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About UAE

Employment Law in UAE
(Dubai, DIFC, Abu Dhabi)

INTRODUCTION

Labour matters in the UAE are governed by Federal Law No. 8 of 1980 Regulating Labour Relations as amended by Federal Laws No. 24 of 1981, No.15 of 1985 and No.12 of 1986 (the “Law”). There are special labour related regulations applicable in some of the free zones in the UAE, such as the Jebel Ali Free Zone.

According to Article 3 of the Law, the Law applies to all staff and employees working in the UAE, whether UAE nationals or expatriates. However, there are certain categories of individuals who are exempted from the Law as listed below:

TO WHOM DOES THE LAW APPLY?

Staff and workers employed by the federal government, government departments of the member emirates, the municipalities, public bodies, federal and local public institutions and those staff and workers employed in federal and local governmental projects.

Members of the armed forces, police and security units.

Domestic servants.

Agricultural workers and persons engaged in grazing (this exemption does not include persons who are employed in corporations which process agricultural products and/or those who are permanently engaged in the operation or repair of machines required for agriculture).

ARE EMPLOYEES IN THE FREE ZONE SUBJECT TO THE LAW?

Although the Law stipulates that all employees other than the ones listed above are subject to it, in practice employees in the free zones, such as the Jebel Ali Free Zone and the Dubai Airport Free Zone, are subject to the rules and regulations of the free zone concerned and maintain their own employment contracts. However, as mentioned above, the Law will still apply and the provisions in the employment contract must be in accordance with the Law. Moreover, it should be noted that free zone employees are sponsored by the relevant free zones and not by their employers.

Such employees are seconded by the free zones to companies established in the free zones in return for, amongst other things, a bank guarantee which is required to secure the employees’ dues and any end of service benefits which may be payable on termination of their employment contracts. However, although the free zones are technically the employees’ sponsor, the employees do maintain their right of action against their employers before the courts.

In addition, as will be discussed in section 19 below, when a new business is established it has to be registered with the Ministry prior to the employment of staff. The free zones authority sponsoring the employees, refer directly to the immigration authorities and not to the Ministry. This is not to say that disputes between employees and their employers in the free zones will not first be heard at the Ministry. The Ministry may entertain such claims and there is nothing as yet under UAE law precluding that unless the Free Zone Authority has a special ordinance governing the relationship between employee and employer.

ENFOREABILITY OF THE LAW

By whom is the Law enforced?

The Law is federal and is therefore applicable to all the emirates of the federation. It is enforced by the Ministry. Labour related litigation is adjudicated by the federal and local courts of the UAE, however, all disputes relating to labour matters must first be referred to the Ministry. If either of the parties involved (employer or employee) is unhappy with the Ministry’s decision and the matter cannot be settled amicably, the dispute may then be referred by the Ministry to court, within two weeks from the date in which the complaint was filed, after which either party may revert to the court directly.

CONDITIONS FOR EMPLOYMENT

What are the primary pre-requisites for employment?

In order to employ any expatriate employee in the UAE, an application must be made to the Ministry. The application has to be approved by the Ministry prior to the employee entering the UAE. It should be noted that new businesses are required to register or open a file with the Ministry before they can employ staff (as will be discussed in section 19). In addition to obtaining the Ministry’s approval to employ non-UAE nationals, certain immigration procedures need to be followed as explained below.

There is also a requirement for certain employers to submit to the Ministry a bank guarantee as security for end of services benefits and repatriation costs related to their employees. This procedure is also applicable to employers in most of the free zones in the UAE.

Where the intended employee is a UAE national, an employment contract may be entered into at any time. Employment contracts for non-nationals must be drawn in the format approved by the Ministry on an application made by the employer.

Employment contracts for national employees need not, however, be in writing and the terms and conditions of employment may be proved by any means of proof admissible by law. A labour permit for an expatriate employee will not be issued by the Ministry unless a formal written labour contract is filed with the Ministry.

EMPLOYMENT CONTRACTS

Two types of employment contracts are allowed in the UAE – limited employment contracts or fixed term contracts, which are contracts for a specified duration with specific commencement and completion dates, and unlimited contracts where the employee continues to work for the employer from a specific date until such time as the employment contract is terminated by either party after giving prior notice.

WHAT INFORMATION SHOULD BE STATED IN AN EMPLOYMENT CONTRACT?

The only information required by law to be specified in an employment contract is the following:

  • Wages/remuneration payable.
  • Date of the employment contract.
  • Date of commencement of the employment contract.
  • Nature of the contract (limited or unlimited).
  • Nature of the work.
  • Duration of the contract (for fixed term contracts).
  • The location of employment.

The labour office at the Ministry maintains standard employment contracts in Arabic and English, where the employer and the employee need only fill in the blanks. It is however not compulsory for the parties to use or file these contracts at the Ministry and may instead draft and lodge their own employment contracts at the Ministry providing they do not contain provisions which are contrary to the Law and are in the Arabic language.

WAGES

Wages according to the Law are defined as follows:

“All payments made to the worker on a yearly, monthly, weekly, daily, piece work, or production, or commission basis, in return for the work he performs under the contract of employment, whether such payments are made in cash or in kind.

Remuneration shall include the cost of living allowance. It shall also include any grant given to the worker as a reward for his honesty or efficiency if such amounts are provided for in the contract of employment or in the internal regulations of the establishment or have been granted by custom or common practice to such an extent that the workers of the establishment regard them as part of their remuneration and not as donations.”

MINIMUM WAGES

No minimum wage has been prescribed by law to date, however, an employee with a monthly salary of less than Dhs.4, 000 (plus accommodation allowance), will not be able to sponsor his spouse or children for the purpose of residing in the country.

These are immigration regulations and do not form part of the Law.

In addition, in order to sponsor a house-maid or domestic help in the UAE there is a minimum basic wage requirement of Dhs.6, 000 per month.

OFFICIAL HOLIDAYS

Which official holidays are an employee entitled to take?

An employee is entitled to an official holiday with full wage on the following occasions:

Occasion Time Off

  • Hijri New Year’s Day one day
  • Gregorian New Year’s Day one day
  • Eid Al Fitr (end of Ramadan) two days
  • Eid Al Adha and Waqf three days
  • Prophet Mohammed’s Birthday one day
  • Isra and Al Miraj one day
  • National Day one day

The holidays listed above are applicable to all employees whether they are working in the public or private sectors. However, public sector employees may be granted additional days off to those specified on the above occasions, which are announced from time to time.

It is therefore open to private sector employees to grant their employees a holiday on the above occasions or to pay them instead. The date(s) on which the above official holidays fall depend on the Ministry’s announcements, which are published in the local newspapers shortly before they occur.

PAYMENT OF GRATUITY

What is the employee entitled to on the termination of his employment contract?

On the termination of the employment contract, an employee is entitled to the following:

  • A notice period, or any amount due in lieu of the notice period in the case of an unlimited contract.
  • In the case of an unlimited contract, compensation for unreasonable dismissal if the contract was terminated by the employer for unreasonable cause.
  • In the case of a limited contract, compensation equivalent to the period until the end of the contract, or three month’s wages, whichever is shorter.
  • Payments equivalent to the balance of unutilized leave or any part thereof.
  • Payments for overtime or any balance of wages due and not yet paid.
  • End of service gratuity calculated on the duration of the employment.
  • Repatriation expenses as per the Law or the employment contact, subject to the employee not being in violation or in breach of either the Law or the employment contract.

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