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Understanding the UAE labour & employment laws.

Key aspects of the UAE labour law impacting both domestic and foreign employees
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Understanding the UAE labour & employment laws

The relationship between employers and employees is crucial for a successful company. To guarantee the well-being and safety of employees, employers must ensure that they comply with the labour law.

This protects employees from exploitation and develops a positive work environment built on trust and fairness. Moreover, adherence to the labour law demonstrates a commitment to upholding ethical standards and promoting social responsibility within the workplace.

This guide provides a comprehensive overview of the UAE labour laws, covering key aspects such as employment contracts, leave entitlements, work visas and termination procedures.

Key takeaways

  • Recent legislation establishes fixed-term contracts as the standard and introduces alternative work arrangements such as part-time work, temporary employment and flexible schedules.
  • Employees are entitled to annual leave, sick leave, maternity/paternity leave, compassionate leave and special leave for pilgrimage (Hajj).
  • Termination for valid reasons typically requires a written notice, with a notice period ranging from 30 to 90 days in advance.
  • There are three primary types of employment visas in the UAE: standard work visa, green visa and golden visa.

Main labour law in the UAE

Employment relationships are regulated by the Federal Decree-Law No. 33 of 2021 (Labour law) and UAE Cabinet Resolution 1/2022 (Executive regulations). These regulations apply to all private sector companies and employees throughout the UAE, including most free zones, except for the Dubai International Financial Centre and the Abu Dhabi Global Market, which have their own employment laws.

This law, implemented in February 2022, governs various aspects of employment in the UAE. It establishes fixed-term contracts as the standard while also allowing for part-time work arrangements. The law sets a standard workweek of 48 hours, with a maximum of 8 hours per day and a two-hour overtime limit (with some potential exceptions).

It requires employers to provide at least one rest day per week, although Friday is no longer mandatory. The law also mandates various types of leave, including annual and sick leave, and outlines procedures for termination, including notice periods and severance pay. Finally, the law places a responsibility on employers to ensure a safe and healthy work environment for their employees.

Employment contracts

Federal Decree-Law No. 33 of 2021, which was recently enacted, has set fixed-term contracts as the standard, allowing for extension or renewal options. The amended law eliminates indefinite contracts and mandates fixed-term contracts lasting up to three years. Expired contracts automatically renew under the same terms if both parties continue fulfilling obligations.

Several alternative work arrangements have been introduced, including part-time, temporary, flexible and job-sharing.

Probation period

The maximum probation period in the UAE is six months and cannot be extended. Once the employee completes the probation period and continues working for the company, it will be part of their service.

If the employer or employee decides to terminate the contract during the probation, they must give a 14-day notice in advance. Employees who want to join another company in the UAE must provide written notice for at least one month. The new employer must compensate the current employee’s recruitment expenses unless they agree otherwise.

Working hours and days

The standard working hours in the private sector is eight hours per day or 48 hours per week. However, the working hours are reduced by two during Ramadan. Employers must ensure that their employees receive at least one day off each week, which can be any day.

The working hours for the employees in a federal government entity are as follows:

  • 7:30 to 15:30 from Monday to Thursday
  • 7:30 to 12:00 on Fridays
  • Saturdays and Sundays are the official weekend.

Overtime

Employers can have an employee work overtime. However, it must not exceed two hours per day. If the type of work requires employees to work beyond their usual hours, they should receive compensation equal to their regular pay for standard hours, plus an additional 25%. If overtime occurs between 10 pm and 4 am, the compensation increases to 50%. However, these rules do not apply to employees working in shifts.

Employees working on their scheduled day off should either receive a substitute rest day or be compensated at 150% of their regular pay for standard hours.

Leaves and holidays

Annual leave

Employees are eligible for annual leave after completing six months of employment. Those who have worked between six months and one year will receive two days of leave for each month of service. Employees are entitled to 30 days of fully paid annual leave after completing one year of service.

It is now mandatory for employees to use their annual leave in the year it is accrued. They cannot carry forward unused days into the next holiday year unless permitted by the employer. Unused leave days will be forfeited without compensation, except when the employer prevented the employee from taking leave during the accrual year.

Sick leave

Sick leave is granted 90 days a year and begins after the probation period ends. Employees receive full pay for the first 15 days, half for the next 30 days, and the remaining 45 days are unpaid. Employees must inform their employer within three months of falling ill and provide a medical report from an authorised medical institution.

