The relationship between an employer and employee is one of the most important. It is vital to support the relationship with rules and regulations to ensure the safety of all parties. Countries tend to establish labour laws to regulate this relationship. In the United Arab Emirates, the law is called the UAE Labour Law.
What is UAE Labour Law? Labour law refers to rules and regulations governing the relationship between an employer and the employee. The law is established in Federal Law No. 8 On the Organisation of Labour Relations in the UAE. Several Decrees and Resolutions accompany the law.
The law sets out rules for the private sector regarding how wages are paid, what kind of employment contracts are allowed and who helps with disputes.
Employment contracts are contracts between the employer and the employee. These are mandatory to establish the legal boundaries for the work. The details of work contracts depend on whether you’re employed in the private or the public sector.
An employment contract can be either full-time or part-time.
The latest Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector, the UAE Labour Law, established fixed-term contracts as the norm in the country. The new law came into effect on 2 February 2022.
The fixed-term contract means an employee is hired on a fixed term that may be extended or renewed for a similar or shorter period. Suppose the contract is not renewed or extended upon expiry, but the parties continue to perform the obligations. In that case, the contract is automatically considered renewed under the same terms.
Current unlimited employment contracts need to be converted into fixed-term employment contracts.
You can have different types of work arrangements. The available models are:
The probation period in the UAE can’t exceed six months or be extended. When the employee finishes the probation and continues working for the company, the probation period will amount as part of their service.
If the employer wants to terminate the contract during probation, they must give 14 days prior notice. Suppose the employee resigns during the probation period with the intention of leaving the UAE. In that case, they must provide a 14-day prior notice in writing.
Suppose the employee wants to change jobs to join another UAE company. In that case, they must provide a written notice of a minimum of one month. The new employer must also compensate the current employee’s recruitment costs unless otherwise agreed.
Contracts for the public sector are available as follows:
The Ministry of Human Resources and Emiratisation (MoHRE) defines nine professional levels of jobs. These are similar to those issued by the International Labour Organisation (ILO). The nine levels are:
Level 1: Legislators, managers, and business executives.
Level 2: Professionals in scientific, technical and human fields.
Level 3: Technicians in the scientific, technical and humanitarian fields.
Level 4: Writing professionals.
Level 5: Service and sales occupations.
Level 6: Skilled workers in agriculture, fisheries and animal husbandry.
Level 7: Craftsmen in construction, mining, and other craftsmen.
Level 8: Operators and assemblers of machinery and equipment.
Level 9: Simple professions.
Your labour is classed as skilled work if it fulfils all of the following conditions:
Working hours depend on whether you work in the public or the private sector.
The working hours in the private sector are:
During the holy month of Ramadan, these hours are reduced by 2.
The daily working hours can increase or decrease for certain economic sectors or categories of workers. The Executive Regulations of the Labour Law define these.
You should note that the time spent commuting to the workplace is not included in the working hours. Again, some exceptions apply.
Every employee is also entitled to have one or more breaks when they work for five consecutive hours. The breaks must be less than an hour and aren’t calculated within the working hours.
The employer has the right to ask an employee to work overtime. Overtime must not exceed two hours in one day.
Suppose the nature of the work forces the employee to work beyond the normal hours. In that case, they are entitled to a pay equal to regular working hours’ remuneration plus 25% of that pay. This can increase to 50% if the overtime occurs between 10 pm and 4 am. However, the rule doesn’t apply to employees who work in shift work.
Employees working on their day off are entitled to a substitute rest day. Alternatively, the employer must pay equal to normal working hours’ remuneration plus 50% of that pay.
The seven emirates have slight differences in working hours.
If you work in a federal government entity, then your working hours are:
Local government entities in Abu Dhabi, Dubai, Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah Governments use a similar work week. The Government of Sharjah employees work four days a week, from Monday to Thursday. The official weekend in Sharjah is Friday, Saturday and Sunday.
What about leaves and holidays in the UAE?
