Recent Changes in UAE Employment Law that you should know

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Staying abreast of recent developments in employment laws is vital for both businesses and employees. In this article, we explore key updates in UAE employment regulations and their potential impact on various stakeholders.

Emiratization: Private sector companies with 20 to 49 employees must employ at least one Emirati, with this requirement increasing to two in 2025. This represents a significant expansion of Emiratization beyond the previous threshold of companies with 50 or more employees. Read more here.

Alternative End-of-Service Gratuity Scheme: Instead of a lump sum payment, employees can coordinate with employers to invest their accrued end of service gratuity by making monthly contributions to a licensed investment fund. This initiative encourages a savings mentality and has the potential to increase the payout amount to the employee.

Unemployment Insurance Plan: Updates to the UAE labor law introduce an unemployment insurance plan aimed at providing economic security for private sector employees. It is now mandatory to employees to register for unemployment insurance through the ILOE app/website. However, it’s important to note that the responsibility of enrolling in this insurance lies with the employee, not the employer.

New Pension Scheme:

The new contribution rate starting from October 2023 is 26% of the total salary:

  • 11% is the contribution account salary (employee’s share in government and private sector)
  • 15% is the contribution account salary (employer’s share in government and private sector)

The Government bears 2.5% on behalf of the employer in the private sector for Emirati employees whose salary is less than AED20,000. Meaning in this case that the employer would be subject to a 12.5% contribution rate.

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