Study leave

Employees who have been with an employer for two years are entitled to a 10-day study leave per year to attend exams. The employee must study at one of UAE’s certified educational institutions.

Maternity leave

Female employees are entitled to 60 days of maternity leave: 45 days are fully paid, and 15 days are half paid.

Paternity leave

Private sector employees are entitled to five paid days of parental leave beginning from the day of childbirth to six months.

Bereavement leave

Employees are eligible for a paid bereavement leave of five days upon the death of a spouse and three days in the event of the death of a parent, child, sibling, grandchild or grandparent.

Special leave for Pilgrimage (Hajj)

Employees are allowed a special leave for Hajj for a maximum of 30 days, but this leave is unpaid and can only be granted once during the employee’s employment with the company.

Umrah leave

The UAE Labour Law does not specify conditions for Umrah leave entitlement. The employer can approve Umrah leave and deduct it from the employee’s annual leave. Alternatively, Umrah leave may be granted as unpaid leave.

Public holidays

Both public and private sectors must provide employees with a day off during public holidays.

These holidays include:

  • Eid-Al-Fitr
  • Arafat Day
  • Eid-Al-Adha
  • Islamic New Year
  • Prophet Mohammed’s birthday
  • National Day

Wages

Private sector employers must transfer their employees’ salaries through the Wages Protection System (WPS). Failure to comply with this requirement will lead to fines and penalties. The WPS transfers the employee’s salary to bank accounts authorised by the UAE Central Bank.

Salary payments can be in Emirati Dirham or any other currency mutually agreed upon in the employment agreement.

Minimum wages

The UAE Labour Law does not specify a minimum wage, but salaries should sufficiently cover the basic needs of employees.

Gratuity

Employees with one year or more of continuous service are entitled to gratuity payment upon contract termination. The gratuity calculation is as follows:

  • For service between one to five years, gratuity is based on 21 days’ salary per year.
  • For service exceeding five years, the gratuity is based on a 30-day salary per year after the initial five years.

It’s important to note that the total gratuity should not exceed two years’ salary.

Taa-meen

On October 15, 2018, the MoHRE introduced the insurance policy known as Taa-meen for private-sector workers and domestic helpers. This policy is an alternative for employers who would otherwise be required to maintain a bank guarantee of AED 3,000 when hiring new employees. As per Ministerial Resolution No. 318 of 2022 concerning Bank Guarantees and the Employees’ Protection Insurance Scheme, employers can choose between two for their employers:

  • Obtain a bank guarantee from a UAE-based bank. The guarantee must be at least AED 3,000 per worker, valid for one year from the date of issuance, automatically renewable and payable upon request by MoHRE without any restrictions.
  • Purchase an insurance policy for the employee.

Termination of employment

Termination with notice

Employers and employees can terminate an employment contract, provided they give notice as required and adhere to other legal obligations. The termination of an employment contract may occur under the following circumstances:

  • Bankruptcy of the employer.
  • Closure of the establishment by UAE legislation.
  • Termination due to the employee’s death or incapacity to work, supported by a medical certificate for sick leave.
  • Termination due to the employer’s death.
  • The employee fails to meet the conditions required for work permit renewal.
  • The employee receives a final court judgement imposing a freedom-restriction penalty for at least three months.
  • The employer and employee agree to terminate the contract.
  • The expiration of the contract’s term without renewal or extension.

Termination period

The termination notice period requires a written notice with a duration of 30 to 90 days in advance.

Termination without notice

The employer may terminate the contract without notice if the employee:

  • Absent without valid excuse for over 20 intermittent or seven consecutive days.
  • Discloses confidential employer information, resulting in losses or missed opportunities.
  • Exploits their position for personal gain.
  • Found intoxicated or under the influence of prohibited substances during working hours.
  • Joins another company without complying with workplace change rules.
  • Made a significant mistake resulting in considerable loss to the employer or intentionally damaged the employer’s property.
  • Physical assault on the employer, manager or colleagues.
  • Repeatedly fails to fulfil basic contractual duties despite warnings.
  • Uses a false identity or submits forged documents and certificates.
  • Violates safety instructions or workplace regulations.

An employee may terminate the contract if the employer:

  • Assigns different tasks than those agreed upon in the contract.
  • Does not meet contractual or legal obligations towards the employee.
  • Fails to address employee health and safety hazards despite awareness of such risks.
  • Harasses or assaults the employee in the workplace, provided MoHRE is notified within five working days.

