the employment contract without a notice in cases of violations committed by the counterparty, however, the 2021 Law expands the grounds for termination without notice by both parties under Article 44 and Article 45 E.g., if the employee violates the bylaws of the establishment in relation to work or work safety or if the employee assumes a false identity or submits false documents.  On the other hand, an employee may terminate without notice if the workplace poses a serious threat to safety and health or if the employer assigns the employee work substantially different from the work agreed upon.

Is It Permitted to Initiate a Notice of Termination During an Employee’s Leave?

Previously, an employer was not allowed to terminate nor initiate the notice period while the employee is on leave, nor the law has specified when the notice period shall commence if the employee decides to resign during their leave. Article 35 of the 2021 Law provides clarity in this regard as it states that in the event that either party to the employment contract desires to terminate the contract during the period of the employee’s leave, the period of notice agreed upon in the employment contract shall not start to take effect, except as of the day following the scheduled return of the employee from leave nonetheless, the parties may agree otherwise.

Is The Employment Contract Still In Effect During the Notice Period?

While the provisions regarding the payment of employee’s wage and obligation on the employee to continue working during period has been unchanged under the 2021 Law, one of the novel provisions is pertaining to Article 43(5), which obligated the employers to provide one unpaid working day per week during the notice period to the employee provided the same has been notified 3 days prior to the absence.  This provision, hence enables the employees to take out time during their notice period to look for new job and hence been a change lauded in favor of the employee.

Does 2021 Law Effect the Notice Period of Current Unlimited Employment Contracts?

As the 2021 Law revokes the previously permitted unlimited contracts and conversely sets standardized renewable limited employment contracts not exceeding 3 years while requiring the current unlimited contracts to be transitioned to a newly prescribed limited term contract within a period of one-year granted as a grace period from the date of the law entering into force in accordance with Article 68(2).

Nonetheless, Article 65(6) of the 2021 Law further sets new notice periods pertaining to unlimited contracts that must be adhered to within the grace period and prior to adopting the new limited contracts which is corresponding to the years of employment of the concerned employee i.e.  (30) days if the service period is less than (5) years; a period not less than (60) days if the service period is more than (5) years; and a period not less than (90) days if the service period is more than (10) years.

Could The Parties Mutually Agree to Shorten or Waive Notice Periods?

As the 2021 Law reaffirms under Article 65 that the conditions that are more beneficial to the employee shall apply and that the provisions thereof shall not prejudice any of the rights granted to the employee, it is evident that the minimum notice period must be provided for in the employment contract and must be the same for both parties unless it is in the interest of the employee as per Article 43(2) hence, the employer may not stipulate a shorter notice period of termination and oblige the employee to serve a notice term as prescribed under the 2021 Law.

However, as per Article 43(2) of the 2021 Law, an agreement may be made to exempt from the warning condition or reduce its duration while preserving all the rights of the employee for the warning period agreed upon in the employment contract.

On the other hand, the probationary notice period is deemed to be binding as the law obliges both parties to serve their respective notices towards the other, thus, an agreement which is contrary to the law will be deemed null and void.

What Happens If a Party Fails to Duly Notify?

Similar to the provisions of the previous law, the 2021 Law obliges the party who does not abide by the notice period to pay the other party a compensation in lieu of notice equal to the employee’s wage. Moreover, the 2021 Law obligates a compensation in lieu of notice during the probation period in addition to providing that, if the foreign employee leaves the State without abiding by the mandatory notice of 14 days during the probation period, he/she will not be granted a work permit to work in the State for a period of one year as of the date of leaving the State.

Conclusion

The introduction of the changes to the notice period under 2021 Law aim to provide stability in the market place and implore both employers and employees to enhance the efficiency and productivity in future employment contracts while encouraging the continuity of labour relations. Importantly, the new law offers the flexibility and sustainability of the labour market in UAE by ensuring the protection of the parties to the labour relation.

Authored by:

Waddah Elhassan ( Junior Associate)

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