KEY CHANGES IN THE NEW ADGM EMPLOYMENT REGULATIONS 2024

09 January 2025

Bini Saroj

The Abu Dhabi Global Market (ADGM) has introduced the Employment Regulations 2024 ("New Law"), which will come into effect on April 1, 2025, replacing the Employment Regulations 2019 (as amended) ("Old Law").

Abu Dhabi: The ADGM Employment Regulations 2024 introduce several key changes aimed at enhancing workplace standards, strengthening employer-employee relationships, and supporting the continued development of ADGM as a leading financial hub.

The regulations apply to all employers and employees based in ADGM. Employers holding dual licenses issued by the Abu Dhabi Department of Economic Development (ADDED), whose employees fall under UAE federal labor law, are exempt

Below we list key matters you need to be informed about:

Below are the key changes and updates that employers should take note of:

1. Hiring and Employment Contracts

·        Employers are required to issue written employment contracts within one month of an employee’s start date. These contracts must be in English and signed by both parties. Any amendments must be agreed upon in writing by both parties

• Written employment contracts remain mandatory.

2. New Employment Classifications:

1.        Remote Employees: Employees working outside the UAE are not required to obtain a UAE residence visa or ADGM work permit. Their rights and obligations differ slightly from those of on-site employees. For those working outside the UAE, visa and employer liability insurance provisions are not applicable.

2.     Part-Time Employees: A new classification introduced to address the needs of employees working reduced hours. Entitlements for part-time employees, including leave and benefits, are now explicitly pro-rated based on the number of hours worked

3. Probationary Period

The probationary period is capped at six months. During probation, employees are entitled to sick leave but not sick pay, and certain sections of the regulations do not apply

4. Working Hours and Leave

·        Working Hours: Limited to 48 hours per week unless the employee consents otherwise in writing. During Ramadan, Muslim employees are entitled to a 25% reduction in working hours without pay reduction. Employees must provide written consent for overtime work. There is no overtime pay provision, though ADGM may introduce rules or guidance later.

·        Leave Policies: Employees can roll over up to five days of annual leave into the following year. New provisions include five days of paid bereavement leave and expanded maternity and paternity leave rights, such as nursing breaks and adoption-related leave

5. Leave Entitlements

• At least five days of accrued but untaken leave can now be carried over to the next year (previously capped at five days).
• Employers may still require employees to take annual leave with one week's notice.
• Employees are now entitled to five working days of paid bereavement leave.

6. Parental Rights

• Maternity leave remains at 65 working days.
• The right to maternity leave now extends to employees adopting children under five years old.
• Paternity leave remains at five working days, with the same rules for pay and holiday extensions.

7. Discrimination

• The protected characteristic ‘gender’ has been replaced with ‘sex.’
• Explicit protection has been added for pregnancy and maternity.
• ‘Colour’ has been removed as a protected characteristic, as ‘nationality’ and ‘race’ cover this aspect.

8. Victimisation

• Employers are prohibited from subjecting employees to detriments, including dismissal, for engaging in protected acts.
• Protected acts include filing discrimination claims, giving evidence, or formally reporting violations.
• False claims made in bad faith are not protected.
• Courts may order employers to compensate victimized employees up to three years’ total salary.

9. Protected Disclosures (Whistleblowing)

• Employees making protected disclosures are not breaching confidentiality obligations.
• Employers cannot impose civil or contractual liability on whistleblowers.
• Retaliation, such as dismissal, disciplinary action, or refusal of benefits, is prohibited.
• Courts can grant compensation and order mitigation measures if retaliation occurs.

10. Vicarious Liability

• Employers can be held liable for employees’ actions that breach the law if connected to their employment.
• Employers must prove they took reasonable steps to prevent wrongful acts.
• Specific liability applies for discrimination, harassment, and victimisation.

11. Termination and End of Service Gratuity

• The notice period remains unchanged, but payment in lieu of notice now requires employee consent.
• Employers must provide a written statement of termination reasons.
• The basic salary must constitute at least 50% of the total salary for gratuity calculations.
• Employees with more than one year of service are entitled to gratuity even if terminated for cause.
• Pension or savings schemes remain an alternative to gratuity payments.

12. Late Payment

• Employers must pay all amounts due within 21 calendar days of termination.
• A penalty equal to the employee’s daily wage applies for each day of delay beyond 21 days (capped at six months' wages).
• Courts may reduce or waive penalties based on employer and employee conduct.

13. Settlement Agreements

• Settlement agreements remain valid, but employees must confirm they had the opportunity for independent legal advice.
• Employers cannot make visa cancellation conditional on waiving employee rights.

14. General Provisions

• The New Law does not apply to employees with temporary work permits holding onshore visas.

In Conclusion

The ADGM Employment Regulations 2024 reflect global changes in workplace practices and provide greater clarity to employers and employees regarding their rights and obligations. These changes aim to promote and foster best employment practices in ADGM, ensuring a competitive and compliant business environment.

ALKETBI TOUCH

Our team of professionals has a strong understanding of its regulatory requirements. ALKETBI can assist you with all aspects of compliance under the Employment Regulations 2024, from updating employment contracts to implementing workplace policies, ensuring that your business stays aligned with the new rules. If you need support with implementing the ADGM employment regulations, contact our team and if you require assistance with any other aspects of company set-up, restructuring, local partnership and or ongoing corporate obligations, we will be happy to help! Contact us