The UAE’s rapid economic growth and business climate make it the best place for entrepreneurs to start their ventures. 69% of Business Climate Survey UAE 2023 respondents have experienced a rise in industry-wide turnover this year. However, one major challenge is coping with the country’s ever-evolving local labour laws.
On the other hand, abiding by these rules and regulations ensures a healthy relationship between employer and employee. This article shares some of the essential labour laws in the UAE.
What are UAE Local Labour Laws?
No matter where you work, every country has unique local employment laws. It is a set of rules and regulations that employers must follow during an employee’s tenure with the company. Otherwise, an employee can take legal action if the company doesn’t comply with those laws.
UAE local labour laws set out numerous rules and regulations for the private sector for fair and transparent employee contracts. It primarily includes contract terms, wages, employee benefits, health and safety, insurance, employment termination, etc.
However, these laws exclude employees working in federal and government organisations, members of the armed forces, domestic employees of UAE or decrees, and police and civil servants.
Essential Local Labour Laws for Employers to Follow
Are you looking to set up a business in UAE? Let’s look at some of the essential labour laws that you must pay heed to:
Employment Contracts
Whenever you recruit an employee, the first thing you must hand over is a written employment contract. It primarily contains
- the date when to start working
- the contract expiry date
- type and place of work
- contract duration
- wages
However, these details depend on what kind of organisation you run, private or public sector. You must create two copies of the contract, one for the employee, and keep the other one with the recruiter.
Public-sector local labour laws allow full-time, part-time, temporary and special contract work arrangements. On the other hand, the private sector adds flexible and remote working and job-sharing work arrangements to the facilities available in the public sector.
The probation period for your employees cannot exceed six months for private employment. However, if they continue to work after probation, that period is considered part of their service. Remember that if you’re terminating them within the probation period, a 14-day prior notice is a must. On the other hand, if they plan to join another UAE company, you must ask for a one-month prior notice.
With the introduction of new local labour laws, the unlimited term employment contracts are no longer valid. Every private employer needs to convert them into limited-time contracts that don’t exceed three years.
Working Hours
You cannot make employees work more than 8 hours per day or 48 hours per week in the private sector. However, during Ramadan, the working hours get reduced by 2. Additionally, you can ask employers to work overtime, but that shouldn’t go beyond 2 hours in one day. Furthermore, you must compensate them fairly with money or paid leave for extra service.
However, these working hours differ if an employee works in a federal government entity. This includes 8 hours of duty from 7:30 a.m. to 3:30 p.m. from Monday to Thursday and from 7:30 a.m. to 12:00 p.m. on Fridays. Saturdays and Sundays are considered official weekends for public sector employees.
Leaves and Holidays
All your employees working in the private sector must be entitled to the following paid and unpaid leaves.
- Annual leave
- Sick leave
- Study leave
- Maternity leave
- Parental leave
- Compassionate leave
- Leave to complete Hajj
Additionally, every employee, irrespective of public or private sector, must get holidays on special occasions, like
- Gregorian New Year on 1st January
- Lesser Bairam
- Greater Bairam and Eve
- Al Isra and Al Mi’raj
- Hijra New Year
- Prophet Mohammad’s birthday
- National day
The public holiday dates can change, like the Islamic holidays are set as per moon sightings.
Wages
There is no minimum wage set for private sector employees in the UAE. However, you must pay them fairly such that it is enough to cover the basic needs. If they work for more than one year in your company, you must pay them a gratuity upon contract termination.
Furthermore, you cannot deduct employee wages unless they are bound to repay loans. At times, they are legally mandated to contribute towards Social security and insurance schemes, provident funds, welfare schemes, etc. Otherwise, if the employee is fined, you can deduct them from their wages.
Employee Benefits
According to labour laws for employees, employers must provide certain benefits like health and safety insurance. However, you cannot deduct the premium for mandatory health insurance packages from their salary.
In addition to that, Taa-meen (UAE insurance policy) is a must for private sector workers. It is an alternative option for employers to keep a fixed sum (AED 3,000) as a bank guarantee when recruiting new workers.
Besides these, there’s also an unemployment insurance scheme for Emiratis and residents in the federal and private sectors. It is to provide financial support to workers who lost their jobs due to termination by the employer. Finally, UAE National full-time contracts are entitled to pensions and end-of-service benefits.
Workplace Health and Safety
According to clause 13 of the UAE Labour Law, you must provide workers with a safe and appropriate work environment. The organisation must be cleaned and well-ventilated and offer adequate lighting, drinking water, and toilets.
You can arrange for one or more medical practitioners in your organisation to conduct general medical examinations occasionally.
In addition to that, if you’re working with construction and industrial workers, ensure they don’t work during extreme weather. Furthermore, any work-related injuries must be reported to MoHRE.
Non-Compete Restrictions
According to the local employment law solicitors, employers can include non-compete restrictions in their employment contracts. However, these restrictions must be used to protect companies’ legitimate interests.
Under the new law, employers can trigger the non-competent close at the moment of departure of an employee. But, it is restricted to workers who have access to your confidential or trade secret information. This agreement can last only for a maximum of 2 years.
Non-Discrimination Clause
The new non-discrimination clause under employment laws and regulations mandates employees to provide an equal payout to all employees.
Therefore, it guarantees both males and females equal job opportunities and the same pay for their service. In addition, employers are responsible for protecting them from harassment and violence within the organisation.
Disciplinary Rules
You can set different disciplinary penalties in your organisation within the private sector. This will range from written notice, warning letter, and payout deduction to temporary suspension, denial of promotion, and dismissal from service.
However, you must sanction disciplinary rules only after considering the severity of the violation.
Termination of Employment
Not only you but also your employees have the right to terminate their employment contract. However, the notice period before termination can range between 30 days to 90 days.
There are numerous other conditions to follow if you terminate an employee without notice. If you aren’t following them, workers can complain against you to the Ministry of Human Resources and Emiratisation.
What are the Provisions for Non-Nationals to Work in the UAE?
Even though job hunting and business setup are easy in the UAE, that’s not the case for non-nationals. Wherever there’s a deficit of national workers, the employer must give preference to workers of other Arab nationalities and then to workers of other nationalities.
You can employ non-nationals only with prior approval of the Labour Department. Furthermore, these employees must obtain employment permits by following the procedures and regulations of the Ministry of Labour and Social Affairs.
Additionally, you must remember that non-national workers cannot work in the UAE on their visit visas or tourist visas.
How 6 Pence Helps
We understand how difficult it is to hire quality talent in the UAE. You must do a thorough background check to ensure they are residents of the UAE or have a proper international work permit. Otherwise, not only the employee but also you may need to pay penalties or suffer legal liabilities.
In this process, 6 Pence can help you avoid such miseries. We are the leading staffing agency in Dubai that offers temporary to permanent staffing while staying compliant with local labour laws.
We help with everything from work visa processing to document verification. Connect with us to know more.
Also Read: 5 Tips to Improve Your Human Resource Employee Relations
Frequently Asked Questions
What are labour laws?
Labour laws refer to rules and regulations that mediate the relationship between workers, recruiters, and the government. These laws specify employers’ responsibilities and employees’ rights during their employment period.
How is termination pay calculated?
According to the local labour laws in UAE, if an employer wishes to end a contract before its limited term ends, employees are entitled to early termination compensation. It includes at least three months’ worth of pay, including salary and benefits; otherwise, the remaining contract term if the period is less than three months.
What happens if you resign without notice?
You can resign without notice only under four specific cases as registered in UAE’s labour law. Otherwise, you will be legally liable to pay financial compensation to your employer.
