Understanding Labor Contracts in the UAE A Comprehensive Guide

1. UNDERSTANDING Labor Contracts in the UAE A Comprehensive Guide

2. The UAE proudly stands as the most favoured country in the world for international professionals seeking employment. Whether it’s the employment rate, attractiveness to talented individuals, or any other metric, the UAE has a leading labour market worldwide. These achievements, however, are not coincidental. The UAE government is very active in implementing labour laws that ensure a fair, transparent, and facilitative work environment. One such great initiative is the labor contract UAE. The UAE labour contract, which is overseen by MOHRE, is a legal agreement between the employer and the employee that sets out clear work expectations and protects the rights of both. It serves as a safeguarding tool for the employer and employee, and it is important for both sides to understand how it works according to UAE labour laws. in this blog, we will explore the various essential aspects of the UAE labour contract, its regulations, its essential clauses and how it ensures a fair work environment.

3. Role of MoHRE in UAE In the UAE, the regulation of all matters related to labor and employment is overseen by the Ministry of Human Resources and Emiratization (MOHRE). Similarly, the labor contract UAE regulations and laws are also managed exclusively by MOHRE. The ministry is responsible for the issuance of work permits and labour cards for both local and foreign workers, registering and approving labour contracts, implementing labour laws, and promoting Emiratization. It also acts as a mediator in labour disputes, ensuring minimal labour disputes and effective resolutions.

4. THE LABOUR LAW IN UAE The Federal Law No. 33 of 2021 by MOHRE, commonly known as the UAE Labor Law, governs and regulates employment relationships. This law outlines employee regulations, ensuring that the rights and obligations of both employers and employees are clearly defined. The provisions of this law are applicable to all establishments, employers, and workers in the UAE’s private sector. This decree law introduces significant amendments and changes to previous labour laws (Federal Decree Law No. 8 of 1980). It made them more flexible, conducive, and protective. It addresses key aspects such as working patterns, labour contracts, job conditions and much more.

5. WHAT IS LABOR CONTRACT UAE A labour contract UAE, also known as a MOHRE labour contract, is a legal work agreement between an employer and an employee. This agreement is signed by both parties, binding them to specific legal terms and conditions under the labour law. The employment contract is written, and one copy is provided to the worker while another is retained by the employer. It clearly outlines the terms, conditions, and other aspects of the job, on which the worker and the employer have mutually agreed. This ensures a transparent and legally protected working environment, safeguarding the interests of both parties and fostering strong work relationships.

6. TYPES OF LABOUR CONTRACT IN THE UAE A labour contract in the UAE can be created for various types of working patterns as determined by the UAE labour law. Here are the broad types of labor contract UAE: 1. Fixed-Term Employment Contract: In the UAE, a worker can be hired on a fixed-term employment contract, also known as a limited contract. The duration of such contract can be up to three years and is renewable or extendable for a similar or shorter term, one or more times. At the time of extension, any new terms agreed upon will be considered an extension of the original terms. If the contract is not renewed or extended upon its expiry, and the parties continue to perform the obligations of the contract, it is considered renewed and same terms and conditions continue to apply. 2. Unlimited Employment Contract: Unlimited employment contracts do not have a fixed start or end date, and they end with mutual agreement between the parties. However, now, all the unlimited employment contracts must be converted into fixed-term contracts in compliance with Federal Decree Law No. 33 within one year of the contract’s enforcement date. In the meantime, the provisions of Federal Law No. 8 of 1980 apply to unlimited employment contracts created under it.

7. 3. Full-Time Labor Contract: This type of contract applies to jobs where the employee works for the employer full-time for the standard daily working hours (8 hours per day or 48 hours per week) throughout the working days. 4. Part-Time Labor Contract: In this arrangement, the employee works for the employer for a specified number of hours or days designated for the job. Part-time employees usually have fewer working hours than full-time employees. 5. Temporary Work Contract: Under this system, the employee works on a specific assignment or task and the contract ends upon its completion 6. Flexible Work (Freelance) Contract: In this type of labor contract UAE, the working hours or days vary depending on the business needs of the employer and workload. Employees work at variable times according to requirements. 7. Remote Work Contract Here, the work is performed outside the workplace. There is electronic means of communication between the worker and the employer instead of physical presence. This can apply to both part-time and full-time jobs. 8. Job Sharing Contract: In this working arrangement, responsibilities are shared between two or more employees. The job-sharing contract specifies how the work is divided among the employees. Rules for part-time work are applied to such arrangements

