Employment and employee benefits in United Arab Emirates: overview

A Q&A guide to employment and employee benefits law in the United Arab Emirates.

The Q&A gives a high level overview of the key practical issues including: employment status; background checks; permissions to work; contractual and implied terms of employment; minimum wages; restrictions on working time; illness and injury; rights of parents and carers; data protection; discrimination and harassment; dismissals; redundancies; taxation; employer and parent company liability; employee representation and consultation; consequence of business transfers; intellectual property; restraint of trade agreements and proposals for reform.

To compare answers across multiple jurisdictions, visit the Employment and Employee Benefits: Country Q&A tool.

The Q&A is part of the global guide to employment and employee benefits law. For a full list of jurisdictional Q&As visit www.practicallaw.com/employment-guide.

Contents

Scope of employment regulation

1. Do the main laws that regulate the employment relationship apply to:
  • Foreign nationals working in your jurisdiction?

  • Nationals of your jurisdiction working abroad?

Laws applicable to foreign nationals

The main law that regulates the employment relationship in the UAE is Law No 8 of 1980 Regulating Labour Relations, as amended by Federal Laws No 24 of 1981, No 15 of 1985, No 12 of 1986 and No 8 of 2007 (Labour Law), and the applicable ministerial orders implementing these provisions. This applies to all employees (including foreign nationals) working in the UAE, apart from the following categories of workers:

  • Officials, employees and workers in federal and local government departments, or appointed for federal and local government projects.

  • Members of the armed forces, police and security officers.

  • Domestic servants working in private residences.

  • Workers employed in agriculture (apart from employees of agricultural companies engaged in processing products, or operating or repairing machinery required for agriculture).

  • Employees working for a company with a place of business in the Dubai International Financial Centre (DIFC) and who are based in, or ordinarily work in, the DIFC. These employees are subject to the DIFC Employment Law No 4 of 2005, as amended (DIFC Employment Law).

  • Employees working for a company with a place of business in the Abu Dhabi Global Market (ADGM) and who are based in, or ordinarily work in, the ADGM. These employees are subject to the ADGM Employment Law No 1 of 2014, as amended (ADGM Employment Law).

Employees (including foreign nationals) working in one of the many free zones in the UAE (with the exception of those working in DIFC and ADGM) are subject to the Labour Law and the employment regulations introduced in the relevant free zone. If the free zone regulations are inconsistent with the Labour Law, the Labour Law provisions take precedence. However, this does not apply if the Labour Law is less favourable than the relevant free zone regulations.

If no mandatory laws apply, the law of contract governs the contractual employment relationship. The parties can choose the governing law that applies to their contract, but in practice, during litigation, the UAE courts generally assume jurisdiction.

Laws applicable to nationals working abroad

The Labour Law, the DIFC Employment Law and the ADGM Employment Law only apply to nationals working abroad if this was contractually agreed between the parties. Further, the UAE laws are subject to the jurisdiction that they are working in (that is, the laws of other jurisdictions can prevent non-local laws being agreed between the parties).

Protection of the interests of UAE nationals

The Labour Law and various ministerial decisions contain the following provisions that seek to protect the interests of UAE nationals:

  • UAE nationals have priority to work in the UAE. Foreign nationals can only be employed in the private sector if both the following apply:

    • there is appropriate approval from the authorities, and they obtain a residence visa and a labour or ID card (see Question 5);

    • the employee has the professional competence or educational qualifications that the state requires.

  • If no UAE national is available to take up a position, preference must first be given to persons who are nationals of an Arab country, and then to persons of other nationalities.

  • There are certain limitations on the ability of companies to dismiss UAE nationals (see Question 19).

 

Employment status

2. Does the law distinguish between different categories of worker? If so, what are the requirements to fall into each category, the material differences in entitlement to statutory employment rights and are there any maximum time periods for which each category of worker can be engaged?

Law No 8 of 1980 Regulating Labour Relations, as amended by Federal Laws No 24 of 1981, No 15 of 1985, No 12 of 1986 and No 8 of 2007 (Labour Law) is applicable throughout the UAE, except for those working within the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).

Categories of worker

The Labour Law does not distinguish between different categories of worker.

The DIFC Employment Law No 4 of 2005 and ADGM Employment Law No 1 of 2014 contain different entitlements for short-term employment. If the employment is for less than 30 days, the employee is not required to have an employment contract or the right to an itemised pay statement.

The ADGM Employment Law provides for part-time employees to take vacation time, sick leave, maternity and paternity leave on a pro-rata basis.

Entitlement to statutory employment rights

See above, Categories of worker.

Time periods

See above, Categories of worker.

 

Recruitment

3. Are any grants or incentives available for employing people? Does any information/paperwork need to be filed with the authorities when employing people?

Grants or incentives

The Emiratisation policy is applicable in the UAE but is not applicable in the free zones. It seeks to increase the number of UAE nationals working in the private sector by providing recruitment targets. Through the Emiratisation policy the UAE Government offers:

  • Lower transaction fees for processing employment permits.

  • Residency visas and labour or ID cards for employers meeting these targets and maintaining a diverse workforce.

The Ministerial Resolutions (292) and (293) of 2015 also streamline the process of hiring UAE national and Gulf Cooperation Council (GCC) national employees. Employers must submit the work permit application and the signed employment contract to the Ministry of Labour. Once the application is approved, the UAE national or GCC national employee can begin work immediately.

Filings

Non-free zone based employers must obtain a labour card from the Ministry of Labour for each new employee hired, and the labour card must be cancelled when employment ends. Free zone based employers must obtain an identity card from the relevant free zone. The process of obtaining the identity card differs depending on the free zone involved. An employee who is not a UAE national must also obtain a UAE residence visa (see Question 5).

