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Al Suwaidi & Company

1

GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

All disputes relating to employment in the UAE, except those with special laws such as DIFC and ADGM, should be amicably settled through the Ministry of Human Resources & Emiratisation (MOHRE), and General Directorate of Residency and Foreign Affairs) for the employees which are working in specific free zones. If such settlement fails, UAE courts can entertain the case and a claimant should submit a No Objection Certificate (NOC) from MOHRE to validate such referral to courts. Some free zone authorities, such as the Jebel Ali Free Zone Authority, have an employment committee to facilitate amicable settlement between companies formed under its Regulations and the employees. In those instances, the UAE courts will accept a NOC from the free zone authority.

Employees can now file complaint by online system and concerned officer from MOHRE will call the complainant to verify the complaint and details of the case. If the employee is outside the court, power of attorney holder of the employee can file complaint online and the office from MOHRE will verify the details.


The Main Sources Of Employment Law

Federal Law No. 8 of 1980 as amended, otherwise known as UAE Labour Law, is the applicable law regarding employment in UAE as proposed by then Ministry of Labour and Social Affairs, approved by the Council of Ministers and Federal National Council, and ratified by the Supreme Council. For DIFC, the governing law is DIFC Law No. 2 of 2019 as amended by DIFC Law No. 4 of 2020, otherwise known as DIFC Employment Law 2019. ADGM has Employment Regulations 2019. There are also special laws for government employees, members of the armed forces, police and security, domestic helpers, maritime workers, and agricultural workers. The discussions below will focus on Federal Law No. 8 of 1980, being the general law applicable to most employees.


National Law And Employees Working For Foreign Companies

The Laws are applicable on all employees or workers within UAE, regardless of if the employees are working in national or foreign companies as applicable employment laws are a matter of Public Order in the UAE.


National Law And Employees Of National Companies Working In Another Jurisdiction

When the contract of employment was concluded and executed in UAE, UAE laws shall be applicable.


Data privacy

There are no specific provisions under UAE Labour Law, however, breach of data privacy may be linked to the provisions in the UAE Labour Law relating to the breach of confidentiality. Data Privacy, in general, is protected under the UAE Constitution, special laws in DIFC and ADGM Free Zones, UAE Civil Code, UAE Penal Code, Electronic Transaction and Commercial Law and the Cyber Crime Law.

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

Formal contracts from the MOHRE should be registered officially with the said Ministry. Term and termination, salary and place of work are compulsory requirements. There is also an Annex specifying terms and conditions of employment which are applicable. Other special requirements should not go against Federal law.


Mandatory Requirements
  • Trial Period

    • As per the Law, the employer may subject the employees to a probation period not exceeding six (6) months.

  • Hours Of Work

    • Art. 65 of the UAE Labour Law prescribes maximum normal working hours for adults of 8 hours per day or 48 hours per week. Some special businesses are allowed, with the Ministry’s prior approval, to work over such limits. A special work timing is allowed during Ramadan, the Holy Muslim Month.

    Due to COVID19, employees are allowed to work from home or in their home country as mutually agreed between the employer and the employee with flexible timing.

  • Special Rules For Part-time Work

    • As per the Ministerial Decree No. 31 of 2018, an employee can work part-time after getting the work permit from MOHRE. The employee should be above 18 years of age and the work hours with the original employer should be less than 8 hours but not less than 20 hours a week. Permission from the original employer is not required but permission from the MOHRE should be obtained. If the original employer wants to restrict the employee for working as Part-time with another employer, due to the reason of confidentiality or trade secrets or non-compete clause, the original employer should obtain court order in that respect. Original employer shall be responsible for annual leave and the end of service gratuity of the employee.

  • Earnings

    • There is no definition of earnings, and it is subject to mutual agreement between employer and employee.

  • Holidays/Rest Periods

    • Federal Decree No. 11 of 2017 authorizes the Cabinet to determine the public and private sector holidays in the UAE, repealing Article 74 of the UAE Labour Law. The Cabinet issues a Circular of approved holidays as determined. Article 75 of UAE Labour Law provides a worker’s entitlement to annual leave of 30 calendar days per year where a worker’s period of service is more than 1 year. For Rest Periods, a worker should not work for more than 5 successive hours without breaks for rest, meal, and prayer amounting to at least 1-hour rest per day. In addition, Friday is the normal weekly rest day except day workers.

  • Minimum/Maximum Age

    • 15 years / 65 years, subject to requirements.