8. COMPONENTS OF A UAE LABOUR CONTRACT MOHRE has provided certain essential clauses that must be included in a labor contract UAE. To get a labour contract registered and approved, it is mandatory to mention these legal terms. Here is the essential information that must be clearly stated in a labour contract UAE: 1. Details of All Parties: The most essential component is the complete details of both the employer and the employee. These include their full legal names, addresses and contact details. Employers must also provide their UAE trade license details, and employee’s nationality and qualifications. 2. Employment Period: The duration of the contract must be clearly stated, including the starting and ending date of employment. Additionally, the type of working arrangement (temporary, part-time, or full-time) should be specified.

9. 3. Probation Period and Notice Guidelines: The duration of the probation period must be clearly mentioned. As per UAE labour law, the probation period can be up to six months from the commencement of work. If the employer is unsatisfied with the employee’s performance, they may terminate the employment during the probation period with a 14-day written notice prior to termination. Employees leaving during probation for another UAE job must give one month’s notice, while those leaving the UAE permanently need to provide 14 days’ notice. 4. Job Description and Responsibilities: The contract must clearly outline the employee’s responsibilities, tasks they will be accountable for, reporting structure, and required skills 5. Wages and Benefits: The labor contract UAE must include detailed information about the employee’s salary and benefits including basic salary, allowances, incentives, and other benefits such as transportation, accommodation, and insurance along with how wages will be paid (e.g., weekly, monthly, or daily). 6. Working Hours and Overtime: The working hours for job must be explicitly mentioned. As per the labour law, the maximum standard working hours are 8 hours per day or 48 hours per week. Generally, commute time is not included in working hours. For other working patterns, the employer and employee can mutually agree on the working hours. Consecutive working hours must not exceed 5 hours without breaks. If overtime is required, it should not exceed 2 hours per day. In such cases, the employee is entitled to additional compensation.

10. 7. Currency Arrangements: The contract must specify in what currency wages will be paid. Payments can be made in UAE Dirhams or another currency as agreed upon by both parties. 8. Leave Entitlement: The labor contract UAE must mention the employee’s leave entitlements. As per labour law, it includes: 1. Annual Leave: 30 days for each year of extended service. 2. Maternity Leave: 60 days for female workers (45 days with full pay and the following 15 days with half pay). 3. Sick Leave: Paid leave for health-related issues. 4. Other Leaves: Bereavement leaves: Up to 5 days. Paternal leave: Up to 5 days. Unpaid leave: Subject to employer approval. 9. Public Holidays: Public holidays must also be mentioned in the contract. If an employee works on a public holiday, they must be compensated with a day off on another day or paid their daily wage along with a minimum of 50% more than their basic wage. 10. Non-Compete Clause: UAE labour laws empower employers to include non-compete clauses in employment contracts. This means they can impose restrictions on employees from working for competitors after the employment period ends. The duration, geographical scope, and specifics of the non-compete clause must be clearly mentioned in the contract. The non-compete restriction can be enforced for a maximum of two years.

11. 11. End of Service Benefits: At the end of service, the employee may receive benefits and gratuity depending on the length and type of service. These details must be clearly mentioned in the employment contract. 12. Termination Clause: The terms and conditions under which the labor contract UAE would terminate must be properly mentioned. This includes the notice period, eligibility to terminate, and compensation for both parties, etc. 13. Conflict Resolution: The contract must specify the mechanisms to resolve any disputes that may arise. Federal Decree Law No. 9 2024 introduces some amendments to labour law focusing on streamlined dispute resolution. 14. Employee Policies: The labour law has introduced certain mandatory obligations for employers, which include ensuring non-discrimination based on class or gender, providing equal pay for genders, and prohibiting physical, verbal, and sexual harassment in the workplace For more detailed information, you can consult experts at Dubiz Business Setup.

12. LABOUR CONTRACT UAE Amendment and Termination 1. Contract amendment guidelines: According to the Federal Decree Law No. 33, the worker and employer may mutually agree to add new clauses to the approved contract, provided these changes adhere to the decree law and legal regulations. In case of significant changes, approval from MOHRE is required. Such amendments may include salary adjustments, modifications in working hours, contract extensions, or changes due to legal or regulatory requirements. 2. Contract Termination Guidelines: Termination of contract means ending it. Now there can be cases where the labor contract UAE may be ended, and the process may be initiated by the employee or employer. In fact, termination can also happen in the probation period. There are certain things that UAE labour laws say about the termination of a labour contract.