In order to obtain a labour card or residence visa, a standard employment contract must be filed with the Ministry of Labour within 60 days of the commencement of the employment. Employers who do not have a signed employment contract face a fine of AED500 or a one-month delay and can be temporarily suspended from hiring new employees.

The requirements in free zones are different. Some free zones have a standard form employment contract that must be entered into to obtain a residency visa/identity card (although this does not apply to all free zones).

 

Background checks

4. Are there any restrictions or prohibitions on carrying out background checks in relation to applicants?

UAE law imposes no restrictions on background checks in relation to applicants, except that the information must be obtained lawfully.

 

Permission to work

5. What prior approvals do foreign nationals require to work in your country? What information/paperwork needs to be kept or filed with the authorities when they start work?

Visa

Procedure for obtaining approval. Once an employee enters the UAE on an entry permit, the employer must make an application for a residence visa to the immigration authorities. Before the visa is granted, the employee must pass a medical examination. These requirements must be satisfied within 60 days of the employee's entry into the UAE on the entry permit, but it is advisable to meet them within 30 days. Residence visas are typically valid for two years outside the free zones and three years for employees within a free zone.

Cost. The total cost of the residence visa and the required permits depends on the nature of the company's activity and whether the employee is hired within or outside of the UAE. The cost outside of the free zones ranges between USD400 to USD1,200. Free zone costs can differ.

Time frame. The process is usually completed within 30 days, but it is often completed more quickly.

Sanctions. Sanctions for violations of the visa rules can include fines and imprisonment. For foreign nationals, sanctions can also include deportation and a lifetime ban on re-entering the UAE.

Work permits

Procedure for obtaining approval. Before an employee enters the UAE for employment purposes, the employer must seek the Ministry of Labour's approval (or the relevant alternative authority's approval if the employee is to be employed in a free zone). Before granting an employment permit, the Ministry of Labour can consider whether there are any unemployed nationals who are capable of performing the job that the foreign national employee will be employed to do.

After an employee enters the UAE on an entry permit for employment purposes, the employer must apply for a labour card if employed in a non-free zone or an ID card (if employed in a free zone) within 60 days of arrival. Labour cards for non-free zone employment are usually valid for two years. ID cards for employees within a free zone are usually valid for three years.

Cost. The total cost outside of the free zones (for the visa and the required permits) is approximately between USD700 and USD1,500. Free zone costs can differ.

Time frame. The process is usually completed within 30 days, but it is often completed more quickly.

Sanctions. Sanctions for violations of the labour rules include fines and imprisonment. For foreign nationals, sanctions can also include deportation and a lifetime ban on re-entering the UAE. In addition, dependent on the severity of the breach, the Ministry of Labour can prevent an employer from issuing new work permits until it is satisfied that remedial steps have been taken.

Sponsorship

If an employee wishes to sponsor spouses and children to live with him in the UAE, he must earn at least AED4,000 per month. To sponsor parents, the employee must have a monthly salary of AED20,000.

 

Restrictions on managers and directors

6. Are there any restrictions on who can be a manager or company director?

Age restrictions

Directors and managers must be at least 18 years of age. However, a person under 21 years of age is considered to be a minor and therefore must be supervised by a guardian. There is no upper age limit but individuals over 60 years of age may find it difficult to obtain the appropriate residence visa or labour card (see Question 5), or may only be issued with visas for a one-year period, with a requirement to renew on an annual basis.

Nationality restrictions

There are no formal nationality restrictions, but individuals from certain jurisdictions may be subject to additional security checks or automatically denied a visa.

Other

In most cases, a manager or director must hold an academic qualification equivalent at least to a bachelor's degree.

 

Regulation of the employment relationship

7. How is the employment relationship governed and regulated?

Law No 8 of 1980 Regulating Labour Relations, as amended by Federal Laws No 24 of 1981, No 15 of 1985, No 12 of 1986 and No 8 of 2007 (Labour Law) is applicable throughout the UAE, except for those working within the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).

Written employment contract

As part of the residence visa and employment permit application process, employees in non-free zones must enter into a standard template dual language contract provided by the Ministry of Labour. The contract must specify the (Article 36, Labour Law):

  • Date of its conclusion (or state that it is an unlimited term contract).

  • Date the employment is to commence.

  • Nature and place of employment.

  • Length of the contract (if it is a fixed-term contract).

  • Amount of salary.

Some free zones require the parties to enter into employment contracts using a template specific to the relevant free zone. Subject to the provisions of the Labour Law, the information that must be included in employment contracts varies among the free zones.

DIFC Employment Law No 4 of 2005 and ADGM Law No 1 of 2014 require employers to provide their employees with a written contract of employment. The contract of employment must specify:

  • Names of the employer and employee.

  • Date the employment starts.

  • Employee's wages.

  • Applicable period.

  • Terms and conditions relating to hours or days of work.

  • Terms and conditions relating to:

    • holiday leave;

    • holiday pay;

    • national holidays and pay for national holidays;

    • sick leave; and

    • sick pay.

  • Length of notice that the employee and employer must give and receive to terminate the employment.

  • Employee's job title or a brief description of their work.

  • Period for which the employment is expected to continue or, if it is for a fixed term, the date when it is to end (where the employment is temporary).

  • Place of work.

  • Applicable disciplinary rules and grievance procedures.

  • Any other matter that may be prescribed by the applicable free zone authority.

  • Which terms of the contract are subject to the employer's policies.

Implied terms

The UAE (except for the DIFC and the ADGM) is a civil jurisdiction that does not apply common law principles. However, the obligation of good faith is implied into employment contracts, although the UAE courts have very wide discretion.

