New UAE labour laws explained
An overhaul of the UAE’s labour laws was announced last year, and officially implemented in January 2011. The revised regulations should allow for increased movement for expatriate professionals and introduce flexibility to the local labour market.
The changes to the labour and residency laws in Dubai and other Emirates are far reaching and designed to both empower the private sector and support Emiratisation. Michael Page Middle East looks at the new regulations in light of the implications for employers looking to hire foreign workers.
Previous labour regulations
The aim behind the law is to lessen the control of employers over employees. Previously, the relationship was heavily weighted in the employers’ favour, with employees needing to complete at least three years of service to gain access to a new work permit. If the employee wanted to switch employment mid-term, he/she required a ‘no objection certificate’ (NOC) from his/her current employer to authorise the job change. If the worker left before the end of the defined contract period, they faced the prospect of being banned from working in the UAE for six months.
The reforms in more detail
Most importantly, the new labour rules mean that both skilled and unskilled workers will be able to take up a new job without the consent of the former employer or with an NOC, once they have completed two years of service and ended their employment contracts legally and cordially. The new regulations replace the previous formalities of transfer of sponsorship for employees.
Additionally, there is now a level of protection for employees that didn’t previously exist. The new regulations state that if an employer fails to honour legal or contractual obligations or when a working relationship ends outside the responsibility of the worker, he/she will be eligible new obtain a new work permit before the two year period is complete and without the agreement of the contracting parties.
For those workers currently residing in the UAE, access to the new two year residency visas and labour cards will only be possible when existing visas expire.
What this means for the labour market?
One of the main outcomes for employers in the UAE will be the boost to productivity enabled by the flexibility in movement for the local workforce. Previously, organisations were denied access to the local labour market with the inability to engage with expatriate workers already in the region, who were without an NOC or under the six month banning restrictions. The new labour laws will allow organisations access to employees available in the current workforce, rather than attracting additional foreign workers in at significant cost.
Partly, the change in laws has been driven by the need to conform to the guidelines set out by the United Nation’s International Labour Organisation (ILO), which monitors international labour standards. As the new laws eliminate the employers’ monopoly of the labour market, the UAE will improve its global standing in labour market efficiency, according to a statement released by the ILO in December 2010. “The reforms will facilitate the country’s move towards a knowledge-based economy,” according to Maurizio Bussi, deputy regional director at the ILO’s Regional Office for Arab States in an interview with Gulf News.
“We see the above changes as a positive for the UAE labour market and when combined with the many freezones that allow employees to move between businesses without an NOC’s they make the UAE one of the most employee friendly markets in the Middle East.” Matt Gribble, Managing Director, Michael Page Middle East
For more information on how the new labour regulations may impact your hiring decisions, please contact your local Michael Page team.
