Labour relations between employers and employees in the UAE are chiefly governed by the Federal Law No. 8 of 1980. In its 193 articles, it outlines everything from employee entitlements and employment contracts to disciplinary settlements.
The law applies to all employees in the UAE including expatriates but does not apply to public officials, civil servants, members of the armed forces and police, domestic servants and agricultural workers. Work is considered to be a right for UAE nationals but if they are unavailable, priority is given to Arab nationals, followed by workers of other nationalities.
An employment contract can be drawn up for a limited or unlimited time frame. If for a limited time, it cannot be more than four years but can be renewed by mutual agreement. Eight hours per day or 48 hours a week is the maximum number of working hours an adult employee can work, but this can be extended to nine hours a day in the commercial sector.
There are also certain minimum statutory obligations in UAE Labour Law which employers must observe and can be summarised as follows:
It is now mandatory for UAE employers to provide medical insurance cover for employees. This came into effect in June 2016.
An employee with more than six months service but less than a year is entitled to two calendar days’ holiday leave per month. An employee with more than one year’s service should be granted 30 calendar days per year.
As well as holiday entitlement, employees are given seven national holidays. The holidays, which can fall on any day of the week, are announced by the Ministry of Labour (MoL) who decide the length of each holiday. Employers are not obliged to provide an additional day off if the public holiday falls on a weekend. Some national holidays can be determined by the lunar calendar.
UAE employees are entitled to overtime pay but this cannot exceed two hours per day, unless the work is necessary to prevent a serious accident or substantial loss. Overtime pay is calculated at 125% of an employee’s normal salary for the period worked, but rises to 150% if it is carried out during the hours of 9pm-4am.
Workers who are not serving a probationary period are entitled to the first 15 days of sickness on full pay, the next 30 days on half pay but after 45 days they are unpaid.
End of Service Gratuity Payment
For an employee to qualify for this they need to have worked for one year and not have been dismissed for gross misconduct. It amounts to 21 days’ pay for each year of service up to the first five years and 30 days’ pay for each year of service in excess of five years.
Protection from Dismissal
Employees are protected from dismissal and can only be relieved of their duties for a valid reason, typically connected to performance. Generally speaking, the minimum notice period is 30 days.
Relocation and Repatriation
A business is required to meet the costs of recruiting an employee and repatriating them after a contract ends. An employee is entitled to the cost of a flight home after a job ends and in some cases return flights home during employment once a year, although the latter is not a statutory right.
Top Tips to consider
- If employers do not act in accordance with the above terms, they could find themselves embroiled in a costly dispute
- To avoid this, a strong, well-crafted supplementary contract will put the employer in a more favourable position
- The supplementary contract should ensure the business’s intellectual property, confidentiality and post-termination restrictive covenants are adequately protected
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