A. Update
DIFC has added to Part 10 of the existing Employment Law, a new Article 65(3) via DIFC Laws Amendment Law No.1 of 2024 that requires DIFC employers to make “top-up” payments into a Qualifying Scheme (such as the DEWS Scheme) for their GCC national employees (in addition to making their GPSSA contributions) in circumstances where the amount of their GPSSA contributions are lower than what they would have received as monthly end-of-service contributions under the Employment Law if they were not GCC nationals.
This “top-up” contribution by employers in respect of a UAE or a GCC national employee under Article 65(3) is the positive difference between:
- the Core Benefits that would have been payable to the Employee at 5.83% or 8.33% of an employee’s Monthly Basic Wage, as applicable, had the Employee not been registered with the GPSSA; and
- the Employee’s GPSSA pension contribution for the month.
The “top-up” requirement is, however, subject to a de minimis monthly threshold of AED 1,000, i.e. the monthly top-up contribution obligation for each such employee is equal to or more than AED1,000.
DIFC Laws Amendment Law No.1 of 2024 is enacted on March 01, 2024 and comes into force on March 08, 2024 as per the Enactment Notice. However, as per the amended section 3 “Defined Terms” in Schedule 1 of the DIFC Amendment Law, the Commencement Date of this top-up contribution will be the first day of the month following the date of enactment of the amendment law, i.e. April 2024.
B. Statutory Compliance Release Date: March 14, 2024
C. Effective Date: April 01, 2024
A. Update
The Social Protection Fund in Oman has made changes to its contribution rates for Omani citizens who are both working in the UAE and covered by the unified extension protection system.
The new contribution rate as of 1st January 2024 for Omani’s covered by the extension protection system has become 18.5%, out which both government and private sector employers bear 11% and the insured bears 7.5%.
Additionally, Omani citizens who have voluntarily opted to participate in the ‘job security’ system of Social Protection Fund in Oman, which is similar to the voluntary unemployment system of GPSSA, bear an additional 1% of the total salary, alongside the deducted monthly contribution percentage
B. Statutory Release Date: February 07, 2024
C. Effective Date: January 01, 2024
https://gpssa.gov.ae/en/Pages/NewsDetail.aspx?newsId=509#/
A. Update
The General Pension and Social Security Authority (GPSSA) has recently confirmed that the provisions of new Federal Decree Law No. (57) of 2023 will apply to Emiratis joining work for the first time, starting from October 31, 2023 onwards, with any employer affiliated with the GPSSA.
Entities affiliated with the GPSSA include UAE-based federal and government sector employers, with exception to government entities in Abu Dhabi and Sharjah, as well as private sector employers, with exception to Abu Dhabi; however, it is important to note that private sector entities whose headquarters are located in any part of the UAE are subject to the provisions of the pension law, including its branches in other emirates. Entities whose headquarters are in Abu Dhabi, including their branches in other parts of the UAE, are subject to the Abu Dhabi pension law.
B. Statutory Compliance Release Date: November 27, 2023
C. Effective Date: October 31, 2023
A. Update
General Pension and Social Security Authority (GPSSA) has announced issuance of a new Federal Decree Law No. (57) of 2023 on Pension and Social Security.
This new Federal Decree Law will be applied to Emirati employees who joined the labour market for the first time from the date of its publication in organizations registered with the GPSSA. Current employees’ participants will continue to be covered by the provisions of the current Federal Law No. (7) of 1999 on Pension and Social Security.
Monthly Contribution Rate
The monthly contribution for the employees will be 26% of their contribution account salary, out of which the employee will bear 11% and the employer will bear 15%. The government will bear 2.5% of the private sector employer’s share for working Emirati nationals whose contribution account salary will be less than 20,000 dirhams, to encourage recruiting UAE nationals in the private sector.
Monthly Contribution Base
For Public Sector:
Contribution base includes monthly basic salary with monthly allowances including the cost-of-living allowance, the social allowance for children, the social allowance for UAE nationals, and the housing allowance. The maximum contribution base is 100,000 dirhams.
For Private Sector:
Contribution base is considered as per the wage mentioned in the employment contract. The minimum contribution base is 3,000 dirhams and maximum contribution base is 70,000 dirhams.