  • Illness/Disability

    • As per Article 83 of UAE Labour Law, total illness leave is 90 days per year for either continuous or intermittent illness, with pay as follows: 15 days/year with full salary; 30 days/year with half salary and 45 days/year with no salary. In case of partial disability, the employee will be working according to his capabilities, and in case of total disability, he will be dismissed and be paid according to the law.

  • Location Of Work/Mobility

    • At any agreed place between both Employer and Employee and under the supervision of the Employer. It is now permitted to work from home or home country due to COVID 19 restrictions as mutually agreed between the employee and the employer. Pension Plans

  • Pension Plans

    • For expat Employees there is no pension plan, but they are entitled to End of Service Gratuity depending on the length of service. For Emiratis and GCC nationals, there is a pension plan as per the requirement of the Law.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)

    • Nothing is mentioned regarding Paternity and Adoption, however for Pregnancy and Maternity, an employee is allowed 45 days fully paid maternity leave on both pre- and post-natal periods. In addition, unpaid leaves of up to 100 days after delivery based on a certified medical condition. If the Employee (mother) is nursing her new-born up to 18 months, she is allowed two additional breaks, each not exceeding half an hour, per day.

  • Compulsory Terms

    • They are defined as per the UAE Labour Law:

    • Notice period
    • End of service benefits
    • Annual leave
    • Employer and Employee can go beyond the mandatory requirements if the agreed terms are more advantageous to the Employee as per Article 7 of UAE Labour law.

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  • Non-Compulsory Terms

    • All other terms in the labour contract are subject to the mutual agreement of the Employer and Employee


Types Of Agreement

Agreements are either of limited or unlimited periods. The application of some provisions of the UAE Labour Law depends on the type of agreement.


Secrecy/Confidentiality

It is not required on all contracts, and it is subject to the nature of work or position. Employer and Employee may agree on securing secrecy and confidentiality.


Ownership of Inventions/Other Intellectual Property (IP) Rights

If any registration of the invention is made by the employee before the employee joins with the employer, IP right is protected and right shall remain with the employee and subject to mutual agreement upon joining. If the invention is made during the employment and in relation to the employment, it is deemed a work product owned by the employer.


Pre-Employment Considerations

N/A


Hiring Non-Nationals

It is not prohibited to hire non-nationals, but the Ministry has reserved certain positions for Nationals and has some special requirements for the employment of Non – Nationals.

 

Hiring Specified Categories Of Individuals

The nature of work will prohibit hiring of some specified categories such as juveniles and women for hazardous works.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

It is allowed subject to the Approval of the Ministry and having the required licence from concerned authority for the agencies.

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

Not specified in the Law. However, changes related to the compulsory terms and salary should be reflected in the contract registered with the Ministry. Changes should be mutually agreed in writing or clearly demonstrate consent and the period of effectivity or applicability of the changes.


Change In Ownership Of The Business

There will be no changes to the current employment contract at the time of change in ownership and should properly continue. Former and new employers are jointly responsible toward the Employee for the first six months after the change in ownership. The new Employer will become solely responsible after such period.


Social Security Contributions

There is no social security contribution for expats, however a social benefit scheme is in place for UAE citizens.


Accidents At Work

Any accident during work time should be reported to the police. The Employer should compensate the Employee for any accident happening in the place of work and/or due to the work of the Employee and the compensation value is determined according to the UAE Labour Law. Such compensation does not prevent the employee to sue the person or entity who caused the incident.


Discipline And Grievance

Disciplinary measures that an employer may impose are enumerated in Art. 102 of the UAE Labour Law and these includes warning, fine, suspension with reduction of pay for a maximum of 10 days, denial of bonus, denial of promotion for those with promotional scheme, dismissal without prejudice to end of service gratuity, and dismissal with denial of all or part of severance pay if dismissal is under Art. 120 of the UAE Labour Law. Any complaint by Employer or Employee should be brought before the Ministry of Employment. If the process doesn’t succeed in finding the right solution, the complaint will be taken to the civil courts (labour).

No special provisions for the same. UAE civil and penal code will be applicable.


Harassment/Discrimination/Equal pay

No special provisions for the same. UAE civil and penal code will be applicable.


Compulsory Training Obligations

Not specified under UAE Labour Law. However, the Ministry will not grant any work permit for unqualified persons relative to the position or sector they are applying for. Certain positions require a special licence before issuance of the work permit from MOHRE such as those in the medical sectorand legal consultancies that require annual training.


