Mimo Legal Consulting

Questions & Answers on UAE Labor Laws

The UAE is home for over 200 nationalities from all corners of the world. Most of the people moved to the UAE due to the employment opportunities here. Therefore, the matters related to UAE employment laws and regulations may cross everyone’s mind. We hope that following publication would be helpful for both the employers and the employees in the UAE by shedding some light on the most important topics in relation to labor laws.

Federal Law No. 8 of 1980 Regulating Labour Relations as amended by subsequent laws (the Law”) governs employment relations in the UAE. There are many other Ministerial Resolutions and Cabinet Decisions regulating the employment matters in the country. Moreover, some free zones have their own employment laws applicable within the free zones respectively.

Q: What are the pre-requisites for employment in UAE?

Employees who are not UAE nationals may be employed in the United Arab Emirates only after obtainment of a work permit of the Ministry of Labor and Social Affairs (the “Ministry”). The application to obtain the work permit is submitted to Ministry by an employer.

The work permit is only given when the employee has the required professional competence for the position sought and he has lawfully entered the country and complies with the conditions stipulated by the residence regulations in force in the UAE.

While applying for the work permit, employers are required to submit a bank guarantee to the Ministry as security for end of services benefits and repatriation costs of their employees.

Q: What is an employment contract?

Employment contracts for expats must be in writing and drawn in the format ratified by the Ministry, which is a prerequisite for issuance of the work permit. The employment contract shall be made in duplicate, one copy to be given to the employee and the other to the employer. In absence of a written contract, all of its conditions may be proved by all legal means of evidence such as email communications, witnesses etc.

The Ministry has its standard employment contracts written in Arabic and English and contains minimum conditions. In most of the cases, the parties use the standard contract of the Ministry. However, it is not mandatory for the parties to use this standard contract and may alternatively draft and lodge their own employment contracts at the Ministry. Such self-prepared contracts should be in Arabic or have Arabic translation and can not contain provisions which are in contradiction with the Law.

Q: What are the types of employment contracts?

An employment contract may either be for a limited or an unlimited period. If it is for a limited period, such period shall not exceed four years and the contract may with mutual agreement be renewed one or more times for similar or shorter period/periods.

An employment contract is considered a contract for an unlimited period effective from the day of its commencement in any of the following cases:

  • If it is not concluded in writing.
  • If it is made for an unlimited period.
  • If it is made in writing for a limited period and continues to be applied by both parties after lapse of its period without a written agreement between them.
  • If it is concluded for the performance of a specific job for which no period is fixed, or if the job by its nature calls for renewal, and has remained in force despite the completion of work agreed to.

Q: What are the conditions that need to be specified in employment contracts?

The employment contract shall in particular specify the date of its conclusion, the date on which work starts, nature and place of work, duration of the contract in the case of contract with limited period and the amount of the remuneration.

Q: What is a probationary period?

The employee may be appointed for a probationary period not exceeding six months. Both the employer and the employee may terminate the employment contract during the probation period without giving a notice. Appointment of the employee on probation basis may not be made more than once. However if the employee passed the probationary period satisfactorily, and remained in service, such period of service shall be added to the whole period of his service. The parties may also agree to waive the probation period and commence employment without it. Once it is waived, the probation period cannot be restituted.

Q: What is the minimum wage requirement for a person to be employed in UAE?

At present there is no requirement for minimum wage in UAE, as per the law, however, if an employee wishes to sponsor his spouse or children for the purpose of residing in the country, he needs to have a minimum salary of AED 4000 (plus accommodation allowance).

Q: What are the rules pertaining to the employment ban in UAE?

Generally, the employees of on-shore entities in the UAE may get automatic 6-month employment ban upon termination of the employment contract. There have been some drastic changes to this rule by the Cabinet Resolution 25 of 2010 and its supporting Ministerial Resolutions. As per the new developments, from January 2011, the automatic 6-month ban will be lifted where:

  • Employment contract is terminated by mutual consent; and
  • The employee has worked for the same employer for at least two years.

However, there are few exceptions to this rule, as follows:

“Mutual consent” may not be required if:

  • An employer has breached its obligations under the Law and the employment contract. For instance, if an employer fails to pay salary for a period of 60 days or more, assaults the employee; or
  • Where an employee has not been a cause for the termination of the employment. For instance, if an employer has closed down and has not been carrying out any business activity for at least two months, provided that the employee has filed a complaint to the Ministry during this period; where the employer dismisses the employee arbitrarily or the employer terminated a limited term contract pre-maturely, or where the employer terminates the contract unilaterally or fails to renew a limited term contract.

In addition, the requirement of two years’ service will not be required where:

  • An employee falls under one the below categories: University Degree holder and above, Diploma holder and High School qualification and will get from the new employer the minimum salaries of AED 12,000 for degree holders, AED 7,000 for Diploma holders and AED 5,000 for high school graduates respectively; or
  • An employer acts in breach of its legal obligations; or
  • An employee is transferred within the companies belonging to the same shareholders or group.

Q: In which cases the employment contract can be terminated?

An employment contract can be terminated in any of the following circumstances:

  • If both the parties agree to terminate the contract, provided that the employee consents to this in writing.
  • If the contract term has come to an end, unless the contract has been explicitly or implicitly extended in accordance with the rules.
  • Where the contract is for an unlimited term, then one of the parties can terminate the contract by serving a prior one-month notice.

