UAE Labor Law - guide Type of employment contracts - Fixed term (or limited contract), up to maximum 4 years, renewable if both parts agree. It is common practice in the UAE that employers make the period of the contract the same with the employment visa validity. - Unlimited contract, until it is terminated by either party after giving prior notice (minimum 30 days). Probation period - It is common practice in the UAE to hire employees on an initial probationary period. - During the probation period, both the employer and the employee may terminate the employment contract with immediate effect without providing a valid reason or notice. In such cases, the employer will not be liable to pay end of service benefits or compensation to the employee. - Can be for any period of 0 to 6 months and it is paid in full. - Both parties may agree to commence employment without probation as it is not compulsory under the Law. - During the probation period, the employee cannot take any type of Paid Leave. Working hours - Maximum working hours for an adult employee (aged min. 18) is 8 hours per day or forty-eight hours per week. - The working hours may be increased to nine hours per day in the case of employees working in trades, hotels, cafeterias, and as guards. - During the month of Ramadan, normal working hours shall be reduced by two hours no matter the religion of employees. - Friday is the official weekly holiday for all employees (except for those on daily wage bases). Overtime - It is considered overtime only when the employer requests the employee to work additional hours. - Employees who hold responsible senior posts in the management or supervision positions are expected to work long hours without overtime pay. - Overtime may not exceed two hours per day unless work is necessary to prevent substantial loss or serious accident or to eliminate its effects. - Overtime pay is the wage paid during ordinary working hours plus an additional amount of not less than 25% of the wage for the overtime period. - Overtime pay between 9.00pm and 4.00am (night hours) is the salary payable during normal working hours plus an increase of not less than 50% of the wage for the overtime period worked. - For working on a Friday: a rest day to be given in lieu to be taken at a later date or the basic wage plus an additional 50% (minimum) of that wage. Annual Air Ticket - All employees must be provided with a return air ticket to their home country for each year of service. - Some companies prefer to give a standard air ticket allowance in order to avoid the booking formalities. Annual Leave - For every year of service, an employee is entitled to annual leave of not less than the following: 1. Two calendar days leave for every month if his service is more than six months and less than one year. 2. A minimum of thirty calendar days annually, if his service exceeds one year. At the end of his service the employee is entitled to annual leave for the fraction of the last year he spent in service. - The employer may decide to divide the annual leave in two parts at the most. 1
- During Annual Leave an employee is paid his basic wage plus the housing allowance and any other allowances which he receives in the normal working month exclusive of any bonuses received. - Before an employee goes on annual leave, his employer shall pay him the full wage due to him plus the leave pay. - Employees are not entitled to Annual Leave during their probation period. Sick leave - The employee must report to the employer any sickness within a maximum period of two days. - The employee is not entitled to any paid sick leave during the probation period. - After a period of three months continuous service following the probation period, the employee is entitled to sick leave (continuous or intermittent) wages as follows: (1) Full wage for the first 15 days. (2) Half wage for the next 30 days. (3) Additional 45 days without wage. - Sick leave is not paid if sickness resulted from misbehavior of the employee such as consumption of alcohol or narcotics. - The employer may not terminate the service of an employee for his health deficiency before he uses the entire leaves lawfully due to him. (a total of 90 days paid & unpaid) - If an employee is on Sick Leave for more than 90 days in 1 year, the company has the right to terminate the employment based on the employee being unfit to work. Maternity Leave - A working woman is entitled to 45 calendar days maternity leave with full pay which includes the period before and after the delivery, provided she has served continuously for not less than one year. - The maternity leave is granted with half pay if the woman has not completed one year of service. - A working woman nursing her child shall, during the eighteen months following the date of delivery, be entitled to two additional breaks each day for this purpose, neither of which shall exceed half an hour. These two additional periods shall be considered as working hours and shall not cause any reduction of remuneration. Pilgrimage Leave A special leave without pay may be granted for the performance of pilgrimage to the employee once through-out his service and shall not be counted among other leaves and may not exceed 30 days. Public Holidays Official Paid Public Holidays in the UAE no matter the employee s religion: (The number of days differs for Public and Private sector.) - Hijra New Year: One day - Christian New Year: One day - Eid Al Fitr: Two days - Eid Al Adha and Waqfa day: Three days - Birthday of the Prophet: One day - Ascension Day: One day - National Day: One day Medical Insurance - The employer must provide employees with means of medical care according to the standards decided by the Minister of Labour and Social Affairs in collaboration with the Minister of Health. This is the regular health card issued by the ministry and which can only be used in government hospitals. - As for 2011, only Abu Dhabi and Al Ain are obliged by law to provide health insurance to their employees and dependants (spouse + 3 children up to age 18) on the guidelines laid out by the respective governments. So far the Dubai government has not implemented any law. - This is applicable for the entire period when the employee is on Company sponsorship/visa. 2