Offsetting Earnings

It is permissible for an employer to offset debts or loans of the employee toward the company against earnings. This offsetting shall be for the full amount of debt upon termination of employment. If during the employment, Article 60 of the UAE Labour Law shall be applicable which includes authority to deduct for loans or advances in excess of his entitlements but the deduction per month must not exceed 10% of his regular wage.


Payments For Maternity And Disability Leave

For maternity leave, an employee is allowed 45 days fully paid and 100 days after delivery unpaid leave based on a medical certificate. For disability leave, it may be up to 6 months with full pay and if treatment lasts for more than 6 months, the pay will be reduced by half for a further period of 6 months or until the worker fully recovers, whichever occurs first.


Compulsory Insurance

It is mandatory in Abu Dhabi and Dubai that the Employer provides the Employees with health insurance. Other Emirates have different procedures. However, the Ministry issues a Health Card for all Employees in all Emirates which enables them to avail of medical consultancy from Government Hospitals. Such card is not an insurance card, and it doesn’t cover procedures or medicines.


Absence For Military Or Public Service Duties

There are no specific provisions for this.


Works Councils or Trade Unions

Trade Unions are not formally recognized in UAE. There are some provisions for collective labour disputes in relation to more than one Employee and the Ministry of Employment may appoint a committee for such a dispute.


Employees’ Right To Strike

Employees in the UAE do not have a recognized right to strike.


Employees On Strike

Since Strikes and Lockouts are not allowed in UAE, there are no specific provisions in the UAE Labour Law for these. The only mention of strike is relative to temporary suspension when an employee is accused of committing an offence associated with strike.


Employers’ Responsibility For Actions Of Their Employees

Employers are responsible for their employees’ actions to the extent of the labour agreement provisions.

4

FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

Article 113 of the UAE Labour Law provides that an employment agreement can be terminated if the two parties agree to cancel it and if the term comes to an end unless explicitly or implicitly extended according to the rules of the law. If the termination by the Agreement is only by one party, there must be a valid reason and the procedures required by the law must be followed.


Instant Dismissal

Instant dismissal by the employer is allowed pursuant to Article 120 of the UAE Labour law which provides that an employer may dismiss an employee immediately without notice in any of the following cases:

    1. ) If the employee adopts False identity/documents
    2. ) During Probation period
    3. ) If the employee commits mistake, loss or gross misconduct (complaint should be made to the Ministry of labour within 48 hours of the employer’s knowledge about the said incident)
    4. ) Disobedience, safety procedure by the employee
    5. ) Not doing basic duties and violation despite repeated warnings
    6. ) Revealing Trade Secrets of the employer
    7. ) Sentenced by a competent court for an offence involving honour, honesty or public morals
    8. ) Intoxication by the employee during working hours
    9. ) If the employee assaults any of his colleagues, worker, employer, manager, supervisor etc
    10. ) Absence from the work without valid reason for more than 20 non-consecutive days or more than 7 consecutive days.

Employee's Resignation

An Employee may resign and should respect the contract terms and any notice period, otherwise, he will be deemed to have abandoned his work which may result to forfeiture of benefits. The employee may abandon his work if employer fails to honor his obligations under the law and the agreement or if employee is assaulted by the employer or the employer’s legal representative.


Termination On Notice

If the contract is for an unlimited period, the contract will come to an end if the employer or employee terminate the contract for a valid reason by giving other party a minimum of 30 days written notice or more as agreed between the parties pursuant to Article 117 of the UAE Labour Law.


Termination By Reason Of The Employee's Age

An employment contract shall be terminated upon the employee attaining the retirement age. The retirement age for an expatriate working in the private sector is increased from 60 years to 65 years. However, the expatriate employee can work by obtaining a one-year visa after the retirement age provided the service of the said employee is required by the employer subject to the approval of the authority.


Automatic Termination In Cases Of Force Majeure

There is no provision in the UAE Labour law about automatic termination in case of force majeure events.


Collective Dismissals

UAE Labour law does not provide any provision for collective dismissal. They must follow the usual procedures for termination.


Termination By Parties’ Agreement

The employment contract can be terminated by the parties if they agree to end the contract mutually. An employer’s death does not constitute the termination of a labor contract, unless the subject of the contract is related to him personally. The contract will be terminated upon an employee’s total disability (without prejudice to his end of service benefits).


Directors Or Other Senior Officers

There are no special provisions for termination of directors or other senior officers.