Under DIFC Contract Law No 6 of 2004 implied obligations in a contract can arise from:

  • The nature and purpose of the contract.

  • Practices established between the parties and relating to usage.

  • Good faith and fair dealing.

  • Reasonableness.

In the ADGM, English common law forms part of the law of the ADGM. However, there are appropriate safeguards in place to ensure that any undesirable provisions of common law can be overridden by the ADGM.

Collective agreements

There are no trade unions in the UAE and employee representatives are not common. Therefore, collective agreements do not exist.

 
8. What are the main points to consider if an employer wants to unilaterally change the terms and conditions of employment?

Generally, an employer cannot unilaterally introduce changes to employment terms and conditions that are unfavourable to employees. In these cases, the employee's consent must be obtained in advance. Depending on the circumstances, non-consenting employees who are subject to the Labour Law can resign from employment without a requirement to provide notice where the employer unilaterally changes terms and conditions that are unfavourable to employees.

It is possible for employees in the Dubai International Financial Centre (DIFC) or the Abu Dhabi Global Market Employment (ADGM) to argue that a unilateral change is ineffective, or that the employer was in breach of contract by making the change.

 

Minimum wage

9. Is there a national (or regional) minimum wage?

There is no specified minimum wage.

 

Restrictions on working time

10. Are there restrictions on working hours? Can an employee opt out on either an individual or collective basis?

Law No 8 of 1980 Regulating Labour Relations, as amended by Federal Laws No 24 of 1981, No 15 of 1985, No 12 of 1986 and No 8 of 2007 (Labour Law) is applicable throughout the UAE, except for those working within the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).

Working hours

The following restrictions apply under the Labour Law:

  • Working hours must not exceed eight hours per day or 48 hours per week, over a six-day week. However, this can be increased to nine hours per day for some businesses. Working hours are reduced by two hours per day during the Islamic month of Ramadan.

  • Overtime must not exceed two hours per day, unless the work is necessary to prevent substantial loss or serious accident (or to eliminate or alleviate its effects).

  • Overtime pay amounts to 125% of an employee's normal remuneration for the period of overtime worked (unless the employee is required to work overtime during the hours of 9pm and 4am, in which case this rises to 150%).

  • The normal weekly holiday is Friday, unless the employee works on a daily wage basis. If an employee is required to work on a Friday, he is granted a one-day leave in lieu or paid 150% of his normal remuneration for the Friday worked. Other than labourers, no employee can work more than two consecutive Fridays.

  • Managers and senior staff are not entitled to overtime pay.

  • Women are not permitted to work between the hours of 10pm and 7am.

The following restrictions apply in the DIFC and the ADGM:

  • Weekly working hours must not exceed, on average, 48 hours over a seven-day period, unless the employer first obtains the employee's written consent to work longer hours.

  • Reduced Ramadan hours are only applicable to fasting Muslim employees.

Rest breaks

The following restrictions apply under the Labour Law:

  • Employees cannot work more than five consecutive hours without receiving break times of not less than one hour in total for rest, food and prayer. This break time does not constitute a working hour.

  • An employee who works more than six hours per day is entitled to rest and prayer breaks of not less than one hour on aggregate during that period.

These provisions do not apply to certain employees working in a senior or managerial capacity, or ship crews and seamen who work under special service conditions due to the nature of their work.

The following restrictions apply in the DIFC and ADGM:

  • Where an employee's daily working time is more than six hours, he is entitled to at least one hour of rest and prayer break.

  • The employee is entitled to not less than 24 hours' rest in each seven-day work period.

Shift workers

There are no special rules for shift workers.

 

Holiday entitlement

11. Is there a minimum paid holiday entitlement?

Law No 8 of 1980 Regulating Labour Relations, as amended by Federal Laws No 24 of 1981, No 15 of 1985, No 12 of 1986 and No 8 of 2007 (Labour Law) is applicable throughout the UAE, except for those working within the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).

Minimum holiday entitlement

Under the Labour Law, an employee is entitled to paid leave for each year of service, of not less than:

  • Two calendar days per month, for an employee who has more than six months' service but less than one year's service.

  • 30 calendar days per annum, for an employee with more than one year's service.

In the DIFC and the ADGM, an employee who has carried out at least 90 days of service is entitled to paid vacation leave of 20 working days per year. This is accrued pro rata in the first year and is calculated at the rate of 1:12 of the employee's leave entitlement on the first day of each month of service.

Public holidays

In addition to the above minimum holiday entitlements, employees are entitled to public holidays as declared by the UAE Government. The UAE Government declares the length of each national holiday before the holiday takes place for both the public and private sectors (the entitlements can differ). The lunar calendar determines the dates of some national holidays.

If a public holiday falls on a weekend, an employer is not obliged to provide a day in lieu.

 

Illness and injury of employees

12. What rights do employees have to time off in the case of illness or injury? Are they entitled to sick pay during this time off? Who pays the sick pay and, if the employer, can it recover any of the cost from the government?

Law No 8 of 1980 Regulating Labour Relations, as amended by Federal Laws No 24 of 1981, No 15 of 1985, No 12 of 1986 and No 8 of 2007 (Labour Law) is applicable throughout the UAE, except for those working within the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).

Entitlement to time off

Under the Labour Law, an employee is not entitled to be paid for sick leave during the probationary period. If an employee has worked continuously for the employer for three months after the end of the probationary period, the employee is entitled to 90 days' sick leave per year either continuously or on aggregate.

Entitlement to paid time off

Under the Labour Law, a qualifying employing (see above, Entitlement to time off) is entitled to 90 days' sick leave. Paid sick leave is paid as follows:

  • First 15 days are with full pay.

