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Navigating Employment Law in the UAE: A Comprehensive Guide for Employers

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The United Arab Emirates (UAE) has evolved into a global business hub, attracting multinational corporations and skilled professionals from around the world. Consequently, staying informed of the country’s Employment Law is crucial for both employers and employees, enabling them to understand their rights and obligations and fostering a fair and productive work environment. 

As a leading law firm with expertise in Employment Law, Al Kabban & Associates is here to provide you with essential information, guidance, and support throughout your journey in navigating the complexities of the UAE’s labour landscape.

Employment Law in the UAE is governed by Federal Law No.33 of 2021 Regarding the Regulation of Employment Relationship and its amendments, also known as the UAE Labour Law. This legislation covers various aspects of employment, such as working hours, leave entitlements, termination of employment, employee rights, and dispute resolution. Employers are required to comply with these regulations and must also adhere to the specific rules and guidelines issued by their particular Emirate or free zone authority.

In this blog post, we will explore the key aspects of UAE Employment Law, focusing on the core elements that employers should be aware of when managing staff and maintaining compliance. We will discuss employment contracts, working hours and leave entitlements, termination procedures, and employee rights regarding wages and benefits. 

Furthermore, we will address the best practices for managing workplace grievances and resolving employment disputes, offering insights into fostering a harmonious and compliant work environment. Stay tuned as we delve into the intricacies of UAE Employment Law, and do not hesitate to contact our experienced team of lawyers for personalized advice and assistance tailored to your unique business circumstances.

1. Employment Contracts: Types and Key Considerations

The latest amendment of the UAE Labour Law introduced a significant change mandating fixed-term employment contracts for all private sector company employees, with a few exceptions including those employed within the DIFC and ADGM jurisdictions. The deadline for transitioning all existing employees on ‘unlimited-term’ to ‘fixed-term’ contracts was February 1, 2023.

The initially imposed three-year cap on fixed term contracts has since been removed. This allows parties to mutually determine the duration of the fixed term contracts according to their preferences (though adherence to fixed term contracts remains obligatory).

It is also important to consider specific requirements for hiring expatriate employees, such as obtaining work permits and visas and adhering to the sponsorship system (Kafala) and Emiratisation policies promoting the employment of UAE nationals.

2. Working Hours, Leave Entitlements, and Employee Benefits

Employers must comply with statutory requirements relating to working hours, public holidays, and annual leave. The UAE Labour Law stipulates a standard working week of eight hours per day, six days per week, with maximum daily working hours capped at nine hours. During Ramadan, working hours for Muslim employees should be reduced by two hours per day.

Employees are entitled to paid annual leave of not less than two days per month for those with more than six months but less than one year of service and 30 days after one year of service. Additionally, employees are entitled to paid sick leave and maternity leave (subject to certain conditions).

Employee benefits should be in line with the UAE Labour Law, including end-of-service gratuity payments and must not discriminate between employees based on nationality, religion, or gender.

3. Termination of Employment: Procedures and Legal Obligations

Below are the specific scenarios under which an employment contract can be terminated, as detailed in Article 42 of the Labour Law:

1.    If the contract’s duration expires without extension or renewal.

2.    If both the employer and the employee mutually agree in writing to terminate the contract.

3.    If either party decides to terminate, while adhering to the contractual termination provisions and agreed-upon notice period (explained below).

4.    In case of the employer’s demise when the contract pertains to the entity.

5.    If the worker passes away or becomes permanently unable to work, supported by a medical certificate from a recognized medical entity.

6.    When a worker receives a final court judgment involving a freedom-restricting penalty for a minimum of three months.

7.    If the establishment is permanently closed, complying with UAE legislations.

8.    In the event of the employer’s insolvency, bankruptcy, or facing exceptional economic circumstances that hinder project continuation.

9.    If the worker is unable to fulfill work permit renewal conditions due to reasons beyond the employer’s control.

Notice Period for Termination:

Article 43 of the UAE Labour Law states that either party within the employment contract may terminate it for a ‘valid reason,’ provided that:

1.    Written notice is provided to the other party.

2.    The party initiating termination serves a notice period of one month (30 days) to three months (90 days) as mutually agreed to when signing the labour contract.

Furthermore, the following guidelines must be followed:

·         Duties stipulated in the contract must be fulfilled during the notice period.

·         The worker is entitled to the full wage specified in the contract for the notice period.

·         If either party fails to observe the notice period, they must compensate the other party with a ‘notice period’ allowance. This allowance corresponds to the worker’s wage for the complete notice period or proportionately for the remaining duration. Calculation of the allowance is based on the worker’s most recent wage.

In the event of an employer-initiated termination, the worker has the right to take one day of unpaid leave per week during the notice period for job searching.

It is important to note that the notice period’s length can be adjusted or waived through mutual agreement between both parties, ensuring that the rights of all parties remain unaffected.

4. Dispute Resolution and Best Practices for Managing Workplace Grievances

When faced with employment disputes, employers should adopt a proactive approach in addressing and resolving grievances through internal mechanisms, such as carefully documented investigations, mediations, and hearings. In case a dispute cannot be resolved amicably, the matter can be escalated to the Ministry of Human Resources and Emiratisation (MOHRE), followed by the UAE courts if necessary.

Creating a comprehensive employee handbook outlining company policies and procedures is an excellent best practice to ensure communication of expectations and a fair approach to managing workplace grievances, further reducing the likelihood of disputes escalating to litigation.

Conclusion:

Understanding and adhering to UAE Employment Law is vital for employers operating in the country, ensuring compliance and fostering a harmonious workplace. By familiarizing yourself with key aspects such as employment contracts, working hours, leave entitlements, termination procedures, and dispute resolution mechanisms, you will be well-equipped to navigate the complexities of the UAE labour market. 

The experienced team of legal consultants in Dubai at Al Kabban & Associates is dedicated to providing comprehensive guidance and support in this dynamic area of law, helping you tackle challenges and maintain compliance with confidence.

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