Special Provisions
- The insured employee who wishes to take unpaid leave (to pursue postgraduate studies, or the mother to care for her children) are allowed to maintain the subscription in the pension for the period of their leave in accordance with the terms and conditions set by the Authority.
- The pensioner who is receiving a pension in accordance with the provisions of Federal Law No. (7) of 1999 referred to or any previous law shall also continue to be covered by the current law.
- The insured person who has received an end-of-service bonus in accordance with the provisions of Federal Law No. 7 of 1999 or any previous law, will continue to be covered by the current Federal Law No. (7) of 1999, even if they started a new job after the issuance date of the new Federal Decree Law No. (57) of 2023.
B. Statutory Compliance Release Date: November 17, 2023
C. Effective Date: October 13, 2023
A. Update
Ministry of Human Resource and Emiratization (MoHRE) has introduced an alternate End of Service Benefit Scheme (“EOSB Scheme”/“Savings Scheme”/”New Scheme”) in collaboration with Securities and Commodities Authority (SCA) which was released as Cabinet Resolution No. (96) of 2023.
Through this scheme, employees can opt to invest their end of service amount in well-proven investment funds approved by MoHRE and SCA and get benefits from it.
Scope:
This is applicable to all private sector companies and employees in the country, including free zones.
Participation:
Participating in this Scheme is voluntary. Employers who are willing to opt for this alternative end of service scheme will have to submit a request to the Ministry (MoHRE) through its service channels, select one of the approved investment funds, and pay the subscription fees for the workers they wish to register.
If opted, workers will keep the gratuity they would have earned so far (prior to subscription to the new Scheme), however, the existing end-of-service gratuity system will be suspended for these employees and gratuity benefits they would have accrued will be calculated based on their years of service up to the date they join the new Scheme. The gratuity will then be calculated as per the new Scheme starting from the date the employee is registered in it, with all earnings (before and after the new Scheme) disbursed at the end of the contract with the employer.
Employer Obligations:
Employers must adhere to the following to participate:
- Choose and enter into a contract with one of the licensed investment funds.
- Select the levels and categories of employees that should be included in the alternative system.
- For the selected employees, discontinue using the present end-of-service benefits (gratuity) program. However, employers are required to calculate benefits due to beneficiaries in accordance with the Decree Law prior to implementing the alternative system and must pay them upon the termination of the employment relationship, based upon the beneficiary's basic salary as of the time of participation.
- In accordance with the resolution's guidelines, compute and pay the basic subscription amount without taking money out of the beneficiary's pay.
Provide all beneficiary-related documentation and data on the request from investment fund service providers.
When a worker moves from their current employer to a new one, they may obtain their gratuity from the fund, based on their current employer’s contributions. Alternatively, they can opt to keep it in the fund until the investment matures, with the possibility of collecting it at any time. The new employer may take over from the previous one and continue paying the subscription to the same fund, after contracting with it. The new employer may also register the worker with another fund manager and pay the basic subscription amounts.
Calculation of Subscription Fee:
The subscription fee is calculated as under:
- If the selected employee has served for less than 5 continuous years of service, then the subscription fee will be 5.83% of the monthly basic salary.
- If the selected employee has served for more than 5 continuous years of service, then the subscription fee will be 8.33% of the monthly basic salary.
It is important to note that the continuous service period begins with the date of employment and not the date of subscription.
The subscription fee will be transferred to the investment fund account within 15 days of the following month.
Employees' Voluntary Contribution:
Employees can also contribute approximately 25% of their total annual salary in addition to the subscription amount paid by employer to increase their investment returns. The Scheme also allows voluntary participation for UAE nationals working in the government and private sectors with only additional voluntary contributions. In this case, employers remain responsible for paying contributions to the pension and social security authorities, and do not need to pay subscription under the new Scheme. Workers can also withdraw some or all the contributions and investment returns, based on the terms and conditions of the Scheme.
B. Statutory Compliance Release Date: Oct 10, 2023
C. Effective Date: Nov 01, 2023
- Ministerial Resolution No. (668) of 2023 Regarding Subscription Under the Alternarive End-of- Service Benefits System
- Cabinet Resolution No. (96) of 2023 Regarding an Alternative End-of-Service Benefits System
A. Update
The Ministry of Human Resources and Emiratisation (MoHRE) has announced December 02 and 03, 2023 as paid public holidays for private sector workers in the UAE on the 52 nd UAE National Day.
