IMPACT – MEDIUM

What is the change? Several new labor laws affecting the employment and work authorization of foreign nationals in the United Arab Emirates will go into effect Jan. 1, 2016.

What does the change mean? The three new decrees cover employment offer letters, conditions allowing for the termination of foreign employees, and the criteria that are required before a new employer may obtain a work permit for an employee whose employment ended with a previous employer.

  • Implementation time frame: Jan. 1, 2016.
  • Visas/permits affected: Work permits.
  • Who is affected: UAE companies recruiting and hiring foreign nationals.
  • Business impact: The decrees are intended to give foreign employees additional protection as well as to increase labor mobility and allow expatriate employees to change employment more easily.
  • Next steps: Companies should plan for new duties and obligations and may need to change their procedures for hiring foreign employees as well as their policies for retaining expatriate workers.

Ministerial Decrees 764, 765 and 766 were approved in September and are due to take effect Jan. 1. They are summarized as follows:

Offer letter. Under Decree 764, employers must issue to foreign employees an employment offer letter that conforms to the Ministry of Labour’s approved standard employment contract. The terms of the employment contract cannot be changed to more restrictive terms than those in the offer letter. The letter must be signed by the foreign national and lodged with the ministry before an entry visa or work permit is issued.

Termination of employment. Decree 765 redefines the conditions for termination of employment. Fixed-term contracts have a maximum duration of two years and can be terminated upon expiration, upon mutual agreement, or unilaterally if the employer or employee gives written notice at least one month (but not more than three months) in advance. Unlimited contracts may be terminated for cause, by mutual agreement, or upon notice by one of the parties at least one month (but no more than three months) in advance.

New work permits. Decree 766 removes the current requirement that employees stay at least one year with an employer and allows a new employer to apply for a work permit for the employee under the following conditions:

  • The new employer may obtain a work permit for a foreign employee previously subject to a fixed-term contract if the termination occurred because the contract term expired, or if one party provided at least 30 days’ notice of termination, or if the contract was terminated by mutual agreement as long as six months of the contract was completed. (The six-month requirement will not apply to employees with a high school education or higher.)
  • The new employer may obtain a work permit for a foreign employee previously subject to an unlimited contract if six months of the contract were completed and the termination was either mutually agreed upon, or one party provided at least one month’s (but not more than three months’) notice, or if the employer terminated the employee without cause. The six-month requirement does not apply to employees with a high school education or higher. An expatriate worker may also obtain a new work permit with a new employer if the former employer stopped paying wages for 60 days, ceased operating, or if a court has found that the employer failed to meet legal requirements owed the employee.

BAL Analysis: Employers should review their policies in accordance with the new labor rules and anticipate that foreign employees will have greater flexibility to change jobs.

This alert has been provided by the BAL Global Practice group and our network provider located in the United Arab Emirates. For additional information, please contact your BAL attorney.

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