The Ministry of Human Resources and Emiratisation (“MoHRE”) has introduced the New Employers' Awareness Kit (the “Kit”) to provide employers in the United Arab Emirates with a comprehensive and practical guide to the statutory requirements governing private-sector employment. The Kit serves as an authoritative compliance resource, detailing the principal legal obligations, procedures, and regulatory mechanisms that must be observed throughout the employment relationship. This article provides a detailed overview of the Kit's key components, outlines the legal duties imposed on employers, and highlights the benefits of integrating the Kit into human resources and business operations.
Purpose of the New Employers' Awareness Kit
The Kit is designed to promote a stable, transparent, and legally compliant work environment. By consolidating the essential requirements of Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations and its implementing regulations, the Kit enables employers to:
- Recognize and fulfill their statutory responsibilities toward employees;
- Streamline employment processes, including recruitment, onboarding, remuneration, and separation;
- Support national initiatives such as Emiratisation and employee protection schemes; and
- Avoid administrative penalties by ensuring timely and ongoing compliance with all applicable legislation.
Key Components and Legal Requirements
1. Leaves and Related Entitlements
The Kit specifies employers' obligations to grant and accurately record statutory leave entitlements, including:
- Annual Leave: Employees are entitled to 30 calendar days of annual leave for each year of service. Employees with more than six months but less than one year of service are entitled to two days of leave for each month. Upon termination, employees are entitled to a cash payment in lieu of any unused annual leave.
- Maternity Leave: Female employees are entitled to 60 days of maternity leave following six months of pregnancy, with 45 days at full pay and 15 days at half pay. Termination of employment due to pregnancy or maternity leave is prohibited.
- Sick Leave: Employees are entitled to up to 90 days of sick leave per year, with the first 15 days at full pay, the next 30 days at half pay, and the remaining 45 days unpaid. During probation, sick leave is unpaid and requires a medical report from an approved entity.
- Other Leave: Employees are entitled to bereavement leave, parental leave, study leave, and other officially declared holidays as provided by law.
2. Wages and Wage Protection
Employers are required to pay the agreed-upon wage on its due date, in UAE Dirhams or another agreed currency as specified in the employment contract. All salary payments must be processed through the Wage Protection System (“WPS”), which is an electronic system that ensures employees receive their wages in full and on time. The WPS enables employers to pay wages through banks, exchange houses, and financial institutions authorized and licensed by the Central Bank of the UAE. If an establishment fails to pay wages on time, the WPS issues electronic reminders on the third and tenth day after the due date. On the seventeenth day after the due date, the issuance of new work permits for the establishment is suspended, wage restrictions are imposed, and the establishment owner is notified of the reason for the suspension. Employers are urged to pay wages within the first 15 days of the due date to ensure compliance and avoid violations.
3. End-of-Service Gratuity
Foreign employees are entitled to an end-of-service gratuity after completing one year of continuous service. The gratuity is calculated as 21 days' basic wage for each of the first five years of service and 30 days' basic wage for each subsequent year, with a maximum cap of two years' wages. The gratuity is based on the employee's last basic wage. National employees are entitled to end-of-service benefits in accordance with applicable regulations.
Optional Alternative: Employers may choose to participate in the Optional Savings Scheme, which serves as an alternative to the traditional end-of-service gratuity system. Under this scheme, the employer pays a monthly contribution on behalf of the employee into an approved investment fund throughout the period of employment. Upon termination of service, the employee is entitled to receive the total amount of the basic contributions made by the employer, in addition to any investment returns accrued during the employment period. The Savings Scheme is designed to enhance financial security for employees, provide greater transparency and predictability for both parties, and may offer medium-term cost advantages for employers compared to the standard gratuity system. Participation in the scheme is voluntary and subject to the terms and conditions set by the Ministry of Human Resources and Emiratisation.
4. Work Permits and Recruitment Costs
Employers must obtain the appropriate work permit for each employee and are responsible for all related government fees, insurance premiums, and recruitment costs. Employees may not be assigned to work for third parties except as permitted by law.
