UAE: Introduction of minimum wage is a 'progressive step' in new labour law, say experts

The introduction of a minimum wage is an important step for preserving the rights of low-skilled workers, legal experts have said.

In a first-of-its-kind move, the new UAE labour law introduces a minimum wage for employees in the private sector, effective from February 2, 2022.

The UAE Cabinet will determine the minimum wage, according to Article 27 of the newly-announced Federal Decree Law No. 33 of 2021 on regulating labour relations.

Abdulla Ziad Galadari, senior partner at Galadari Advocates & Legal Consultants, called the new article a "a progressive step."

"Article 27 provides a new structure for establishing minimum wage in the private sector, which is a big leap in modernising the employment sector in the UAE to match the best international practices," he said.

As opposed to the past, employers will now have a minimum wage threshold to adhere to, which protects private sector workers' rights in an evolving labour market.

“Consequently, the new addition to the private employment sector will further attract talents from all around the world to the UAE and enable UAE to continue to grow as a global hub,” Galadari said.

Ghassan El Daye, partner and head of litigation for the Middle East at Charles Russell Speechlys, said the minimum wage will preserve employees' rights, particularly those of low-skilled workers.

“Previously, the wage was based on a mutual negotiation between employees and employers since there was no minimum wage threshold. A wage primarily covers basic salary, housing and transportation," he said.

Once a minimum wage is determined by the Cabinet, it has a binding effect that employers can never violate.

Setting a minimum wage, El Daye noted, is an “innovative step” to improve the livelihood of employees and help them establish a decent living that responds to inflation, taxes and rapidly-evolving markets.

Echoing similar sentiments, Mohammed Al Dahbashi, managing partner at ADG Legal, said by setting a minimum wage, the new law will govern a humanitarian aspect for working-class employees in the private sector and prohibit misuse of human resources.

However, he noted the direction and standards by which the future minimum wage will be determined are yet to be seen. The executive regulations of the law will detail the implementation.

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During the announcement on Monday, Dr Abdul Rahman Al Awar, Minister of Human Resources and Emiratisation, said the new law aims to support the UAE’s efforts in creating a flexible labour market that copes with the ever-changing modern world, safeguards employee rights, empowers women, and attracts talents and competencies from all over the world.

He noted that the law was drafted in consultation with all the relevant parties in the federal and local government and the private sector. The executive regulations of the law that will oversee the implementation are still underway.

sherouk@khaleejtimes.com

• Dubai