Employment of foreign employees

There are three primary types of employment visas available in the UAE for foreign employees:

  1. Standard work visa:
    1. This is the most prevalent type of work visa, typically sponsored by an employer in various sectors such as private, government or free zones.
    2. The visa is valid for two years and can be renewed. It is sponsored by the employer, and employees are allowed to work only for the sponsoring employer throughout its validity period.
  2. Green visa:
    1. Green visas are available to freelancers, self-employed, and skilled employees.
    2. This five-year valid visa does not require sponsorship or an employer. It can be renewed under the same conditions and offers flexible work and residency options.
  3. Golden visa:
    1. The golden visa offers long-term residency to foreign talents, allowing them to live, work, or study in the country with exclusive benefits. These include a six-month multiple-entry visa, renewable residence for five or ten years, no need for a sponsor, and the ability to sponsor family members and domestic helpers without restrictions.
    2. Eligibility criteria include investors with a deposit of AED 2 million, real estate investors with properties valued at AED 2 million, entrepreneurs with projects worth AED 500,000, and specialised talents such as doctors, scientists, athletes and PhD holders.

Obtaining the work visa

1. Get an employment entry visa:

  • Obtain entry visa quota approval: The employer applies for employment visa quota approval from the Ministry of Labour (MOL), ensuring compliance with office space regulations and quotas on foreign hires.
  • Submit signed employment contract: After quota approval, employers must submit a signed contract to the MoL. The contract should be written in English and Arabic, and if the employee’s native language differs from either, it must also be translated into their native language.
  • Apply for work visa and entry visa: Employers must submit the employee’s work visa for approval, which the MoL will verify the sponsor’s status as a registered UAE corporate entity and assess if any unemployed UAE citizens are available to fill the vacant position before considering the foreign applicant.
  • Employment entry visa issuance: Upon approval, an employment entry visa, or pink visa, is issued, allowing legal entry to the UAE. For standard and green visa holders, the entry visa is valid for two months, while golden visa holders enjoy a validity of six months with multiple entries. If the employee is already in the UAE, they must apply for a visa change or exit and re-enter. Upon arrival in the UAE, the employee must collect documents for the residence visa application while the employer finalises the work visa.

2. Apply for an Emirates ID:

  • Apply for Emirates ID: Foreign employees must obtain an Emirates ID at the Emirates Identity Authority (EIDA) centre for medical screening and residency purposes. This ID, linked to the residence visa, serves as official identification in the UAE.

3. Secure work and residence visas in the UAE:

  • Undergo medical checkup: All applicants must undergo medical screening at approved clinics in the UAE, as the results are required for the residence visa application.
  • Submit labour contract: Employers must upload the employee’s labour contract to the MoL website within 14 days of the medical screening.
  • Obtain health insurance: Health insurance is mandatory for foreign employees. It is provided by employers in some Emirates, such as Abu Dhabi and Dubai, or purchased individually in others. Employees cannot obtain or renew work visas from the MoL without a valid health insurance card.
  • Receive work visa and initiate payroll: The MoL usually takes approximately five days to approve the official work visa. Once received, employees can start working in the UAE, and employers can initiate payroll processing through the official UAE system.
  • Apply for a residence visa: Employees must submit the required documents for a residence visa application. The visa is valid for two years and is renewable. It is essential for various transactions in the UAE, such as opening a bank account and PO box.

Employment visa cancellation

The sponsoring employer applies to cancel the employment visa at the MoL and the Immigration and Citizenship Authority (ICP). After settling any outstanding dues and signing a cancellation consent, the employee has a 28-day grace period to either change their visa status or leave the country.

Conclusion

The recent legislative changes show a continuous effort to adjust rules as workplaces evolve. These updates reflect a committed push to create a supportive and fair work environment where employees feel valued, respected and motivated. This emphasis on employee well-being extends to provisions for leave entitlements and termination procedures. Additionally, incorporating flexible work options and alternative arrangements, such as part-time schedules and temporary employment, emphasises the UAE’s dedication to addressing diverse workforce needs.

By aligning regulations with human-centric values, the UAE labour laws aim to create a positive and sustainable working environment that prioritises the rights of workers. This enhances job satisfaction and productivity and contributes to the overall success and stability of businesses in the UAE.

How Acclime can help

Businesses can find it daunting to handle the intricacies of UAE labour law. Acclime simplifies this process by providing expert guidance and support. With extensive local knowledge and tailored solutions, we assist businesses in navigating complex regulations. Contact us to learn more about how we can help.