  • Next 30 days are with half pay.

  • Remaining 45 days are not paid.

After an employee has exceeded the 90-day period, the employer can terminate employment and the employee will be entitled to receive a gratuity.

Under DIFC Employment Law No 4 of 2005 and ADGM Employment Law No 1 of 2014, an employee is entitled to 60 days' paid sick leave per year. An employee who exceeds 60 days' sick leave can be dismissed with notice and payment of a gratuity.

Recovery of sick pay from the state

Sick pay cannot be recovered from the state in the UAE. There is no state sick pay.

 

Statutory rights of parents and carers

13. What are the statutory rights of employees who are:
  • Parents (including maternity, paternity, surrogacy, adoption and parental rights, where applicable)?

  • Carers (including those of disabled children and adult dependants)?

Law No 8 of 1980 Regulating Labour Relations, as amended by Federal Laws No 24 of 1981, No 15 of 1985, No 12 of 1986 and No 8 of 2007 (Labour Law) is applicable throughout the UAE, except for those working within the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).

Maternity rights

Under the Labour Law, a woman with at least one year's continuous service with her employer is entitled to 45 days' maternity leave with full pay. A woman with less than one year's service is entitled to 45 days at half pay. A woman can take a maximum of 100 (consecutive or non-consecutive) additional days' leave, without pay, if she suffers an illness resulting from pregnancy or birth.

For 18 months after the baby is born, a nursing mother is entitled to two additional breaks each working day, each not exceeding half an hour, in which to nurse the child. These breaks form part of her working hours and there is no reduction to her remuneration.

In the DIFC and the ADGM, an employee is entitled to a minimum of 65 working days' paid maternity leave provided that she:

  • Has been continuously employed with her employer for at least 12 months before the expected or actual week of childbirth.

  • Notifies her employer in writing that she is pregnant at least eight weeks before the expected week of childbirth, if such a provision is contained in the employment contract.

  • Provides a medical practitioner's certificate stating the expected or actual birth date, if such a provision is contained in the employment contract.

  • Notifies her employer in writing at least 21 days before the day she proposes to begin her maternity leave.

An employer in the DIFC and ADGM must pay maternity pay at:

  • The employee's normal daily wage for the first 33 working days of maternity leave.

  • 50% of the employee's normal daily wage for the next 32 working days of maternity leave.

An employee in the DIFC and ADGM can return to work at the end of the maternity leave to the same role or a suitable alternative on the same terms and conditions, and with the same seniority rights. An employer must not, because of an employee's pregnancy or maternity leave:

  • Terminate the employment.

  • Change the employee's role or terms of employment without obtaining the employee's prior written consent.

Paternity rights

There are no statutory paternity rights under the Labour Law and DIFC Employment Law No 4 of 2005. ADGM Law No 1 of 2014 allows for five business days' paternity leave to be taken within the first two months of the date of the birth of the child.

Surrogacy

There are no statutory provisions relating to surrogacy.

Adoption rights

There are no statutory adoption rights under the Labour Law or in the free zones.

In the DIFC and ADGM, where a female employee is adopting a child of less than three months' old, she is entitled to normal maternity leave. This is subject to the normal provisions concerning continuous employment and notification requirements (see above, Maternity rights).

Parental rights

There are no statutory parental rights.

Carers' rights

There are no statutory carers' rights.

 

Continuous periods of employment

14. Does a period of continuous employment create any statutory rights for employees? If an employee is transferred to a new entity, does that employee retain their period of continuous employment? If so, on what type of transfer?

Law No 8 of 1980 Regulating Labour Relations, as amended by Federal Laws No 24 of 1981, No 15 of 1985, No 12 of 1986 and No 8 of 2007 (Labour Law) is applicable throughout the UAE, except for those working within the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).

Statutory rights created

Under the Labour Law, an employee is entitled to an end of service gratuity payment on termination of employment if:

  • He has accrued one year's service.

  • His dismissal was not for gross misconduct (Article 120, Labour Law) (see Question 19, Notice periods).

The amount of the gratuity payment is calculated with reference to the employee's last basic pay before termination at the rate of:

  • 21 days' pay for each year of service up to the first five years' service.

  • 30 days' pay for each year of service in excess of five years' service.

An employee with a contract for an unspecified term who resigns from employment with less than five years' service is entitled to a reduced gratuity payment. This is calculated as follows:

  • An employee who has more than one year but less than three years' service is entitled to one-third of the total gratuity entitlement.

  • An employee who has more than three years' but less than five years' service is entitled to two-thirds of the total gratuity entitlement.

An employee who has more than five years' service is entitled to the full gratuity entitlement. An employee with a specified term contract who resigns from employment with less than five years' service is not entitled to a gratuity payment.

There are slight variations to the above in certain free zones, where the reduction in the amount of the gratuity payment does not apply.

An employee is not entitled to an end of service gratuity payment in either of the following circumstances:

  • If the employee is entitled to a company pension that complies with the provisions of the Labour Law, DIFC Employment Law No 4 of 2005 or ADGM Employment Law No 1 of 2014 (as appropriate).

  • If pension contributions are made by the employer, on a UAE national or GCC national employee's behalf, to the applicable UAE pensions authority.

Under the Labour Law, employees that are hired outside of the UAE are also entitled to a reimbursement of repatriation costs. These costs are the equivalent of the price of a travel ticket as well as any other travel expenses as stipulated in the employment contract.

In the DIFC and the ADGM, the gratuity payment is calculated based on the number of days in the year. Resignation does not affect the gratuity entitlement.

