UAE labor law recently underwent a reform. These new rules, thus, invalidate and overrule UAE Ministry of Labour Federal Law No. 8 of 1980. Employee relations are presently governed by Federal Decree-Law No. 33 in the private sector. Consequently, you must be aware of these new regulations if you currently have a labour contract in UAE or plan to apply for one soon.
In this article, we will be talking about the labour contract in UAE. If you have signed a labor contract in the UAE or plan to apply for one soon, be aware that new legislation may disrupt your working life. Consequently, keep reading and learn everything there is to know about what is labour contract in UAE.
What Is a Labour Contract in UAE?
A labour contract in UAE is an agreement in writing that must be signed by both the company and the employee. The employment contract UAE has legal force once both parties sign it. Employees are limited by the character and extent of their job because of their employment contracts. It frequently additionally involves schedules, timetables, and job objectives.
A contract of employment in writing binds the employee and the company equally. The employer has to provide any due wages and benefits in accordance with the provisions of the contract.
Numerous distinct employment contract kinds are permissible by UAE labor contract legislation. It is critical that you understand the following types of contracts:
- Temporary and contract workers.
Understanding how each contract type could impact your capacity to conduct business legally in the UAE is vital. Also, you must have a work permit and visa to perform any type of job in the UAE.
According to Federal Decree-Law No. 33, what must a UAE labor contract contain?
According to the law, the contract of employment is a deal between a company and a worker that specifies the basic parameters of employment, including:
- The employee’s title.
- The start date of employment.
- The length of the contract.
- Annual leave.
- Maternity leave.
- Sick leave.
- Termination parameters.
Both the employer’s and the employee’s versions of a labor agreement should be drafted, and both must be signed.
Requirements for UAE Fixed-Term Contracts
A fixed-term contract with a short period frequently coincides with the duration of the UAE residency visa. Therefore, it can be renewed for 2 or 3 years depending on the worker’s location. It will automatically terminate at the conclusion of the term unless one party ends it earlier or both sides agree to a renewal.
A limited term labour contract in the UAE is ideal when a business needs to recruit individuals for a certain set of duties. It is important to note that the length of those jobs is set in advance. Commonly, notice provisions are absent from limited term contracts. As a result, they simply expire when the conditions do or on the due date. Unless either party ends it sooner.
Articles 88 and 120 of the UAE Employment Law state that the employer may terminate an employee’s employment in its entirety on any of the 11 grounds. An employee may legitimately resign before the conclusion of the contract in accordance with the provisions of Article 121 of the legislation. Because the majority of employees were writing letters of non-renewal, fixed-term contract resignation UAE was quite common.
A fixed term contract can be renewed with the consent of both parties. Alternately, at its conclusion, the parties may opt to convert the agreement to a UAE unlimited contract.
According to UAE Labor Law, a limited term employment contract must at the very least contain the following details:
- Beginning date
- End date.
- Type of work.
- Place of labor.
- Compensation’s amount.
- Time frame.
UAE Employment Contract Notice Requirements and Probationary Period
All new hires must complete a probationary period in the UAE. Depending on the company’s specified policies, the probationary period’s length may range from 3 to 6 months. Here is all the information you must know about the probationary period in the UAE if you’re going to apply for employment in Dubai, Abu Dhabi, or any of the other emirates.
In the United Arab Emirates, a probationary period is used to evaluate an employee’s performance before appointing them to a permanent position. While on probation, the employee is subject to a thorough assessment and performance evaluation.
If the candidate proves to be suitable for the specific position, the business will hire them as an ongoing worker when the evaluation is complete.
The UAE Ministry of Labor has been developing several regulations for the country’s employees’ probationary period:
- Employers have to provide probationary employees with at least 14 days’ notice before terminating their employment.
- A probationary employee also needs to give the company at least 14 days’ notice if they plan to leave the United Arab Emirates. On the other hand, if an employee wishes to begin working for a different UAE company, they must provide a month’s notice.
The employee has no right to take a paid sick leave during the probationary term in the United Arab Emirates, as per Article 31 (2) of Federal Decree-Law No. (33) of 2021 regulating the regulation of work relationships. However, according to an examination supplied by a healthcare facility, the employer may in the UAE grant the employee unpaid sick time.
A worker in the UAE who is in their time on probation has no right to any gratuities. This in accordance with the laws and rules of the UAE Labour Law. Extending the probationary period is against the law, especially if the person meets the company’s performance.
Contracts with Flexible Arrangements
An indefinite length contract has no limits and may be terminated for a variety of reasons, in accordance with UAE Labor Law.