Employees working in the private sector are entitled to:
Available after employees have completed six months of service. You should receive 30 days of fully paid annual leave if you’ve completed one year of service and two days per month if you’ve completed six months but not one year.
Available for more than 90 days a year and after the end of the probationary period. The sick leave can be continuous or intermittent. The salary is payable as full pay for the first 15 days, half pay for the next 30 days, and no salary will be paid for the rest 45 days. Employees also need to notify their employer within a maximum of three days. They must also submit a medical report issued by an authorised medical entity.
Employees who have worked for at least two years with an employer are entitled to a ten-day study leave per year to sit examinations. The employee must study for the leave in one of the UAE’s certified educational institutions.
A female worker is entitled to 60 days maternity leave, of which 45 days should be fully paid and 15 days half-paid leave. The employee can also take an additional 45 days off without pay if she has an illness due to pregnancy or childbirth and cannot resume work.
Private sector employees are entitled to a five working day parental leave. The parental leave starts from the day of the birth to six months. The parental leave is a paid leave. The UAE was the first Arab country to grant parental leave to employees in the private sector!
Employees can take a paid bereavement leave for five days in the case of the death of a spouse and three days in case of the death of a parent, child, sibling, grandchild or grandparent.
Employees can get special leave to perform Hajj under the provision that the leave is without pay and doesn’t exceed 30 days. The leave can also be granted just once during employment with the company.
The UAE Labour Law doesn’t provide conditions that entitle employees to Umrah leave. It is up to the employer to consent and deduct from the employee’s annual leave. Alternatively, it could be allowed as unpaid leave.
The public and private sectors must give employees a day off during public holidays. The public holidays that warrant a day off include:
The date of these holidays can change. For example, Islamic holidays are determined according to moon sightings.
Payment of wages is the responsibility of the employer. The salary should also be clearly defined in the employment contract.
All private sector employers must pay their employees’ salaries through the Wages Protection System. Failure to do so will result in fines and penalties.
The WPS system transfers employee salaries to accounts in banks or financial institutions authorised by the Central Bank of the UAE. MoHRE doesn’t process any transactions. The salary payments can be:
Employees wages are due from the first day of the month following the expiry of the period for which the wages are specified in the contract.
If this period isn’t specified, the employee must be paid once a month, at minimum.
The employer defaults on paying the salary if they do not do so within the first 15 days after the due date. A shorter period may be agreed upon in the employment contract.
The UAE Labour Law doesn’t currently define a minimum salary. However, the law mentions that salaries should be enough to cover the employee’s basic needs.
If you have any complaints or concerns regarding unpaid or delayed salaries, you can contact MoHRE. You can register a salary complaint and wait for the authorities to help deal with the issue.
Employees who have spent one year or more in continuous service are entitled to gratuity upon the termination of the contract. The gratuity is calculated as follows:
Please note that the total gratuity shouldn’t exceed two years’ salary.
For other types of employment contracts, the gratuity is calculated differently. The calculations are based on the following:
There are certain employee benefits that employers must provide by law.
The law states that employers must offer their employees a minimum level of healthcare coverage. The health insurance must be covered without deducting the premium from their salary or reducing the compensation to compensate for these premiums.
Please note that this doesn’t require the employer to cover health insurance for the employee’s dependents. However, every person staying in the country must have adequate health insurance.
The UAE has an insurance policy system in place for private-sector workers. The insurance policy is called Taa-meen, and it’s an alternative option for employers keeping a bank guarantee of AED 3,000 when recruiting a new employee.
According to Ministerial Resolution No. 318 of 2022 Concerning Bank Guarantees and Employees Protection Insurance Scheme, employers can either:
There is also an unemployment insurance scheme for Emiratis and residents working in the federal and private sectors. The scheme provides financial support if you lose a job due to termination by the employer.
UAE nationals under full-time contracts are eligible for pensions and end-of-service benefits.
Employers must register entitled employees to the General Pension and Social Security Authority pension schemes within 30 days of the employee joining the company.