The DIFC and ADGM employment laws do not provide for a reimbursement of repatriation costs. In the DIFC, employers will be required to sign a DIFC personnel secondment agreement stating that it has a financial obligation to provide the employee with a ticket back to his home country. However, this only applies if the employee does not start another job in the UAE within 30 days of termination of employment.

Length of service is also relevant for the calculation of:

Consequences of a transfer of employee

There are no automatic transfer regulations. An individual's employment with the first employer must be terminated before the employee can be employed by the second (new) employer.

 

Fixed term, part-time and agency workers

15. To what extent are temporary and agency workers entitled to the same rights and benefits as permanent employees? To what extent are part-time workers entitled to the same rights and benefits as full-time workers?

Temporary workers

There are no provisions specific to temporary or agency workers under the Labour Law (including the free zones, the DIFC Employment Law No 4 of 2005 and ADGM Law No 1 of 2014). Temporary or agency workers are entitled to the same rights and benefits as permanent employees.

Agency workers

See above, Temporary workers.

Part-time workers

Under the Labour Law and the DIFC Employment Law No 4 of 2005, part-time workers are entitled to the same minimum holiday and gratuity payment provisions as full-time employees.

In the Abu Dhabi Global Market, part-time workers are entitled to a pro-rated vacation leave, sick leave, maternity and paternity leave. They can also be dismissed for excessive sick leave (pro-rated).

 

Data protection

16. Are there any requirements protecting employee privacy or personal data? If so, what are an employer's obligations?

Law No 8 of 1980 Regulating Labour Relations, as amended by Federal Laws No 24 of 1981, No 15 of 1985, No 12 of 1986 and No 8 of 2007 (Labour Law) is applicable throughout the UAE, except for those working within the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).

Employees' data protection rights

There are no specific data protection or privacy rights for employees under the Labour Law or in the free zones. However, employees can rely on the general protections contained in the UAE Penal Code Law No. 3 of 1987 as amended and the UAE Cybercrimes Law of 2012. Employees in the DIFC and the ADGM free-zones can rely on the DIFC Law No 1 of 2007 (as amended) (DIFC Data Protection Law) and the ADGM Employment Law No 1 of 2014 (ADGM Employment Law) (see below, Employers' data protection obligations).

Employers' data protection obligations

DIFC Data Protection Law imposes a number of obligations on anyone who processes personal data. Employees have a number of rights concerning their personal data, including the right to have their information processed fairly, securely and in accordance with necessary and legitimate purposes. There must also be adequate protection when data is transferred to a jurisdiction outside the DIFC.

The ADGM Employment Law specifically sets out similar protection rights to those contained in the DIFC Data Protection Law.

 

Discrimination and harassment

17. What protection do employees have from discrimination or harassment, and on what grounds?

Law No 8 of 1980 Regulating Labour Relations, as amended by Federal Laws No 24 of 1981, No 15 of 1985, No 12 of 1986 and No 8 of 2007 (Labour Law) is applicable throughout the UAE, except for those working within the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).

Protection from discrimination

The Labour Law does not contain any specific anti-discrimination or anti-harassment provisions save for the protection of the interests of UAE nationals (see Question 1, Protection of the interests of UAE nationals).

However, in the DIFC and the ADGM free-zones, employers must not discriminate against any person on the basis of their:

  • Sex.

  • Marital status.

  • Race.

  • Nationality.

  • Religion.

  • Mental or physical disability.

  • Age (in the ADGM only).

As prescribed by Article 58 of the DIFC Employment Law No 4 of 2005 (DIFC Employment Law) and Article 55 of the ADGM Employment Law No 1 of 2014 (ADGM Employment Law) respectively, discrimination means that an employee is:

  • Treated less favourably than others would be treated in the same circumstances.

  • In respect of the application of the same provision, criteria or practice, put at a disadvantage not faced by others.

  • Subject to unwanted treatment or conduct aimed at creating an intimidating, hostile, degrading, humiliating or offensive workplace.

As prescribed by Article 58 of the DIFC Employment Law and Article 55 of the ADGM Employment Law respectively, discrimination also includes failing to make reasonable adjustments to the workplace, or working practices, that would enable a disabled person to meet their occupational requirements. This includes:

  • The refusal to employ a person.

  • The refusal to continue to employ a person.

  • Discriminating against a person concerning their employment or any term or condition of their employment.

An employer can implement any programme or activity that is intended to benefit disadvantaged individuals or groups, including those with a mental or physical disability.

The Employment and Sponsorship Regulations of the Abu Dhabi Media Free Zone Authority contains anti-discrimination provisions. These regulations state that the aim of the authority is to create an environment where employment and advancement is based on merit, and an employee is not treated less favourably by reason of gender, marital status, religion or disability. The regulations also state that employers in the free zone must be guided by this principle of non-discrimination when employing employees.

There is no statutory limitation period setting down a qualifying period for claims to be brought in either the DIFC or ADGM. There is a lack of case law in both jurisdictions so the assessment of potential compensation in respect of successful claims in both the DIFC and ADGM remains uncertain pending development of the case law.

Protection from harassment

There are no specific rules under the Labour Law protecting employees from harassment. However, assaulting another employee is grounds for summary dismissal. In addition, UAE ministerial resolutions impose sanctions on certain behaviour in the workplace, including harassment.

DIFC Employment Law No 4 of 2005 and ADGM Employment Law No 1 of 2014 require employers to provide and maintain a workplace that is free from harassment, safe and without risk to the health of their employees. There is no statutory limitation period setting down a qualifying period for claims to be brought in either the DIFC or ADGM. There is a lack of case law in both jurisdictions so the assessment of potential compensation in respect of successful claims in both the DIFC and ADGM remains uncertain pending development of the case law.