Q: Can an employment contract be ended by the death of the employer or the disability of the employee?

An employer’s death can not be the cause of termination of a labour contract, unless the subject of the contract is related to him personally. On the other hand, an employment contract will be terminated upon an employee’s total disability.

However, if the employee’s disability is partial and he is capable of performing other work that suits his health, the employer should transfer the employee to such other position or work if the employee so requests, and should give him wages equal to those paid for similar work.

Q: Can an employer dismiss a worker from work without serving a due notice?

Generally, termination of the unlimited contract by any of the parties without serving a prior notice prescribed by law constitutes a serious breach of the Law. However, in following cases, an employer may dismiss an employee without notice (as per Article 120 of the Law):

1) If the employee assumes a personality or a nationality other than his own, or has submitted fake documents or certificates.

2) If the employee was appointed under probation and the termination happened during that period or at its end.

3) If the employee commits a mistake causing the employer a substantial financial loss, provided the employer informs the Ministry of the incident within 48 hours.

4) If the employee violates instructions relating to safety in the place of work, provided those instructions were written and displayed in a permanent place, and the employee has been informed of these instructions orally if he is illiterate.

5) If the employee fails to carry out his basic duties as stated in the contract and continues to do so in spite of a written interrogation and a warning that his service will be terminated if he repeats his misconduct.

6) If he discloses a secret of the establishment for whom he is working.

7) If he is conclusively convicted by the concerned court of a crime involving honour, honesty and public morals.

8) If he is found drunk or intoxicated by drugs during working hours.

9) If he commits a physical assault on the employer or manager or one of his colleagues during work.

10) If he becomes absent without a legitimate reason for more than 20 intermittent days or more than seven continuous days within one year.

Q: Can an employee terminate his employment contract without serving a due notice?

An employee may terminate his employment contract without serving a prior notice in either of the following cases (as per Article 121 of the Law):

1) If the employer has not performed his obligations towards the employee as prescribed in the contract or in the Law.

2) If the employer or his representative assaults the employee.

Q: Would changes in the structure of a business or its ownership constitute a termination of an employment contract?

If there is a change in the ownership or the structure of a business such as mergers or acquisitions, the employment contract will remain valid. Both the previous and the new employer are jointly responsible for six months from the date of the alteration for the obligations in front of the employee incurred in the period prior to the change. After the end of this six-month period, the new employer is solely responsible to perform employer’s obligations in front of the employees.

Q: What are the rights of an employee on termination of employment contract?

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

1) A notice period, or any amount due in lieu of the notice period in the case of an unlimited contract.

2) In the case of a contract for an unlimited term, compensation for unreasonable dismissal if the contract was terminated by the employer for unreasonable cause.

3) In the case of a contract for a limited term, an amount equivalent to three months’ salaries or period until the end of the contract, whichever is shorter.

4) Amount due for unutilized leave or any part thereof.

5) Due payments for overtime work or any unpaid salaries.

6) End of service gratuity.

7) Repatriation expenses as per the Law or the employment contact.

Above provisions are subject to the employee not being in breach of either the Law or the employment contract.

Q: What does the term end of service gratuity mean?

An employee who completes one year or more in continuous service shall be entitled to a gratuity at the end of their service. The gratuity shall be calculated as follows:

1) 21 days wages for each year of the first five years.

2) 30 days wage for each additional year provided that the total amount of the gratuity can not be more than the wages of two years.

There are few exceptions to the above general rule. You may check our article “Employee End of Service Benefits in the UAE” for more details on this subject.

Q: In case of a dispute between the employee and the employer, how can either of them file a case?

In case of dispute between the employee and the employer, a compliant must be filed by either of the parties to the Ministry in the emirate in which the company is located. The complaint has to be in Arabic and sets out a summary of the facts and the amount claimed. Copy of the labour contract should be enclosed. Normally, any typing center can prepare the compliant letter for you. Once the complaint is filed, the Ministry summons the parties and sets an appointment for both of them to meet in front of the Ministry’s official. The Ministry issues its recommendation and acts as a mediator to facilitate an amicable settlement between the parties.

Should the parties fail to settle the dispute at the Ministry; the case will then have to be filed in a normal court. In this case, the Ministry will its report outlining the summary of the case, its recommendation and the arguments brought by the parties. Once the case is filed in the court, within three days it will schedule a hearing and summon the other party to hear the matter.

Q: Is the employer or the employee liable to pay any court fees if the matter is referred to the court?

As per the laws in UAE, employees are not required to pay court fees. This exemption is also applicable if an employee files an appeal at the court of appeal. However, should an employer elects to proceed with the court action, then he must pay court fees, which are normally determined based on the percentage of the amount in dispute.

Q: Is there any limitation of time for filing employment related cases?

There is a limitation of time in labor related matters. A complaint by either of the parties must be filed to the Ministry within one year from the date on which the disputed amount becomes due. If the complaint is not made within the above-mentioned time, then it will be time bared meaning that the case can not be filed neither to the Ministry nor to normal courts.

Note: This article is intended for general information only and should not be considered as legal advice.