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EMPLOYMENT
Establishing employment relations properly, amending them in case of need and, if necessary, terminating them in a fair manner

Regardless of whether you are an employer or an employee, we support you in all labour-related issues, such as:

Drafting and reviewing employment contracts, bonus agreements and employee handbooks
Advising on individual employment questions, such as severance pay and non-competition clauses
Assisting with the cancellation of employment relationships by termination notice or settlement agreement
Coordinating visa-related matters

Frequently Asked Questions

When do I need a work permit?

A work permit is always required in order to work legally in the United Arab Emirates. It is applied for by the employer and generally requires the existence of a valid employment contract. Although the work permit is still issued as a physical card in some free zones, it is otherwise only issued electronically.

What is a standard employment contract?

Generally, an employment contract is required for the issuance of a work permit and, thus, for legally being employed in the United Arab Emirates. In the mainland, i.e. within the jurisdiction of the Ministry of Human Resources & Emiratisation, the Ministry provides standard employment contracts. Adjustments to these documents can only be made to a very limited extent. It is not possible to submit a privately written contract instead of the standard employment contract. A large number of free zones also offer standard employment contracts. It is quite common to supplement the rigid standard employment contract with so-called additional terms and conditions.

Do I have to pay social security contributions for my employees in the UAE?

In principle, an employer is only required to provide health insurance for its employees in cases where the employer is based in the Emirate of Dubai or in the Emirate of Abu Dhabi. Without proof of a valid health insurance, a permanent residence permit (so-called residence visa) will usually not be issued to the employee. Other social security contributions, such as contributions to pension, unemployment or nursing care insurances, do not exist in the United Arab Emirates currently.

Which aspects must be observed when terminating an employment relationship?

A termination is always valid. The notice of termination must be in writing and its receipt should be documented for evidentiary purposes. If the agreed period of notice is not observed, compensation must be paid. An employment relationship may be terminated with or without observing the notice period, whereby strict requirements have to be met for an immediate termination by the employer. The termination of employment can trigger a number of claims by the employee, such as a claim for severance pay (also called gratuity).

What does gratuity mean?

Gratuity (also known as severance pay) describes a payment to which the employee is legally entitled, provided certain conditions are met. It is part of the so-called end-of-service benefits, i.e. of all rights that an employee can claim upon termination of the employment relationship. In addition to gratuity, the employee might be entitled to, among other benefits, compensation for overtime and unused leave, outstanding salary and damages.

Overview

Labour Regulations in the United Arab Emirates

From a European perspective, the labour laws of the United Arab Emirates ("UAE") can be considered rather employer-friendly. Amongst others, this assessment is based on the stipulations concerning the termination of employment and the fact that neither trade unions nor work councils currently exist.

Legal Basis

Federal Decree-Law No. 33 of 2021 ("UAE Labour Law") forms the primary legal basis with regard to the relation between employer and employee since 02.02.2022.

Creation of the Employment Relationship

When entering into an employment relationship, special attention needs to be paid to the drafting of the employment contract. Apart from local rules and regulations, legal requirements of the home country of the employer and the employee may have to be taken into consideration as well should the employee be seconded to the UAE.

The UAE Labour Law only provides for limited-term contracts. Existing unlimited employment contracts must be converted to limited-term contracts by 01.02.2023.

Provisions of the employment contract may only deviate from the UAE Labour Law if they are in favour of the employee.

Terms of the Employment Relationship

During the employment relationship, the following aspects are significant, amongst others:

a. Salary

In general, the remuneration is divided into basic salary and various allowances.

There is currently no statutory minimum wage. However, the UAE Labour Law provides for the possibility of setting one by cabinet resolution.

b. Working Hours

The employee must be granted at least one day of rest per week. According to the UAE Labour Law, this day does not necessarily have to be on Friday. Therefore, a six-day workweek basically prevails in the UAE. However, most companies in the private sector are closed on two days of the week.

A four-and-a-half-day workweek was introduced for the public sector on 01.01.2022. Saturday and Sunday form the new weekend and Friday is a half working day. The changes are not binding on the private sector.

c. Public Holidays

Employees are entitled to full pay on holidays officially announced for the private sector. To date, these include, for example, the Christian New Year (1st January), the UAE National Day (2nd December), the Islamic New Year and the public holidays at the end of Ramadan.

d. Leave

An employee is entitled to a minimum of 30 calendar days annual leave provided his service exceeds one year. If the employee is employed more than six months but less than a year, the leave period amounts to two calendar days per month.

Termination of the Employment Relationship

Amongst other, the employment relationship ends in any of the following cases:

The parties agree to terminate the contract.
The validity of the contract expires.
One of the parties serves notice of termination.
The employee dies or becomes wholly disabled.