 

Whistleblowers

18. Do whistleblowers have any protection?

There is no specific protection for whistleblowers under the Labour Law, Dubai International Financial Centre Employment Law No 4 of 2005 or the Abu Dubai Global Market Employment Law No 1 of 2014.

 

Termination of employment

19. What rights do employees have when their employment contract is terminated?

Law No 8 of 1980 Regulating Labour Relations, as amended by Federal Laws No 24 of 1981, No 15 of 1985, No 12 of 1986 and No 8 of 2007 (Labour Law) is applicable throughout the UAE, except for those working within the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).

Notice periods

Under the Labour Law, the minimum notice period is 30 days. An employer and employee can mutually agree to a longer notice period, but they cannot shorten the notice period to less than the statutory minimum period. If either party defaults on the agreed notice period, that party must pay compensation in lieu of notice based on the employee's current salary (in proportion to the number of days in default).

An employer can dismiss an employee without notice if the employee commits an act of gross misconduct or is on probation. The offences that constitute gross misconduct are limited to the following (Articles 88 and 120, Labour Law):

  • Working for another employer while on annual or sick leave.

  • Adopting a false identity or nationality, or submitting forged certificates or documents.

  • Making a mistake resulting in substantial material loss for the employer, if the employer notifies the Ministry of Labour of the incident within 48 hours of becoming aware of its occurrence.

  • Disobeying instructions concerning industrial safety or the safety of the workplace, if the instructions are in writing and displayed clearly. If the employee is illiterate, the employer must read the instructions to them.

  • Failing to perform basic duties under the contract of employment and continuing to violate them, despite the fact that the employee has been:

    • the subject of a written investigation; and

    • warned that they will be dismissed if their behaviour continues.

  • Revealing company secrets.

  • A competent court has found the employee guilty of an offence involving honour, honesty or public morals.

  • Being found drunk or under the influence of drugs during working hours.

  • Assaulting an employer, a responsible manager or a colleague during working hours.

  • Being absent without a valid reason for more than 20 non-consecutive days, or more than seven consecutive days.

In the DIFC and the ADGM, the minimum notice period is:

  • Seven days, if the period of continuous employment is less than three months.

  • 30 days, if the period of continuous employment is at least three months but less than five years.

  • 90 days, if the period of continuous employment is five years or more.

However, an employer and employee can agree to:

  • A longer period of notice.

  • A shorter period of notice (in the DIFC only).

  • Waive notice entirely.

  • Accept a payment in lieu of notice.

An employer can dismiss an employee without notice for cause in circumstances where the conduct of one party warrants dismissal and where a reasonable employer or employee would have terminated the employment.

Severance payments

An employee who has at least one year's continuous service with an employer is entitled to an end of service gratuity payment on termination of their employment (Labour Law) (see Question 14, Statutory rights created).

The position is the same under DIFC Employment Law No 4 of 2005 and ADGM Employment Law No 1 of 2014 (see Question 14, Statutory rights created) except that there is no reduction to the end of service gratuity payment when an employee resigns.

Procedural requirements for dismissal

An employer must cancel or transfer sponsorship of an employee's residence visa and labour card (or ID/access card if the employee is working in a free zone) within 30 days following termination of employment. Before they are cancelled by the authorities, employees must sign a final settlement form confirming that they have received all of their legal entitlements. If the residency visa and labour card (or ID/access card if the employee is working in a free zone) are not cancelled within this period, the employer may be subject to sanctions from the relevant authorities, including the imposition of a fine. If the employee delays in signing the settlement form, they will be required (by the authorities) to either co-operate in the visa cancellation process or alternatively initiate a claim before the relevant court.

 
20. What protection do employees have against dismissal? Are there any specific categories of protected employees?

Protection against dismissal

A ministerial resolution was passed in 2009, providing that the dismissal of UAE national employees is prohibited without the Minister of Labour's approval. There are no other express protections from dismissal.

Protected employees

Apart from UAE nationals (see above, Protection against dismissal), there are no other categories of protected employees.

In the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM), employees are protected from discrimination (see Question 17, Discrimination and harassment).

Under Article 39 of the DIFC Employment Law No 4 of 2005 and Article 36 of the ADGM Employment Law No 1 of 2014 (ADGM Employment Law) respectively, a employee who is pregnant or on maternity leave must:

  • Not have her employment terminated.

  • Not have her position or terms and conditions of employment changed without her consent.

  • Have the right to return to the same or a suitable alternative role, on the same terms and conditions and with the same seniority had she not taken maternity leave.

In the ADGM, an employee returning from paternity leave also has the right to return to the same or a suitable alternative role on the same terms and conditions and with the same seniority had he not taken paternity leave (Article 36, ADGM Employment Law).

 

Redundancy/layoff

21. How are redundancies/layoffs defined, and what rules apply on redundancies/layoffs? Are there special rules relating to collective redundancies?

Law No 8 of 1980 Regulating Labour Relations, as amended by Federal Laws No 24 of 1981, No 15 of 1985, No 12 of 1986 and No 8 of 2007 (Labour Law) is applicable throughout the UAE, except for those working within the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).

Definition of redundancy/layoff

There is no concept of redundancy under the Labour Law. Redundancies therefore fall under the applicable dismissal provisions prescribed under the Labour Law. The position is the same in the DIFC and the ADGM.

Procedural requirements

See above, Definition of redundancy/layoff.

Redundancy/layoff pay

See above, Definition of redundancy/layoff.

Collective redundancies

There are no special provisions on collective redundancies.

 

Employee representation and consultation

22. Are employees entitled to management representation (such as on the board of directors) or to be consulted about issues that affect them? Is employee consultation or consent required for major transactions (such as acquisitions, disposals or joint ventures)?

