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Overview of the UAE Labour Legislation

Overview of the UAE Labour Legislation

The economic development of the United Arab Emirates (UAE) is significantly supported by foreign labour, resulting in a unique system of employment relationships within the Emirates. Here is an overview of the key provisions of the UAE labour legislation.

Employment Contracts

In the UAE, particularly in Dubai, all employment contracts are fixed-term, with a maximum duration limited to three years. However, two-year contracts are more common due to this being the maximum duration of a work visa.

An employment contract can be terminated early by providing advance notice to the other party within the period specified in the contract. The legislation sets minimum and maximum notice periods:

Minimum notice period for early termination of an employment contract30 days
Standard notice period for early termination of an employment contract60 days
Maximum notice period for early termination of an employment contract90 days

If either the employee or employer breaches this term, they must compensate the other party an amount equal to the employee’s salary for the notice period specified in the contract. If an employee leaves their employer without following the legally established procedures, they are banned from working in the UAE for one year.

Employers can terminate an employment contract without notice if the employee:

  • Provides fake documents at the time of employment;
  • Intentionally causes material damage to the employer or commits a grave error leading to material damage;
  • Violates safety instructions;
  • Discloses commercial secrets;
  • Is under the influence of drugs or alcohol at work;
  • Commits an immoral act during working hours, insults the manager/colleagues, or physically assaults them;
  • Is absent from work for more than 7 consecutive days without a valid reason, or more than 20 days in a year;
  • Misuses their position;
  • Works for another employer without the consent of their current employer.

During the probation period, the employment contract can also be terminated early by either party, with the only difference being that the maximum notice period is no more than 14 days.

Working Hours in the UAE

The basic working week in the UAE, according to labour law, is six days, with the daily work duration limited to 8 hours for most professions, making a 48-hour working week acceptable.

A distinctive feature of employment relations in the UAE is a lenient attitude towards absence from work without valid reasons. The consequences of absenteeism depend on the duration of the employee’s absence.

Absence from work for more than 7 consecutive daysGrounds for early termination of the employment contract
Absence from work for more than 20 days in a yearGrounds for early termination of the employment contract
Absence from work for less than 7 consecutive days or 20 days in a yearNot grounds for early termination of the employment contract. Other sanctions may apply

If the working day exceeds 5 hours, the employee is entitled to a break for lunch or prayer, lasting 1 hour.

Overtime is paid as follows:

  • 125% of the employee’s hourly pay for each extra hour worked (but no more than 2 hours a day);
  • 150% of the employee’s hourly pay for each extra hour worked during overtime between 22:00 and 4:00;
  • 150% of the employee’s daily rate if they work on an off day or holiday. Alternatively, the employee may be given another day off.

During the holy month of Ramadan, the working day is reduced from 8 to 6 hours, regardless of the employee’s religious beliefs.

Salary Payment

In the UAE, salaries must be paid no less frequently than once a month, though more frequent payments are permitted. This timeframe is the most common and widely practised.

The Emirates also have an automated Wage Protection System (WPS) in place. Through this system, government authorities monitor the completeness and timeliness of salary payments to employees. Employers who fail to pay salaries on time are subject to penalties. It is worth noting that the WPS is currently implemented for mainland companies and some free zones.

If an employee has worked for an employer for at least one year, they are entitled to severance pay upon termination. The amount of this payment depends on the total duration of employment with that employer.

For the first 5 years of employmentThe severance pay is calculated at 21 days’ salary for each year of work
For subsequent years of employmentThe severance pay is calculated at 30 days’ salary for each year of work

Sick Leave Payments

UAE legislation includes provisions for paying an employee during days of temporary incapacity. The amount paid during sick leave after the probation period depends on the number of absence days within the year.

The first 15 days of temporary incapacity within the yearPaid in full
The next 30 days of temporary incapacity within the yearPaid at half of the salary
The next 45 days of temporary incapacity within the yearUnpaid

It is characteristic of the Emirates’ labour law that sick days are not paid by the employer during the probation period. However, the employee’s job position is retained. If the employee’s incapacity period exceeds 90 days in a year, the employer has the right to terminate the employment contract, regardless of whether these days fall within the probation period.

Annual Leave for Employees in Dubai

UAE and Dubai labour law guarantees every employee paid annual leave. The minimum duration is 30 days per year. However, employers may increase this period at their discretion by providing additional rest days.

If an employee does not use their 30 days of annual leave within a year, the employer has the right to:

  • Carry over the unused leave days to the next year;
  • Compensate the employee for the unused days.

The right to 30 calendar days of leave accrues after one year of employment. If an employee wishes to take leave before completing the first year of employment, they are entitled to 2 days of leave for each month worked.

Muslim employees are also entitled to take leave once during their employment to perform Hajj. This leave cannot exceed 30 days and is unpaid by the employer.

Payments for Childbirth

Mothers are guaranteed payment for days absent from work due to childbirth. According to Federal Decree-Law No. 33 of 2021, the minimum number of such days is 60. Employers may extend this period according to internal policies.

The payment for maternity leave in the UAE, and Dubai in particular, depends on the number of absence days.

The first 45 days of the mother’s absence from work due to childbirthPaid in full
The subsequent 15 days of absencePaid at half of the salary

UAE labour law also provides for “parental” days. This guarantee means that within the first 6 months following the birth of a child, the parent is entitled to 5 days of paid leave. These days can be taken consecutively or separately. To receive this entitlement, the employee must provide the employer with a certificate confirming the birth of the child.

Disciplinary Penalties in the UAE

If an employee violates the provisions of the UAE labour legislation or the terms of the employment contract, the employer has the right to impose disciplinary sanctions on them. These sanctions can include:

  • Written notification;
  • Written warning;
  • Withholding of salary for no more than 5 days within a month;
  • Suspension from work for a period not exceeding 14 days, during which the salary is not paid;
  • Loss of periodic bonus for no more than one year. This disciplinary measure is applied if the company has a system of periodic bonuses.

Separately, Federal Decree-Law No. 33 of 2021 provides for the possibility of suspending an employee from work during a disciplinary investigation. In this case, suspension is not a penalty, and the employer is obliged to pay the employee half of their salary for the specified period.

If the investigation concludes that the employee is innocent or the violation is minor, the employer must pay the employee their full salary for the period of suspension. It is also worth noting that this period cannot exceed 30 days.

Employer Sponsorship

Employers are required to obtain a work visa for foreign employees. The employee’s visa is “tied” to the employer, who acts as the employee’s sponsor. If the employment contract is terminated, the employee’s visa is cancelled.

In certain cases, employers are also required to pay for the employee’s tickets to their country of origin.

SituationIs the employer required to purchase tickets to the country of origin for the employee?
If the employment contract expires and the employee does not find another job in the UAEThe employer is required to purchase tickets to the country of origin
If the employment contract expires and the employee finds another job in the UAEThere is no obligation to purchase tickets to the country of origin
If the employment contract is terminated early at the employer’s initiativeThe employer is required to purchase tickets to the country of origin
If the employment contract is terminated at the employee’s initiativeThere is no obligation to purchase tickets to the country of origin

It should also be noted that it is very common in practice for employers to provide additional guarantees in the form of purchasing tickets to the country of origin for employees once during the contract term or once a year. Moreover, in the event of an employee’s death, the employer is obligated to repatriate the remains to the country of origin.

Conclusion

Thus, the labour legislation of the UAE contains a number of significant features. At the same time, these features ensure the sustainable development of Dubai and other Emirates and guarantee their attractiveness both for workers and employers. To start a business in the UAE, it is necessary to register a company.

Company Formation in the UAE
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