13. 1. Notice period: As per UAE law, the notice period must not be less than 30 days or more than 90 days in case any party decides to terminate the contract for legitimate reasons. In case there is a violation of the notice period, the party at fault will have to pay compensation as agreed upon in the contract. Probation: It is possible that termination may happen during the probation only. In that case also, the party will have to serve notice in written. Worker’s dismissal without notice: The employer can terminate the contract without any notice in severe cases such as worker impersonates someone, damages the property, violates instructions in the contract, discloses company secrets, absconding cases, etc. Worker quits without notice: The worker may terminate the contract without notice in case the employer breaches obligations as mentioned in the contract, is guilty of harassment or discriminates based on gender or caste, etc 2. 3. 4. Language for the Contracts In the UAE, the Arabic language is generally approved and used for all forms of files, records, data, etc. For the labor contract UAE, Arabic is used for writing and publishing. If any additional text language is used, which is understood by the parties, it must match what is written in the Arabic.

14. Exceptions to the Contract Law in UAE There are some categories that are exempt from the employee contract under Federal Decree No. 33 of 2012. These categories include: Employees of federal and local government entities and employers of the armed forces Dubai International Financial Centre and Abu Dhabi Global Market (they have their own labour laws) Domestic workers

15. The Process for Employment Contract in UAE Here is the general process for applying for a labour contract agreement in the UAE: 1. Job Offer: The employee receives a job offer from a UAE-based employer. The employee must sign the contract before the employer can get MOHRE’s preliminary approval for his employment. 2. Document Preparation: Documents from both the employee and employer need to be gathered, such as the employee’s passport, current visa, and the employer’s trade license. 3. Drafting the Labor Contract UAE: The employer drafts the contract according to UAE labour laws. Both parties must sign it.

16. 4. Submission of Employment Contract to MOHRE: Within 60 days of the employee’s entry into the UAE or change of status, the contract must be submitted to MOHRE for approval. 5. Review by MOHRE: MOHRE will review the contract and documents to ensure they meet the legal requirements. 6. Contract Issuance Once verified, the contract is officially issued and can also be accessed online. After the above steps are completed, the work permit and employment visa would be also issued to the employee.

17. ISSUANCE AND RENEWAL OF Employment Contract Online The establishments who wish to issue or renew the labor contract UAE can do so through the MOHRE website. Here are the steps: 1. Log in with the username and password, or simply through UAE Pass. 2. Apply through one of the service delivery channels along with the employment contract signed by both parties. The application will be electronically reviewed by the Ministry for compliance with the requirements and documents. In case something is missing, the establishment will be notified. Once all the requirements and documents are met, the request for issuance or renewal will be approved. 3. 4. 5.

18. HOW TO CHECK LABOUR CONTRACT ONLINE You can access the UAE labour contract online through the MOHRE website or app. Here are the steps for labour contract download: 1. 2. Go to the MOHRE website or open the app. Use the Emirates ID or registered credentials to access your account. Navigate to the services option in the menu. Select “View Approved Contract.” Enter the transaction number, passport details, nationality, and DOB as required. Solve the CAPTCHA. View and download the labour contract. 3. 4. 5. 6. 7.

19. Benefits of having a valid LABOR CONTRACT UAE The labour contract UAE is very essential for the employee-employer relationship: For employees: Provides clarity on job role Protects their rights Increases job security Provides a mechanism for dispute resolution Sets out the obligations For employers: Sets out job expectations Reduces risks of financial and legal disputes Fosters a transparent work environment Attracts and retains top talent Ensures legal compliance

20. LET DUBIZ GUIDES YOU Whether you want a business setup in Dubai or are looking for employment, you must ensure you comply with all legal requirements without any negligence. Dubiz Business Setup is committed to making the legal processes as smooth as possible for those who aspire to succeed in the UAE. Be it guidance with labour contract UAE or any kind of business setup services in Dubai, our specialized team provides solutions tailored to meet your unique needs. When planning for a business setup in Dubai, you should know about Emiratization, the Wage Protection System, labour contracts, employment visas and all other labour- related regulations. You can consult with our experts, and they will help you stay updated and informed.

21. CONTACT US +971 563695485 dubiz.co info@dubiz.co Office number 2908, Al Manara Tower, Business Bay Dubai.