Foreign workers in the private sector are entitled to the following:
These end-of-service entitlements should be paid within 14 days from the contract’s end date.
Clause 13 of the UAE Labour Law states that employers must provide employees with a safe and appropriate work environment. The law states that employers and employees are obliged to keep the work environment safe.
In addition, construction and industrial workers aren’t permitted to work in the summer in certain heat. Employees aren’t allowed to work during the hottest hours of the day during the summer months.
Any injuries related to work should be reported to MoHRE.
The UAE Labour Law permits employers to include non-compete restrictions in employment contracts. The restrictions must be limited, however. They need to be used to the extent necessary to:
The non-compete restriction cannot exceed two years from the date of the expiration of the employment contract.
The labour law also has rules to prevent discrimination in the workplace.
There is a Law on Equal Wages and Salaries for Men and Women that guarantees both genders should have equal job opportunities. Men and women also need to receive the same pay for their work. The law on equal wages was established in 2018.
Employers are free to set disciplinary penalties in the private sector. These can range from written notice to warning employees of temporary suspension and termination.
The disciplinary sanction should take into account the severity of the violation. The sanctions should also be clarified to the employees. Sanctions can only be imposed after an investigation, and the employer has been heard.
Employers and employees have a right to terminate an employment contract. They can do so by serving a notice period and complying with other legal consequences.
An employment contract may be terminated in the following situations outlined in Article 42 of the UAE Labour Law:
The notice period to terminate the contract for legitimate reasons requires the following:
Both employees and employers can terminate an employment contract for very specific reasons.
For the employer to terminate the contract without notice, they can do so if the employee:
An employee can terminate the work contract if the employer:
If you believe the employer has fired you without a valid reason, you can complain to the Ministry of Human Resources and Emiratisation.
There are 12 types of work permits available if you want to work in the UAE. The different types of work permits are:
You or your employee must ensure you have a valid work permit before you start working. The employer must have:
You can find more information about work permits through the government portal.
The cost of work permits ranges between AED 250 and AED 3,450. The cost depends on the company’s classification, reflecting the company’s compliance with the UAE Labour Law, the Wages Protection System and the other relevant MoHRE resolutions and directives.
Employers can cancel a work permit if the work contract ends. The employer must acknowledge that it has paid the worker everything they are entitled to. The permit cancellation form should also include the employee’s signature.
The UAE Labour Law states that working without a valid work permit is illegal.
The UAE Government has recently begun a push to include more Emiratis in the workforce. The Government runs a training program called the NAFIS – the Emirati Talent Competitiveness Programme.
The programme aims to have 10% of the UAE private sector jobs in the hands of Emiratis by 2025. To achieve this, the programme will spend money to train and employ young and experienced Emiratis.
The final settlement is set in the UAE Labour Law. The procedure calculates all the payable dues for the employee who may be quitting due to retirement, resignation or having been fired.
The new gratuity law states that employees who have served for a year but under five are entitled to full gratuity pay. The gratuity is calculated based on 21 days’ salary for each year of work. Those who have worked over five years receive a gratuity of 30 days’ pay for each year of work following the first five years.
It can depend on your contract. In general, employees may be liable to pay the employer early termination compensation if they resign before the term of a limited contract. The pay can be half of three months’ remuneration or half of the remuneration for the residual period if the contract has less than three months left.
The UAE Government updated the Labour Law in 2022. Many of the changes became enforceable in 2023. The newly updated law strengthened discrimination law and outlined obligations for employers. Furthermore, the law changed the lengths of certain leaves and established that all employment contracts must be fixed-term.
Children below the age of 15 cannot work in the UAE. Children between the ages of 15 and 18 years can work. However, they are subject to several conditional rules and must have a juvenile work permit to work.
The new Labour Law came into force in February 2022. The Government hopes the law will enhance employment rights and boost the region’s competitiveness. Ultimately, the Government is looking to attract top talent to its private sector.