5. Emiratisation Targets
The Kit sets out clear Emiratisation requirements for private sector establishments, with obligations varying by company size and activity:
Establishments with 50 or More Employees: These establishments must increase the number of Emirati nationals employed in skilled roles by 2% of the skilled workforce each year, starting from 2022, calculated cumulatively, to reach a minimum Emiratisation rate of 10% by 2026. The increase is implemented as 1% every six months. Skilled roles are defined according to the Ministry's approved classification and include positions that require professional, technical, or administrative skills.
Establishments with 20 to 49 Employees in Selected Economic Activities: Establishments operating in specific economic sectors, as determined by the Ministry, must appoint at least one Emirati national during 2024 and a second Emirati national during 2025, regardless of the total number of skilled workers.
Financial Contributions for Non-Compliance: Employers who do not meet the required Emiratisation targets are subject to monthly financial contributions for each unfilled Emiratisation position. For establishments with 50 or more employees, the contribution is AED 6,000 per month for each required Emirati national not appointed, increasing by AED 1,000 annually until 2026. For establishments with 20 to 49 employees in selected activities, the contribution is AED 96,000 for each unappointed national in 2024, and AED 108,000 for each unappointed national in 2025.
Employers are strongly advised to review the specific regulations and ministerial decisions applicable to their entity, as Emiratisation requirements and compliance obligations may vary depending on the sector, activity, and size of the establishment.
6. Occupational Health, Safety, and Accommodation
Employers are required to:
- Provide a Safe and Enabling Work Environment: Employers must ensure a safe workplace and comply with all occupational health and safety standards. This includes adherence to the Occupational Heat Stress Prevention Policy, which prohibits outdoor work between 12:30 pm and 3:00 pm from 15 June to 15 September each year. Employers must implement all necessary protective measures to safeguard employees from occupational risks.
- Labour Accommodation: Where an establishment employs 50 or more workers who each earn AED 1,500 or less, the employer is required to provide suitable accommodation for these employees. The accommodation must be licensed by the competent authorities and registered in the labour-housing system, in accordance with the rules, conditions, and standards applicable in the UAE.
7. Mandatory Insurance and Protection Schemes
The Kit requires employer participation in the following core programmes:
- Employee Protection Insurance: Provides coverage for all employee financial entitlements, including unpaid wages, up to AED 20,000 for a period of 30 months. This insurance is mandatory for the issuance of a work permit.
- Unemployment Insurance: Compensates insured employees with 60% of their subscription salary in the event of involuntary job loss. The insurance premium is not to exceed AED 5 per month for employees with a basic salary of AED 16,000 or less, and AED 10 per month for those earning more than AED 16,000.
- Health Insurance: A basic health insurance policy is mandatory for every private-sector employee and domestic worker as of 1 January 2025 and is a prerequisite for the issuance or renewal of a residency visa.
8. Administrative Penalties
The Kit identifies specific violations that result in administrative fines, including delayed wage payments, sham Emiratisation, submission of incorrect data or documents, failure to renew required documents, and non-registration of mandatory insurance. Penalties increase with repeated or continued non-compliance.
9. Establishment Classification
Establishments are classified into three categories based on their compliance with legal requirements and Emiratisation performance. This classification directly affects the service fees charged by MoHRE.
Benefits for New Employers
The New Employers' Awareness Kit offers clear, practical advantages for organizations in the UAE:
- Regulatory Clarity: A single, reliable reference that simplifies complex labour regulations and reduces uncertainty.
- Operational Efficiency: Streamlined processes and guidance that minimize errors and support timely compliance.
- Cost Management: Insights into classification, insurance, and Emiratisation help employers plan and control costs.
- Risk Mitigation: Adhering to the Kit's requirements helps avoid fines, disputes, and reputational risks.
- Workforce Stability: Fair and transparent practices enhance employee satisfaction and retention.
Legal Obligations and Compliance Issues
Employers must take proactive and ongoing measures to ensure full compliance with the Kit's requirements. Failure to do so may result in financial penalties, suspension of business licenses, or downgrading within the establishment-classification system, directly impacting business operations and reputation.
Conclusion
The New Employers' Awareness Kit is an essential resource for business leaders and HR professionals navigating the UAE's labour landscape. By consolidating key compliance requirements, the Kit enables employers to operate with confidence and efficiency. Please note that this summary is for general information only and does not constitute legal advice. For specific guidance or clarification tailored to your business, we encourage you to contact BSA LAW.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
