Understanding UAE Employment Contracts and Legal Requirements

After getting employed this is where people get stuck when they fail to understand or read their contract, the initial joy of getting a job ends up accepting contracts that may be undesirable, so it is important for the candidate after getting the offer letter he/she need to thoroughly read and understand the employment contract what is being offered, here in this guide we are going to list down different types of contract and what it offer and then you can decide which is best suited for you and your condition also this guide aims to walk you through these paths, shedding light on legal requirements, and what happens when the time comes to part ways with an employer. By laying out this information, we hope to equip you with the knowledge needed to navigate with ease and with confidence.

Types of Employment Contracts in the UAE

1. Limited or fixed-term employment contracts in the UAE are specific to a duration, set at a maximum of three years as per Federal Decree-Law No. 33. These contracts are ideal for projects with a defined timeline, obligating both employer and employee to adhere to the start and end dates mentioned, with an extension or renewal only possible through mutual agreement, not good for people who are a frequent job hopper, as in this contract you will be stuck for the term you agreed earlier.
2. Unlimited or flexible contracts offer a distinct contrast, with no predefined end date, creating a more open-ended agreement. This flexibility allows either party to terminate the contract, provided they honor the notice period, which, under the new UAE Labour Law, cannot be less than 30 days.
3. Part-time contracts allow employees to work fewer hours than a typical full-time role demands, not exceeding 48 hours a week. This arrangement provides flexibility and allows employees the freedom to engage with more than one employer, pending they acquire the right permit from MoHRE. Flexibility is great in this type of contract except a lower pay.
4. Full-time contracts ensure the employee dedicates a standard workweek of 48 hours across six days to one employer. Overtime is compensated, adhering to the UAE Labour Law’s specific provisions.
5. Temporary contracts are utilized during an employee’s initial probationary period, a testing ground for both parties, with the employment continuance hanging on satisfactory performance during these critical first 90 days.
6. Special employment contracts cater to higher status positions within public sector companies, characterized by their two-year maximum duration, bestowed upon by ministerial appointment.
7. Job-sharing contracts introduce an innovative approach, allowing multiple employees to share the responsibilities of one full-time position, suiting individuals seeking greater work-life balance.

Each type of contract carries unique obligations and rights for termination. Fixed-term contracts emphasize agreement renewal or extension upon term completion, while unlimited contracts rely on notice periods for termination by either party. Job-sharing and part-time contracts infuse the work environment with dynamic options, highlighting the UAE’s adaptation to diverse work preferences and circumstances, in our choice best suited is the unlimited contract, where you are not struck and have the freedom to move on if you don’t like your employer for some reason

Legal Requirements for UAE Employment Contracts

Probationary periods in UAE employment contracts span up to six months which is quite long to be honest, allowing employers to assess performance while maintaining fairness. If an employer chooses to terminate, they must provide 14 days’ notice to the employee. If an employee wishes to leave the UAE, they must give 14 days’ notice. For an internal transfer, 30 days’ notice is required.

Non-compete restrictions are distinct in the professional setting. If an employee possesses key insights, the employer may require them to maintain confidentiality post-employment. However, part-time employees are exempt from this, free to work across multiple domains with a MoHRE permit.

Rest days are negotiable, and the specific day for downtime is not always defined. Regarding payment, either party can agree on any currency, but the Wages Protection System only accepts dirhams.

Leave entitlements in the UAE are comprehensive and include:

• Annual leave: Employees accrue up to 30 days of annual leave after one year of service, with unused leave eligible for encashment and then most Companies also provide return tickets to the employee.
• Maternity leave: 45 days with full pay, plus an additional 15 days at half pay.
• Bereavement leave: Available with varying pay arrangements.
• Study leave: Also available with varying pay arrangements.

When contracts come to an end, employers must provide a reason for termination, applicable to both limited and unlimited contracts. They are obligated to make final payments within two weeks of the contract’s end, all must be done smoothly to avoid any issues

The UAE promotes equality in the workplace, prohibiting discrimination based on race, color, religion, gender, or ethnicity. Harassment is strictly forbidden, and employers must have clear guidelines in place to address such issues, ensuring a safe and respectful work environment for all.