This comes in line with the UAE Cabinet Resolution regarding the approved public holidays for the public and private sectors in 2023.
B. Statutory Compliance Release Date: November 22, 2023
C. Effective Date: December 02, 2023
A. Update
Across Middle East Countries, Ramadan is one of the major celebrated festivals. This, however, is dependent on the sighting of the moon. Eid Al Fitr 2023 is from Ramadan 29 to Shawwal 3, which on the Gregorian calendar will likely correspond to Friday, April 21, 2023, to Monday, April 24, 2023.
B. Statutory Compliance Release Date: December 06, 2022
C. Effective Date: April 01, 2023
A. Update
All workers must contribute towards unemployment insurance as per the Federal Decree-Law No. 13 of 2022, except for the following categories:/p>
- Investors (Business owners who own the entire business and manage it themselves)
- Domestic Workers
- Contractual workers/employees on a temporary basis
- Juveniles under the age of 18
- Pension-receiving retirees who have joined a new employer
Eligibility to avail this scheme:
- There must be a minimum subscription period of (12) twelve consecutive months for the insured in the scheme
- The insured must not have resigned or dismissed for disciplinary reasons under the Labor Relations Law and the Human Resources Law of the Federal Government in addition to any other applicable legislation
- The insured shall not be entitled to compensation if there has been fraud or deceit involved in his/her claim or if the establishment where he/she works is fictitious. If such a situation arises, the establishment and the insured shall be subject to the penalties and fines stipulated in the Labor Relations Regulation Law and any applicable legislation
- During the period of compensation entitlement, the payment of compensation shall cease if a worker/employee is hired by another employer
The Contribution to this scheme will be only done by the employee as per below income slabs:
- First Category- Employees with a basic salary of AED16,000 and less, the contribution shall be AED5 per month (or AED60 annually)
- 2 nd Category- Employees with a basic salary exceeding AED16,000, the contribution shall be AED10 per month (or AED120 annually)
The payment can be made by the employee monthly, quarterly, half yearly, or on an annual basis.
Benefit Payment:
The benefit will be paid in form of monthly compensation up to 60% of their last drawn basic salary. Further, the payout shall be subject to a limit of AED10,000 for the first category, and AED20,000 for the second category and for a maximum of three months for each claim from the date of unemployment.
The insured (the employee) must submit the claim through one of the below approved claim channels within 30 days from the date of employment:
- the insurance pool’s e-portal,
- the insurance pool’s smart application
- the insurance pool’s call centre
From the date of submission of claim, Compensation will be paid within two weeks by the authorities.
A compensation period of 3 months is available for each claim; provided that the coverage period does not exceed (12) twelve months during the insured's employment in the UAE labor market
B. Statutory Compliance Release Date: November 4, 2022
C. Effective Date: Jan 01, 2023
A. Update
The Ministry of Human Resources and Emiratization has issued a ministerial circular on working hours in the private sector during the holy month of Ramadan.
According to the circular, all private sector establishments in the country are required to reduce the normal working hours of all employees by two hours per day during the holy month.
This came in implementation of the provisions of Federal Decree Law No. 33 of 2021 regulating labor relations.
The effective date provided may vary on sighting of Crescent Moon.
B. Statutory Compliance Release Date: March 15, 2022
C. Effective Date: April 2, 2022 – May 1, 2022
A. Update
The UAE Government is to adopt a new four and a half day working week. The move applies to Federal Government entities and comes alongside new working hours, with Monday to Thursday workdays now starting at 7:30 am and ending at 3:30 pm, and Friday working hours from 7:30 am - 12:00 pm. Saturday and Sunday will be weekly off for federal employees.
Also, Friday sermons and prayers across the UAE will be held from 1:15 pm. Government staff will have the flexibility to decide to work from home on Fridays, as well as to arrange their working hours on a flexi-time basis.
While this change has been announced for Federal Sector, private sector can adopt the same to align the organisation with federal system.
