Employment Contract in UAE
An employment contract in UAE is a written agreement between an employer and an employee that specifies basic terms including the employee’s title, the start date of employment, compensation, and the length of the contract. Two drafts of the employment contract—one for the employer and one for the employee—should be made, and both should be signed.
Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector allows employers to hire employees under a fixed-term contract for up to three years. Employers have the option to shorten or extend the duration beyond three years. In the United Arab Emirates, employment contracts guarantee a flexible workplace.
Types of Employment Contracts in UAE
According to UAE Labour Law No. 8 of 1980, there are two main categories of employment contracts: restricted and unlimited. There are a few differences between the two sorts, which you must first recognize. Now let’s get started!
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Limited Contract
A legal agreement between an employer and an employee determines the duration of work. It is called a restricted or fixed-term contract. Usually, the limited contracts are for temporary or project-specific positions. They usually have a set expiration date that is no more than three years from the start of employment. This is a common choice for project, temporary, and fixed-term positions.
Unlimited Contract
An unlimited contract has no expiration date, in contrast to a restricted contract. Long-term projects and permanent positions are suitable for this contract. To secure long-term employment with a corporation, employees frequently sign unlimited contracts. However, this contract does not cover employees in the private sector. All private sector workers, except those at DIFC and ADGM, have fixed-term contracts as of 2023.
Probationary Period
Employers cannot extend probationary periods beyond six months. They have the option to terminate the employee during probation without notice or end-of-service benefits. However, if the employee completes the probationary term and remains employed, that period will count towards their overall service.
If the employer or their representative assaults the employee, the employee can quit immediately. Also, if the employer doesn’t fulfill legal or contractual obligations, the employee can leave. If the employee terminates the contract for reasons other than specified ones, they’re required to compensate the employer for any resulting losses. However, this compensation cannot exceed half a month’s salary for the first three months or the remaining time, whichever is shorter. This is unless the contract specifies otherwise.
Contract Termination
There may be a termination of your employment contract in UAE; with terms and conditions. Additionally, it varies according to which end cuts the thread. Having said that, let’s examine both ends.
When An Employer Ends A Contract
When an employer chooses to end a contract, they have legal obligations under UAE labor law to provide employees with appropriate notice. The sender must also dispatch this notice one to three months before the anticipated termination. Nonetheless, there are some circumstances under Article 44 of the UAE labor code that allow employers to end a contract early without giving notice.
During the notice period, the employer must allow the terminated employee to take one day of unpaid leave per week. This time off enables the employee to search for other job opportunities.
When An Employee Ends a Contract
Like the employer, the employee must give notice one to three months before the anticipated date of termination. Additionally, during the notice period (which starts when the notice is submitted), employees are entitled to receive their full pay as specified in the contract.
However, they will have to pay an early termination compensation if the employee quits before the notice period has expired. According to the contract, the compensation is equal to half of three months’ worth of pay. Keep in mind that the compensation covers all of the employee’s regular pay.
Notice Period in UAE
Either the employer or the employee must provide written notification of termination of the agreement. Typically, the employer gives this notice between thirty and ninety days before termination. The time frame, known as the notice period, ranges from 30 to 90 days in the UAE.
If the employer decides not to have employees serve the notice period, they’re entitled to full remuneration. Likewise, if employees opt out of serving the notice period, they must pay half of their three months’ salary as per the contract.
Non-Compete Restrictions
Article 10 of the UAE Labour Law permits employers to include non-compete clauses in employment contracts. To safeguard the business’s legitimate interests, these restrictions need to be specified about time, location, and the type of work involved. The longest length of restriction once an employment contract expires is two years.
All UAE enterprises (both onshore and in the free zones) must review contracts, employee handbooks, and any other employment rules and processes to guarantee compliance with the New Law. As they collaborate to ensure their compliance, they take pride and pleasure in their work.
Types of Work Permit
A new work permit is a document that enables businesses to hire employees, either citizens or residents, from within or outside the nation.
- Work permit under relatives’ residence. The Ministry of Home Affairs (MOHRE) issues a two-year permit to companies. This permit allows them to hire an employee residing in the United Arab Emirates under their relatives’ sponsorship.
- Permit for part-time employment. This document permits locals or citizens to work fewer hours than full-time employees who do the same tasks at the company.
- Temporary work permit. This type of permission enables businesses to hire foreign or domestic workers who are residents of the United Arab Emirates to do specific tasks for a maximum of six months.
- Juvenile work permits. Under specific circumstances, the permit enables citizens or residents between the ages of 15 and 18 to work in an establishment.
- Mission work permit. The Ministry has granted permission for an establishment to issue an electronic mission work permit to carry out a specified fixed-term project or temporary work for a maximum of 90 days. You may renew this permit only once for an additional period. Authorities will grant this permission digitally.
Useful Tips for the Employment Contract in UAE
Make sure you read and comprehend the terms of your employment contract in UAE before signing it, as it is a legally binding agreement.
After accepting a job offer, you’ll need to sign a copy of your contract in both Arabic and English. Before signing, ensure you review the Arabic translation. In case of a disagreement, the Arabic version will be considered the official one.
Before signing a contract with your employer, if your spouse is your sponsor and you want to work, you must get a No Objection Certificate (NOC) from them. Your employer will then apply for your labor card. Your labor card is a legitimate official form of identification that you should always have on you.