Special Rules For Categories Of Employee

There are no special rules for categories of employees other than the employment of young persons and women such as prohibiting young persons from working before reaching 15 years old and women from night working and both from hazardous jobs. Where national employees are not available, preference in employment shall be given to:

    1. ) Arab workers belonging to an Arab country by nationality
    2. ) Workers of other nationalities

Whistleblower Laws

Whistleblowing is not defined by UAE law and is generally considered as disclosure of the information. Whistleblowing may be considered as a criminal offense under Article 379 of the UAE Penal Code which provides that it is an offence for an individual, who is entrusted with secrets through his employment, subsequently to disclose those secrets.


Specific Rules For Companies in Financial Difficulties

Companies in financial difficulties can restructure the company and can reduce the employment but if the employee claims compensation for arbitrary termination, the employer should prove the court by submitting an audited report that the company is really in financial difficulties. The courts grant a compensation amounting to one to three months salary for arbitrarily dismissed employees.


Special Rules For Garden Leave

There are no special rules for Garden Leave as notice period must be served and cannot be reduced. If the Employer or employee foregoes or reduces the mandated notice period, compensation in lieu of notice, irrespective if whether the other party sustains damages, shall be paid. This is without prejudice to other consequences of not serving notice requirement.


Restricting Future Activities

Non-compete clauses are allowed and recognized with certain limits such as it should be for a reasonable period and defined geographic area and must take into consideration the nature of work of the employee and the requirements of the employer to impose certain restrictions.


Severance Payments

According to Article 132 of UAE Labour Law, the Severance pay shall be calculated based on the last basic salary as follows:

  • 21 days for each year for the first five years
  • 30 days wages for each additional year on condition that the total of the gratuity does not exceed the wages of two years.
  • The days of absence from the work without pay shall not be included in calculating the period of service.
  • If the Employee under a limited period contract resigns, he is not entitled to end of service gratuity, unless his continuous service exceeds five years.
  • If the employment contract of limited period is terminated by the employer for the reason other than those stated in Article 120, the employee is entitled to gratuity if he completed one year of continuous service with the said employer.

Special Tax Provisions And Severance Payments

In UAE, there is no tax applicable on income from employment, hence, no deduction at source.


Allowances Payable To Employees After Termination

Limited Contract

    1. Compensation for arbitrary termination equivalent to the period until the end of the contract, or three month’s wages, whichever is shorter.
    2. Payments equivalent to the balance of unutilized leave or any part thereof.
    3. Payments for overtime or any balance of wages due and not yet paid.
    4. End of service gratuity calculated on the duration of the employment.
    5. Air ticket or value of the ticket to home country unless the employee is employed with a new sponsor in UAE.
    6. Repatriation expenses if agreed.

Unlimited Contract

    1. Notice Pay.
    2. Compensation for arbitrary termination/dismissal.
    3. Payment equivalent to unutilized leave or any part thereof.
    4. Payment of overtime or balance salary.
    5. Other allowances until the termination of the employment.
    6. Air ticket or value of the ticket to the home country or the place where they mutually agreed.
    7. Repatriation expenses if agreed.

Time Limits For Claims Following Termination

A complaint must be made before the Labour Ministry office within one year from the date in which the amount or the entitlement becomes due, otherwise, it will be time-barred. No claim will be admitted if the provisions regarding submitting the complaint to the Ministry are not adhered to.

Due to Covid 19, employees can now file complaint by online system and concerned officer from MOHRE will call the complainant to verify the complaint and details of the case. If the employee is outside the country, power of attorney holder of the employee can file complaint online and the officer from MOHRE will call the power of attorney holder to verify the details.

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

It is important to note that an employment visa is required for an expatriate employee to commence employment in UAE, and it is not freely transferable from one employment to another employment until and unless the employee completes a minimum period of service with the said employer. There are certain restrictions for transferring the employment visa. In the event of any dispute, a complaint should be filed before the concerned labour office in the respective jurisdiction before filing the case in court. In the event of arbitrary termination, the maximum compensation allowed is 3-months’ salary with no reinstatement. The employer can also prevent the employee for working with a competitor for a certain period after the termination of the employment from the ex-employer except when the employee meets certain conditions as listed by law. The exclusive jurisdiction for labor disputes lies with the civil courts. If the parties agreed to refer the dispute to arbitration or mediation, this condition is null and void as per public policy.



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Contact a Contributing Author:
Reda Hegazy
Al Suwaidi & Company
United Arab Emirates


Suneer Kumar
Al Suwaidi & Company
United Arab Emirates


Disclaimer:

© 2021, Al Suwaidi & Company. All rights reserved by Al Suwaidi & Company as author and the owner of the copyright in this chapter. Al Suwaidi & Company has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021