B. Statutory Compliance Release Date: December 07, 2021
C. Effective Date: January 01, 2022
A. Update
The Ministry of Human Resources & Emiratisation (MOHRE) has announced the release of new UAE Labour Law by Federal Decree Law no. 33 of 2021. This law will entirely replace the Federal Law No. 8 of 1980.
Major changes announced in the New Law are highlighted below, keeping in mind the relevancy to payroll procedures:
| Sr. no. | Regulation | Current Law | New Law | ||||||
|---|---|---|---|---|---|---|---|---|---|
| 1 | End of Service Gratuity | Gratuity entitlement is reduced if the employee resigns before completing 5 years of service. Unlimited contract:
Also, if the employee has accepted pension fund benefits (only employer contributed to the same), then they are not eligible for gratuity from the employer. |
Gratuity entitlement is not reduced if the period of service is below 5 years, provided the employee has been in service for at least 1 year. Also, regulations regarding pension fund payment are awaited as new law is silent on this aspect. |
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| 2 | Deadline for payment of End of Service Entitlements | No provisions under existing laws. | All end of service entitlements must be paid within 14 days from the termination date. Failure to comply may result in a fine of between AED 5,000 and AED 1,000,000 (with a possible multiplier effect for the number of employees affected by the breach). However, no compensation is payable to the employee if this time frame is not complied with | ||||||
| 3 | Notice period in Probation Period | Employer can terminate employment of an employee during probation period without any notice period. | Notice period of minimum 14 days is mandatory for an employer to provide to an employee if the termination is happening during probation. Also, if the employee wishes to resign to join another employment in UAE, they must provide a notice of 1 month to the employer and the new employer shall compensate the old employer for the recruitment costs incurred. If the employee is leaving UAE, then minimum notice period provided to the employer is 14 days and if the employee returns to UAE within 3 months under new employment, then the compensation of recruitment cost will be done by the new employer to the old employer. |
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| 4 | Leaves | Paid Maternity leave is allowed for 45 calendar days. Beyond this, employees are entitled to a further 100 days of consecutive or intermittent maternity “sick” leave if they are suffering from a condition related to pregnancy or delivery that prevents them from resuming work. Employees returning from maternity leave are entitled to two additional breaks per day (not exceeding one hour in aggregate) for nursing, until the child attains 18 months of age. | Maternity leave has been increased to 60 days, 45 days of fully paid leave and 15 days of half paid leaves. Maternity leave also applies in circumstances where an employee miscarries after 6 months of carrying, still births and/or upon the death of an infant after birth. An additional 30 calendar days of maternity leave (with full pay), for employees who give birth to a disabled or sick child whose health conditions require a “constant companion” is available which can be further extended for an additional 30 days (unpaid). An employee’s entitlement to nursing breaks are reduced from 18 months to six months from the date of delivery. | ||||||
| No provision for compassionate leave | Compassionate leave of five days in the event of the death of an employee’s husband or wife, and three days in the event of the death of an employee’s mother, father, son, brother, sister, grandson, grandfather, or grandmother. | ||||||||
| No provision for Study Leave | Study leaves of 10 days per year, for an employee (with more than two years’ service) who is affiliated or regularly studying with an approved UAE education institution, to sit exams. | ||||||||
| No provision for parental leave | Parental Leave of five days (for both male and female employees) which must be utilised within six months of the child’s birth (as introduced under Federal Decree Law No. 6 of 2020). | ||||||||
| 5 | Carryover and encashment of Annual Leave | Annual leave must be carried forward or encashed if not utilised by the employee. Forfeiture is prohibited. | Unless stated otherwise in company policy, employees must utilise their annual leave in the applicable annual leave year. Employees are entitled to a payment in lieu of unused leave upon the termination of employment calculated based on an employees’ basic salary only | ||||||
| 6 | Part-time and Flexi-working systems | Part-time and flexible working arrangements are not expressly recognised. | New alternative flexible and atypical employment arrangements have been introduced:
The impact of these working systems on gratuity calculation and leave entitlement is yet to be addressed (expected through Executive regulations of the New law). |
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| 7 | Overtime | For overtime between 9PM and 4AM , employees will receive overtime rate that is 50% more tan their regular hourly rate | For overtime between 10PM and 4AM , employees will receive overtime rate that is 50% more tan their regular hourly rate |