Management representation

Employees are not entitled to management representation.

Consultation

Employee consultation is not a statutory requirement.

Major transactions

Employee consultation or consent is not required for major transactions.

 
23. What remedies are available if an employer fails to comply with its consultation duties? Can employees take action to prevent any proposals going ahead?

Remedies

Not applicable (see Question 22).

Employee action

Not applicable (see Question 22).

 

Consequences of a business transfer

24. Is there any statutory protection of employees on a business transfer?

Automatic transfer of employees

Employees are not automatically transferred with the business on a business transfer.

Protection against dismissal

Employees are not given specific protection against dismissal on a business transfer. The general dismissal provisions apply (see Question 19).

Harmonisation of employment terms

There are no regulations concerning the harmonisation of the terms of transferred employees with other (existing) employees of the buyer.

 

Employer and parent company liability

25. Are there any circumstances in which:
  • An employer can be liable for the acts of its employees?

  • A parent company can be liable for the acts of a subsidiary company's employees?

Employer liability

An employer can be vicariously liable for the acts of its employees carried out in the course of their employment pursuant to the UAE Civil Code (Law No. (5) of 1985, as amended).

Dubai International Financial Centre Employment Law No 4 of 2005 as amended provides that an employer can be liable for the acts of its employees carried out in the course of their employment. However, an employer is not liable if it can prove that it took reasonable steps to prevent the employee from doing the act, or similar acts, during the course of the employment.

Parent company liability

A parent company is generally not liable for the acts of its subsidiary company's employees.

 

Employer insolvency

26. What rights do employees have on the insolvency of their employer? Is there a state fund which guarantees repayment of certain employment debts?

Law No 8 of 1980 Regulating Labour Relations, as amended by Federal Laws No 24 of 1981, No 15 of 1985, No 12 of 1986 and No 8 of 2007 (Labour Law) is applicable throughout the UAE, except for those working within the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).

Employee rights on insolvency

Under the Labour Law, employees' claims against the employer for outstanding remuneration take priority over most other claims against the estate of the bankrupt. The only claims that rank higher are the costs of the insolvency and governmental claims.

In the DIFC and the ADGM, preferential debts such as sums owed to employees are paid after the expenses of the winding-up, but in priority to all other secured and unsecured creditors. Preferential debts are debts that are:

  • Owed by the company to a person who is, or has been, an employee.

  • Payable by way of non-discretionary salary (including agreed holiday remuneration) or contributions to an occupational scheme in respect of the whole or any part of the three months before the winding-up date.

State guarantee fund

There is no state guarantee fund in the UAE.

 

Health and safety obligations

27. What are an employer's obligations regarding the health and safety of its employees?

Law No 8 of 1980 Regulating Labour Relations, as amended by Federal Laws No 24 of 1981, No 15 of 1985, No 12 of 1986 and No 8 of 2007 (Labour Law) is applicable throughout the UAE, except for those working within the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).

The Labour Law and various ministerial resolutions place a positive obligation on the employer to protect employees from:

  • Injuries and vocational diseases.

  • Fire.

  • Hazards arising out of the use of tools and machinery.

This obligation includes:

  • Providing employees with clear and detailed instructions.

  • Training on health and safety.

  • Ensuring the provision of adequate ventilation, space, lighting, first aid and equipment.

In addition, the Labour Law states that every employer must provide its employers with medical care up to the standard determined by the Minister of Labour and Social Affairs in consultation with the Minister of Health. In Abu Dhabi, employers must provide health insurance coverage to all employees and their dependants. In Dubai, health coverage exists for employees (but not their dependants) employed by onshore companies with more than 100 employees. However, this will be extended to all employees by June 2016.

DIFC Employment Law No 4 of 2005 (DIFC Employment Law) and ADGM Employment Law No 1 of 2014 (ADGM Employment Law) impose a number of health and safety obligations on employers, including a general duty to ensure a safe workplace that is free from risks to the health of employees. Employers must also minimise risks regarding fire hazards, and provide training and information on protective measures.

Employers must also ensure adequate:

  • Ventilation.

  • Temperature in indoor workplaces.

  • Lighting.

  • Cleanliness.

  • Drinking water.

  • Space.

  • Sanitary facilities.

  • Seating.

The obligation to provide health insurance cover to employees (but not their dependants) also exists under the DIFC Employment Law and the ADGM Employment Law.

 

Taxation of employment income

28. What is the basis of taxation of employment income for:
  • Foreign nationals working in your jurisdiction?

  • Nationals of your jurisdiction working abroad?

Foreign nationals

The UAE does not impose any personal income taxes on foreign national employees.

Nationals working abroad

Nationals working abroad are not subject to local income taxation, but individuals can be subject to taxation in the jurisdiction where they are working.

 
29. What is the rate of taxation on employment income? Are any social security contributions or similar taxes levied on employers and/or employees?

Rate of taxation on employment income

The UAE does not impose any personal income taxes on either UAE nationals or foreign national employees.

Social security contributions

UAE nationals who hold a UAE family book (a book documenting the lineage of a family in the region) are entitled to a monthly pension contribution from their employers. These contributions are payable to the applicable UAE pensions authority and differ depending on the state within which the employee is employed. Employees must also make monthly contributions, which the employer deducts from the employee's salary and transfers to the applicable UAE pension authority with the employer's contribution (Pensions and Social Securities Law, Federal Law No 7 of 1999).

Gulf Cooperation Council (GCC) nationals working in the UAE are also entitled to pension contributions. Pension contributions for GCC nationals vary, depending on the requirements of the relevant GCC country.

 

Bonuses

30. Is it common to reward employees through contractual or discretionary bonuses? Are there restrictions or guidelines on what bonuses can be awarded?