Termination of Employment Contracts

In the UAE, when employment ends, several factors govern the process to ensure fairness. Both the employer and employee hold certain rights when terminating contracts. An employer may initiate termination for reasons such as misconduct, redundancy, or contract expiration. An employee may voluntarily part ways for personal reasons or to explore new opportunities this is where an unlimited contract helps where you are not bound to any timeframe.

Adherence to notice period requirements is critical. Typically, a minimum of 30 days notice is required under normal circumstances. However, in cases of gross misconduct, the employer may proceed with immediate termination, provided due cause is shown.

If an employee believes their termination was unjust, they may be entitled to up to three months’ compensation, calculated based on their last drawn salary. Employees have the right to challenge wrongful termination by submitting a complaint to the Ministry of Human Resources and Emiratisation (MoHRE) or taking legal action through competent judicial authorities.

Understanding the contract is very important you may feel that this is not the right job for you and if you are bound by the contract and then try to terminate it you may end up in chaos leading to legal consequences

Financial aspects play a significant role when contracts end:

End-of-service gratuity: Employees are entitled to this, calculated based on their tenure and basic salary, serving as a financial safety net during the transition period, gratuity is a monetary benefit its aim is to make the employee work longer for the employer

Repatriation: Certain contracts may require the employer to repatriate the employee to their home country upon employment completion, particularly common in expatriate employment contracts but this is not common in UAE

Employees should maintain documented records of communication, contract agreements, and any instances leading up to termination to safeguard their rights and substantiate their stance if disputes arise as it occurs quite often, it’s important to have these records to make your case stronger

End-of-Service Gratuity and Workplace Policy Requirements

UAE employment law has a system in place for end-of-service gratuity entitlements, designed to recognize and reward employees upon the culmination of their service. To be eligible, an employee must have completed one year of service. The gratuity amount is determined by the type of contract (limited or unlimited) and the duration of service. For limited contracts, the gratuity is calculated based on the basic salary at the end of the contract.

UAE employment law mandates certain workplace policies that employers must follow:

Discrimination: Discrimination based on race, color, religion, gender, or ethnicity is prohibited, promoting an inclusive work environment where diversity is respected.

Equal pay: Equal pay for equal work is enforced, challenging wage gaps between genders or nationalities for the same roles and responsibilities. Though it is not strictly followed in general a competent and skilled full individual gets better pay.

Harassment: Harassment, in any form, is strictly prohibited. Employers must cultivate a safe and respectful workspace, with clear guidelines and procedures for reporting and addressing harassment issues.

Employee handbooks: These serve as a critical tool in disseminating knowledge on these policies, ensuring everyone understands their rights and responsibilities.

Employees in the UAE have a deeper awareness and reassurance of their entitlements and the policies upholding their welfare but when you don’t know the law and your rights this is where exploitation can happen by employers and it has been seen generally that low-paying staff with under privilege background experience this sort of exploitation.  

Applying for and Checking UAE Labour Contracts?

Applying for and checking the details of a UAE labor contract can be straightforward. Here’s a step-by-step guide:

Applying for a Labor Contract:

• Secure a job offer from a UAE-based employer.
• Gather the necessary documents (passport, photos, job offer letter, and educational certificates) and apply for a work visa with your employer’s guidance.
• Undergo medical and biometric verification upon arrival in the UAE.
• Your employer submits the required documents to MoHRE, registering you and obtaining your labor card.

Part-Time Work Permit:

• To work multiple jobs, apply for a part-time work permit through MoHRE or their online portal. Provide a no-objection certificate from your full-time employer and standard identification documents.

Understanding your labor contract in the UAE involves following clear steps that lead to a rewarding outcome. From securing a job to navigating the legalities of your contract and exploring additional work opportunities, each step contributes to your professional growth and success within the UAE’s thriving economy.

The most important aspect of this whole journey from getting a job to understanding the legalities of contracts is that knowledge about the different types of employment contracts in the UAE acts as your shield in this professional setting. It guides you through making informed decisions, ensuring your professional journey is both rewarding and compliant with the legal landscape. Keeping abreast of your rights and obligations within these contracts makes you more confident