Termination of Employment An employment contract can be terminated in any of the following circumstances: 1. If the two parties agree to cancel the contract, provided that the employee consents to this in writing. 2. If the contract has expired, unless the contract has been explicitly or implicitly extended according to the rules of the Law. 3. By one of the parties where the contract has an unspecified term, provided that the parties give the 30 days notice and the acceptable reasons to cancel the contract without prejudice. - The employee can leave the service without notice only if the employer does not fulfill his obligations towards the employee as provided for in the contract or if the employer of his legal regal representative has committed an act of assault against the employee. Employee s entitlement in case of Termination: On the termination of the employment contract, an employee is entitled to the following: 1. Notice period: - Minimum 30 days, applicable only for unlimited contracts. - For Limited contracts notice period is not required. - The employee shall be entitled to full pay during the notice period on the basis of last gross salary he earned, and he shall have to perform his duties during such period, if so instructed by the employer. The employer may chose to ask the employee not to perform his duties during this period, but the notice pay is still applicable. - Compensation in lieu of notice: if any of the parts do not serve the notice period, they need to give compensation in lieu (30 days notice based on current gross salary) - The employer may dismiss the employee without notice if employee breaches the regulations of Art. 120. 2. Compensation: - In the case of an unlimited contract, compensation for unreasonable dismissal if the contract was terminated by the employer for unreasonable cause. Arbitrary Dismissal: Termination by the employer of an employee's service is considered arbitrary if the cause for such termination has nothing to do with the work. If the employee has been arbitrarily dismissed, the competent court has the jurisdiction to give judgment against the employer for payment of compensation to the employee. The court shall determine the amount of this compensation, taking into consideration the nature of work sustained by the employee, period of service and after investigation of dismissal circumstances. Provided that in all cases the amount of compensation should not exceed the employee's pay for a period of three months, to be worked out on the basis of last pay due to him. - The UAE Labor Law does not specify what a Valid Reason is. Therefore, any reason for termination that is not part of Art. 120 is considered to be Arbitrary. - 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. (unless employee was terminated based on the grounds of Art. 120) 3. Annual Leave Pay: Payments equivalent to the balance of unutilized Annual Leave, only if employee completed the probation period. 4. Other Payments: for overtime or any balance of wages due and not yet paid. 5. End of service/gratuity: calculated on the duration of the employment, only if employee completed 1 year of continuous service. Gratuity Entitlement: For Unlimited contracts, the gratuity shall be calculated as follows: (1) 21 days wages for each year of the first five years. (2) 30 days wages for each additional year on condition that the total of the gratuity does not exceed the wages of two years. In case of Resignation, employee is entitled to different gratuity depending on his total length of service: 3
From 1 to 3 years of service - 1/3rd of the gratuity From 3 to 5 years of service - 2/3rds of the gratuity From 5 + years of service : full gratuity In case of Termination, employee is entitled to different gratuity depending on his total length of service: From 1 to 5 years of service - 21 days for each year of continuous employment From 5 + years of service : 30 days for each year of continuous employment - Gratuity is calculated only based on the most current Basic salary excluding any additional monthly allowances or bonuses. - Days of absence from work without pay are not included in calculating the length of service. - Length of service includes fractions of a year as well. Resignation - If the employee with a limited labor contract resigns for reasons other than those under Article (121) the employee becomes liable for compensating the employer against losses incurred by him in consequence of contract termination, provided that the amount of compensation may not exceed half a month's pay for a period of three months or for the remaining period of contract whichever is shorter. - If the employee with an unlimited labor contract resigns for reasons other than those under Article (121), he will only need to give 30 days notice to his employer. Minimum wage in the UAE 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. Minimum age to be employed in the UAE Age 15, with the approval of the legal guardian/custodian, night shifts and overtime not allowed, working hours max. 6 hours/day. (Until age 18) ARTICLE (120) The employer may dismiss the employee without notice, Gratuity and additional Compensation payment in the following cases: 1. If the employee adopts a false identity or nationality or if he submits forged documents or certificates. 2. If the employee is appointed under a probationary period and dismissal occurred during or at the end of said period. 3. If he commits an error causing substantial material loss to the employer provided that the latter advises the labour department of the incident within 48 hours from having knowledge of the same. 4. If the employee violates instructions concerning safety of the place of business provided that such instructions are displayed in writing at conspicuous places and in case of an illiterate employee the latter be informed verbally of the same. 5. If he fails to perform his basic duties under the contract of employment and persists in violating them despite formal investigation with him in this respect and warning him of dismissal if the same is repeated. 6. If he divulges any secrets of the establishment where he is employed. 7. If he is awarded final judgment by the competent court in respect of an offence prejudicing honor, honesty or public morals. 8. If during working hours he is found drunk or under the influence of drug. 9. If in the course of his work he commits an assault on the employer, the manager or any of his colleagues. 4
10. If he absents himself without lawful excuse for more than twenty intermittent days or for more than seven successive day during one year. Dual Employment - According to the UAE Labor Law, working for 2 employers at the same time is not permitted. Therefore, there is no legal way of taking up a second part time job in the UAE. Visa requirements: - Visa application must be submitted before the employee starts the work. - Employees cannot be on one company visa and at the same time work for a different company. - Employees must cancel their previous employer s visa before applying for a visa with their new employer. - In cases of visa expiry, the employee still has to submit his passport for visa cancelation. Failure to do so will attract a fine towards the employer. - Employees can be sponsored by their spouses or family. In this case, the company needs to apply for a Labor Card which will allow such employees to work while under their family s sponsorship. - Passport renewal and Emirates ID card is the employee s own responsibility. Free Zones regulations - There are aprox. 32 Free Zones in the UAE: Internet City, Media City, Knowledge Village, DAFZA, DIFC, JAFZA, IMPZ, etc (www.uaefreezones.com/). - Each Free Zone has its own rules and regulations, which are very similar to the UAE Labor Law. Therefore, each employer must follow the regulations of the Free Zone where it is established. Please note: This information was gathered by the internal staff of Manpower ME and does not constitute an official document. It is only a guide with the basic information that any employee should be aware of when working in the UAE. See the official UAE Labor Law document on the Ministry of Labor website: http://www.mol.gov.ae/english/newindex.aspx# 5