Over the last few years, the United Arab Emirates has embarked on a comprehensive overhaul of its labour, immigration, corporate, and civil laws that represent a decisive transition towards a more transparent, globally compliant, and business-friendly environment. These reforms are not superficial; they indicate a new order of laws that necessitate both HR professionals and legal counsel to retool policies, agreements, and internal governance.
Whether operating a local workforce in the UAE or directing a multinational business in the country, the new legal reforms have presented both challenges and opportunities. We assist organisations in the transition at Davidson & Co. The following is an in-depth rundown of what these reforms entail and how HR and legal departments should strategically react.
1. Labour Law Reform – Federal Decree-Law No. 33 of 2021
The UAE’s new Labour Law, enacted on 2 February 2022, has transformed the employer-employee relationship. The most significant reforms are:
Fixed-Term Contracts Only: Unlimited contracts have been eliminated. All employment contracts need to be converted into fixed-term contracts (max 3 years).
Flexible Work Models: The law is a nod to part-time, temporary, remote, and job-sharing models, giving employers greater flexibility.
Probation Clarity: The employer must provide 14 days’ notice before terminating an employee during probation. Conversely, the employee must provide 30 days’ notice if resigning to join a new employer in the UAE.
Anti-Discrimination Provisions: New gender, race, religion, and disability protections are now statutorily enshrined.
Non-Compete Clauses: Enforceability of such clauses is clarified and cut back to two years from termination.
Strategic Considerations:
HR should update and reissue employment contracts to mirror the new fixed-term format.
Legal advice should provide compliance with new notice periods, leave entitlements, and termination practices.
Internal policies should be updated by companies to ensure anti-discrimination and equal pay requirements.
2. New Labour Dispute Resolution Processes
The Ministry of Human Resources and Emiratisation (MOHRE) has simplified the resolution process for labour disputes. A complaint should be filed first by employees with MOHRE, which can refer unresolved issues to the court.
Strategic Considerations:
Ensure a clear HR grievance policy with written internal resolution procedures.
Legal departments must maintain defensible employment files (e.g., performance appraisals, contract modifications) ahead of conflicts.
3. Emiratisation Quotas and Fines
In 2022, the UAE required private sector employers with 50 or more workers to implement 2% Emiratisation of their professional staff, growing every year up to 10% by 2026.
Non-compliance inquests financial fines of AED 96,000 annually (AED 8,000 monthly, per unmet quota).
Strategic Considerations
HR divisions need to establish Emiratisation recruitment pipelines, monitor national staff, and document compliance using MOHRE’s online platforms.
Legal departments need to counsel on Emirati recruitment incentives and maintain avertible quota misclassification, which may invoke penalties.
4. Golden Visa and Talent Retention
Changes to residency regulations have established longer-term visas, such as the 10-year Golden Visa and 5-year Green Visas for freelancers and professional specialists. These initiatives seek to retain talent and spur economic diversification.
Strategic Implications:
HR staff must assist high-achieving workers in acquiring extended residency arrangements, which may improve retention and commitment.
Legal advice needs to remain abreast of eligibility requirements and application processes in order to counsel executives and strategic hires.
5. Data Protection and Employee Privacy
The UAE enacted its first general Data Protection Law (Federal Law No. 45 of 2021) under the UAE Personal Data Protection Law (PDPL). It covers employee data and requires transparent principles of data management.
Strategic Considerations:
HR must update employment handbooks, consent forms, and onboarding paperwork to ensure lawfully processed employee data.
Legal advice should create or revise data protection policies, specifically around cross-border transfers and staff monitoring.
6. Wage Protection System (WPS) Compliance
The UAE compels all employers to remit wages under the Wage Protection System, overseen by the Central Bank. Delays or discrepancies can lead to fines, work permit suspension, or suspension from government services.
Strategic Considerations:
HR must ensure payroll accuracy and clarity, correlating payments with MOHRE-reported contracts.
Legal counsel must periodically review WPS compliance and address discrepancies promptly.
7. Occupational Health and Safety (OHS) and Work Environment
New legislation heightens employer responsibility to provide a safe and respectful working environment, including:
- Anti-harassment and bullying provisions
- Compulsory break periods in prolonged heat
- Increased emphasis on mental health and well-being
Strategic Implications:
HR must implement wellbeing policies, EAPs (Employee Assistance Programmes), and compliance training.
Legal advice must examine incident reporting procedures and inform on liability in occupational claims.
8. Termination and End of Service Benefits
Recent reforms clarified entitlements for end-of-service benefits, with possibilities for employers to implement voluntary savings schemes (e.g., DEWS in DIFC) as substitutes.
End-of-service gratuity is calculated more uniformly across contracts.
Workers who leave are no longer punished in gratuity computation, raising fiscal exposure for employers.
Strategic Considerations
HR has to provide precise computation and timely disbursement of end-of-service benefits.
Legal departments have to analyze adopting substitute retirement schemes for cost predictability and regulatory compliance.
9. Mainland vs. Free Zone Compliance
Strategic Considerations:
There are still regulatory variations between the mainland UAE and free zones (such as DIFC and ADGM). For example, DIFC and ADGM are governed by common law systems with separate employment regulations.
HR needs to have distinct policy systems for employees in various zones.
Legal advisors have to tailor contracts, dispute strategies, and disciplinary policies by jurisdiction.
Conclusion
The UAE’s reform agenda is ambitious and continuing. For HR professionals and in-house legal advisors, this new world requires not only legal acumen but strategic alignment, policy redesign, and cross-functional coordination.
At Davidson & Co., we assist organizations in navigating this changing landscape with confidence. Whether you are reviewing employment contracts, dealing with compliance audits, dealing with complex terminations, or creating localisation strategies, our team provides business-focused, practical legal assistance.
