Employment Laws

In the following article, Jerry Parks of legal consultants Taylor Wessing, provides a useful guide to employment laws in the UAE.
For further information on Employment laws in Dubai visit Links www.linksdubai.com

Employment contracts and relations in the UAE are subject to and governed by Federal Law No. 8 of 1980 (as amended by Federal Law No. 12 of 1986). This law applies to all employers and employees in the private sector and relates to all companies formed under the UAE Commercial Companies Law, branch and representative offices of foreign companies and owners of sole proprietorships operating in the UAE.

Contract - The basic information to be included in a labour contract is as follows:

Probation - A probation period may be agreed not exceeding 6 months during which the contract may be terminated without notice and without end of service benefits becoming payable to the employee.

Termination - The situation regarding the termination of labour contracts differs according to whether it is fixed term or open-ended:

In the case of fixed term contracts termination may be effected by the employer prior to the expiry of that term on one month's notice. In those circumstances compensation is payable to the employee in the amount of that employee's salary for a period of 3 months or the remainder of the term of the contract, whichever is the lower. The employee is also entitled to gratuity.

In the case of open-ended contracts termination may be effected by the employer on giving one month's notice with no compensation payable to the employee. However, the employee is still entitled to gratuity.

Gratuity - The calculation of gratuity differs according to whether the contract is for a fixed term or is open-ended:

In the case of fixed term contracts, employees who complete at least one year's service are entitled to gratuity at the end of their contractual service period or upon earlier termination by the employer calculated as follows:

An employee who resigns before the expiry of his contractual service period is not entitled to gratuity unless he has completed 5 years continuous service in which case he is entitled to full gratuity for the whole employment period.

In the case of open-ended contracts where the employee has completed at least one year's service, if that employment is terminated by the employer the employee is entitled to gratuity calculated as follows:

An employee who resigns after completing one year's continuous service under an open-ended contract is entitled to a proportion of the gratuity set out above calculated as follows:

Summary dismissal - The law sets out certain circumstances in which an employer may summarily dismiss an employee without payment of compensation or gratuity. These include failure to carry out basic duties notwithstanding warnings, disclosure of trade secrets, committing of criminal offences and being drunk or otherwise intoxicated during working hours.

It is not uncommon for expatriate employees working in the UAE to have parallel labour contracts -  i.e. their existing UK contract subject to a UK governing law and a separate short form of UAE contract subject to UAE law entered into for the purposes of filing with the Ministry of Labour. The UAE courts will however regard as null and void any agreement, which purports to deny the employee, the minimum protection set out in the UAE Labour Law. Whilst in some circumstances the entering into of parallel employment contracts cannot be avoided, we would advise that in relation to employees hired specifically to work in the UAE, they be employed locally on UAE contracts tailored to suit the employee's position.