Contracts with unlimited term are typically seen as more adaptable and intuitive than contracts with restricted duration. Therefore, indefinite duration contracts outnumber restricted term contracts in the UAE. If the duration of the project is known in advance, it can be used for personnel who are on the go but not involved in projects.
According to UAE Labor Law, a flexible labour contract in UAE must at the very least have the following details:
- Beginning date
- End date.
- Type of work.
- Place of labor.
- Compensation’s amount.
- Time frame.
Employees who sign contracts with schedule flexibility clauses may be able to choose the hours they operate. As an alternative, an employer may insist that a worker maintain a range of work schedules throughout a calendar year.
An employee’s hours are inconsistent in both scenarios. Nevertheless, the company must still adhere by regulations governing overtime and workload restrictions.
Employers have the right to include non-compete terms in a work contract. Nevertheless, companies have no right to prevent part-timers from looking for additional work at businesses that are not competitors. Therefore, if you are under a flexible contract, you can work for several companies at the same time with no problem.
Likewise, people who work for many employers must get a MOHRE permit. Consequently, you may need PRO services support to obtain this permit. With PRO services you can streamline certain processes with the local authorities. As a result, going through the necessary procedures in little to no time.
Rest Day Contracts
Every employee has the right to one day off every week from their employers by law. The law no longer requires them to set aside Friday as a day of rest, nevertheless. As a result, the rest day can be any other day of the week.
Employers have a duty to compensate workers who show up for work on days that are supposed to be rest days. There are two alternative ways to be compensated: a make-up rest day or compensation for overtime. Whatever you choose, it is important that you do it compliantly. Most businesses decide to outsource their payroll needs to provide compliant payments, that include tax calculations, to their workers.
Entitlements to Leave
Every year that an employee accrues leave, they need to fulfill it quickly. They may be eligible for redemption by the end of the year if they do not make use of the leave.
For the first six months, employees have the right to accumulate leave at a rate of 2 days per month. If a person has been working for a company for a year, they are legally able to take 30 days of leave. The statute makes the following distinctions among extraordinary leave categories:
- Maternity leave
- Compassionate leave
- Study leave
Employees have the right to 45 days of maternity leave with pay. Also, 15 days of unpaid leave for new mothers. Employees are able to take a further thirty days of leave with pay if they give birth to a child who is ill or disabled.
Workers have the right to 3-5 days of time off with pay if a member of their immediate family passes away.
Employees have the right to 10 days of study time at an authorized UAE institution of higher learning. However, in order to be eligible for study leave, employees must have been with their firm for at least 2 years. In addition, study leave with no pay is also a possibility.
Conditions for Contract Termination
According to UAE Labor Law, the employee is eligible for “early termination compensation” of at least three months’ pay. Including salary and a limited agreement gratuity (or the remainder of the contract’s term if there are less than 3 months left), if the employer wants to terminate the agreement before the conclusion of the limited term. With a Professional Employer Organization’s help, this pay is easily accessible.
Employees, on the other hand, have the option to end the agreement. According to labor law, the employee must pay the employer “early termination compensation” of half of three months’ worth of income unless the employment contract states otherwise. includes salary and bonuses for a limited term, or, if the agreement has fewer than three months remaining, half of the remaining pay.
The method for end-of-service tips has been changing under the new law. Now, all employees are eligible to receive the full end-of-service bonus.
However, in order to be eligible for a gratuity, workers must work for their company for at least a year.
Workplace Policy Requirements
The new law requires firms to adhere to specific workplace policy tenants. These are some examples:
- Harassment against certain groups of people is illegal.
- Equal pay for equal work.
- Physical, oral, and sexual misconduct are all illegal.
- The distribution of an employee manual.
- Keep employment records for up to two years after termination.
KPM PRO will assist your company with labour contract
Drafting you labour contract in UAE will be easier with the support of a PRO services provider. Therefore, if you work with KPM PRO Services, you can provide biding contracts to all your employees. In this way, you will not have to worry about compliance, because we will take care of it on your behalf.
We are experts on what we do, consequently, we can help you write limited or flexible contracts that go according to the MOHRE labour law. Our team can ensure that every aspect of the law reflects on the contract. As a result, you will not have to worry about incurring in any fine or penalty thanks to our professional support. We are the partners you deserve in the UAE!
Moreover, we can give you a lending hand if you have any modifications to the employment contracts that you have already in place. In addition, we can give your employees the dependent visa assistance that they need to bring their families into the region once they are working in the area.
KPM PRO offers an overall service, so you do not have to worry about having to outsource PRO services to other companies. All you have to do is give us your requirements and we will make sure to give you all you need! Contact us now!