Hazem Balbaa, Associate at BSA Ahmad Bin Hezeem & Associates LLP, provides technical legal insights into the recently announced Federal Decree Law No. 33 of 2021.
I- FEDERAL LAW NO. 33 FOR THE YEAR 2021 – REGULATION OF LABOUR RELATIONS (“EMPLOYMENT LAW”)
On 20 September 2021, the UAE Federal Government issued Law No. 33 for the year 2021 (hereinafter referred to as the “Employment Law”) that completely repeals the previous employment law. While the new Employment Law, in general, is more explicit, concise and elaborative in certain parts, this does not exclude the fact the new Employment Law has drastically departed from the previous Employment Law in regard to certain provisions and topics. Prior to discussing the important, relevant changes in sufficient detail, it is important to note the following:
The provisions of the Employment Law will be in force on 2 February 2022; and
A lot of articles in the Employment Law refer to the law’s Executive Regulations. The Executive Regulations have not been issued yet, accordingly several provisions of the Employment Law lack clarity in terms of its application.
A. Prohibition on Discrimination
The Employment Law has become more explicit in regard to prohibiting discrimination. Article 4 of the Employment Law makes it clear that any form of discrimination based on race, colour, sex, religion, national origin, social origin, or disability is strictly prohibited. Moreover, the Employment Law makes it clear that women and men are to be equally financially compensated given that the work involves the same duties and responsibilities. With the above mentioned in mind, hiring nationals based on “Emiratization” is not considered a form of discrimination.
B. Types of Work
The Employment Law set out the different types of work available for employees to undertake and employers can offer. This includes the following: (i) full-time employees; (ii) part-time employees; (iii) temporary work; (iv) flexible work; and (v) any other type prescribed or set out in the Executive Regulations
C. Duration of Employment Contracts
A significant change in the Employment Law is the duration of employment contracts. Prior to the Employment Law, employment contracts could have been limited in duration or unlimited duration. However, Article 8 of the Employment Law makes it clear that all employment contracts must be for a limited duration that does not exceed three years and is subject to renewal for another similar period or a shorter period several times.
D. Probation Period
It was the law previously that an employee and/or employer had the right to terminate the employment relationship without any prior notice during one’s probation period. With the Employment Law that is no longer the case. The Employment Law makes it harder for one to keep switching between jobs easily given the great expense the employer incurs. Article 9 prescribes the following conditions:
(i) The employer has the right to terminate an employee during their probation period provided fourteen days written notice is given to the employee;
(ii) In the event an employee during its probation period wants to join a different employer within the country, the employee is obligated to provide its employer with at least one month written notice and the employee and/or the new employer is obligated to compensate the previous employer for the expenses incurred in hiring or bringing the employee. However, if the employee during their probation period wants to leave their current work for leaving the country, the employee is obligated to provide its employer with at least fourteen days written notice. However, if the employee returns to work in the UAE within three months, the employee and/or the new employer is obligated to compensate the previous employer for the expenses incurred in hiring or bringing the employee; and
(iii) In the event an employee fails to abide by Article 9, the employee will not be granted a working permit for a duration of one year from the date in which he left the country.
II- FEDERAL LAW NO. 35 FOR THE YEAR 2021 – AMENDING LAW NO. 9 FOR THE YEAR 2016 ON BANKRUPTCY LAW
- Law No. 35 for the year 2021 amended certain provisions of the UAE Bankruptcy Law. The new amendments allow the court to hold the company’s board of directors and/or managers personally liable for the debts of the bankrupt company in the event that the company’s assets are unable to meet at least 20% of its outstanding liabilities as a result of the following:
(a) Disposal of the company’s assets at prices lower than their market value in order to obtain assets with a view to avoid bankruptcy procedures or delay its commencement;
(b) Entering into transactions with a third party to dispose of the assets at no charge or for an inadequate charge without any certain benefit; and
(c) Satisfying any of the creditors' debts with the intent to cause damage to other creditors, during the period of cessation of payment or during insolvency.
- Additionally, Law No. 35 for the year 2021 imposes criminal liability upon the bankrupt company’s managers and/or directors. In order for a person to be held criminally liable, the law mandates an act of negligence, intentional harm and/or act of deceit to be carried out by the persons.
III. FEDERAL DECREE NO. 14/2020 – DECRIMINALIZATION OF BOUNCED CHEQUES
- Prior to the issuance of Decree No. 14/2020, which comes in force on 2 January 2022; drawing cheques with insufficient funds imposed criminal sanctions on the drawer of the cheque. In the event the amount of the cheque was less than AED 200,000, a fine would have been imposed and for cheques with amounts greater than AED 200,000, the drawer of the cheque may be subject to imprisonment and/or a fine. Decree No. 14/2020 departs from this position drastically.
- Under Decree No.14/2020, criminal sanctions can still be imposed but essentially for the drawer’s deceitful or intentional acts. For example, forging a cheque, presenting a cheque with knowledge that there are insufficient funds to cover the cheque, intentionally writing a cheque in a manner making it ineffective, etc. Moreover, a significant change includes that the law considers the cheque having an executory power. In other words, in the event a cheque is bounced for insufficient funds, the holder of the cheque may proceed immediately to the execution judge requesting to enforce the amount of the cheque against the drawer’s assets.
IV. FEDERAL LAW NO. 34 FOR THE YEAR 2021 – COMBATTING RUMORS AND CYBERCRIMES
- Besides the fact that Law No. 34 for the year 2021 imposes strict criminal sanctions on persons and/or organizations that hack websites whether private or governmental, steals one’s personal information, carries out deceitful acts with the use of the internet; Law No. 34 for the year 2021 makes it a criminal offence that carries a fine and/or imprisonment for anyone that uses the internet to spread rumours. This includes creating the rumour and/or recirculating the rumour.
V- FEDERAL LAW NO. 45 FOR THE YEAR 2021 – PROTECTION OF PERSONAL DATA
- The new Data Law prohibits a person and/or entity from processing or disseminating one’s data without the consent of the concerned person. The law also provides with the proprietor of the data with certain rights. For example: the right to have their personal data erased, the right to object to certain types of data processing. While the law shall come into effect in January 2022, the Executive Regulations of the law will provide greater clarity in regard to the sanctions imposed for any breach and the requirements needed to be complied with by individuals and/or companies.
Hazem Balbaa is an Associate at BSA Ahmad Bin Hezeem & Associates LLP, a full-service law firm with operations in the UAE, Saudi Arabia, Oman, Lebanon and Iraq, guided by the primary mission of offering legal services that combine comprehensive knowledge of local law with a modernised and progressive approach to legal practice.