Bonus schemes are common in the UAE. There are no statutory restrictions or guidelines on what bonuses can be awarded, either under the Labour Law, Dubai International Financial Centre Employment Law No 4 of 2005 or Abu Dhabi Global Market Employment Law No 1 of 2014.

However, the bonus schemes subscribed to by employees working in the UAE office of EU headquartered banks and financial institutions are subject to EU legislation.

 

Intellectual property (IP)

31. If employees create IP rights in the course of their employment, who owns the rights?

The author of a work is its owner (Federal Law No 7 of 2002 for Copyright and Neighbouring Rights (Copyright Law)). It is possible to override this in employment contracts, but the contract will be subject to the limitations on the disposal of future copyright works. For example, purported disposals of more than five future works are void. Further, the author's moral rights to a work are not transferable.

If a work is a collective work, created by co-authors under the direction of the employer and for publication in the employer's own name, then the employer owns the copyright. However, this can be varied by agreement.

Unless the parties have agreed otherwise, an employer has the right to apply to patent any invention created during the course of an employee's employment (Federal Law No 17 of 2002 Regulating and Protecting Patent and Property Rights in Industrial Designs and Models). However, the employee has the right to compensation if the economic value of the invention was not anticipated when the employment contract was entered into.

The employee may be entitled to the invention if both:

  • The inventive activity is outside the scope of the employee's duties.

  • The employee uses their employer's resources to make an invention relevant to the employer's business.

In these circumstances, the employee must give the employer notice of the existence of the invention, and if the employer fails to confirm an interest in owning the invention, the employee is entitled to own it. If the employer does confirm an interest in owning the invention, the employee is entitled to fair compensation, taking into account the significance and economic value of the invention to the employer.

 

Restraint of trade

32. Is it possible to restrict an employee's activities during employment and after termination? If so, in what circumstances can this be done? Must an employer continue to pay the former employee while they are subject to post-employment restrictive covenants?

Law No 8 of 1980 Regulating Labour Relations, as amended by Federal Laws No 24 of 1981, No 15 of 1985, No 12 of 1986 and No 8 of 2007 (Labour Law) is applicable throughout the UAE, except for those working within the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM).

Restriction of activities

It is not possible to obtain injunctive relief from the UAE courts unless the employee is employed in the DIFC or the ADGM) so restraint of trade clauses are of limited use. However, it is possible to prevent an employee from working in the UAE through certain Ministry of Labour administrative processes. If an employee resigns before completing less than two years' service with an employer, the Ministry of Labour can apply a six-month employment ban on the employee. If an employee is on a limited term contract and leaves before the end of the contract, the company can also impose a ban. Bans can be lifted based on the seniority, job title or education level of the employee. They can also be lifted if the former employer confirms that it does not object to the lifting of the ban.

In the DIFC and the ADGM, restraint of trade clauses can be included in an employment contract. In the DIFC and ADGM, it is possible to obtain injunctive relief from the courts. It is not possible to obtain employment bans on employees in any of the free zones, including the DIFC and ADGM.

Post-employment restrictive covenants

In the UAE, employers do not have to pay former employees any specific remuneration while they are subject to post-employment restrictive covenants.

Free zone authorities can enforce post-termination restrictions if they are included in the employment contract, but only within the relevant free zone. Injunctive relief is available from the DIFC and ADGM courts, but an injunction order is only enforceable within the jurisdiction where it was obtained. However, as the ADGM is a newly established territory it remains to be seen whether the DIFC will enforce an ADGM post-termination restriction, and vice versa.

 

Proposals for reform

33. Are there any proposals to reform employment law in your jurisdiction?

Amendments to the Labour Law have been under consideration for several years. It is anticipated that this legislation will be enacted shortly. However, there is little (if any) consultation with stakeholders and a lack of transparency in terms of the content of the proposed new legislation.

A draft law is in the process of being approved, stating that anyone without a UAE identity card (Emirates ID) can be banned from working, studying or staying in the country. Therefore, employers who recruit or retain anyone without an Emirates ID will be subject to fines.

Further measures to encourage or require the hiring of UAE nationals in the private sector are also anticipated.

The Abu Dhabi Global Market is a relatively new federal financial free zone and is still accepting proposals for their Data Protection Law (notwithstanding the data protection provisions in its Employment Law). New laws are expected to be released over the course of the year.

 

Online resources

United Arab Emirates Ministry of Labour

W www.mol.gov.ae

Description. The United Arab Emirates Ministry of Labour website is maintained by the UAE Government to provide information on all work related issues, including UAE Labour Law.

General Directorate of Residency and Foreigners Affairs (Dubai)

W www.dnrd.ae

Description. The General Directorate of Residency and Foreigners Affairs website is maintained by the UAE Government to provide information on rules related to entry permits (for visitors and workers), e-gate services and health examinations for visa clearance.

General Pension and Social Security Authority

W www.gpssa.ae

Description. The General Pension and Social Security Authority website is maintained by the UAE Government. It provides guidelines on pensions and insurance for citizens and residents of the UAE.

Abu Dhabi Retirement Pensions and Benefits Fund

W www.pension.gov.ae

Description. The Abu Dhabi Retirement Pensions and Benefits fund website is maintained by the Abu Dhabi Government. It contains information on ways to manage contributions, pensions and end-of-service benefits for UAE nationals working in or retired from the government, semi-government and private sectors in the Emirate of Abu Dhabi, and their beneficiaries.

Dubai International Financial Centre (DIFC)

W www.difc.ae

Description. The DIFC website is maintained by the DIFC. It provides information on setting up and operating in the DIFC, areas of business and laws and regulations of the DIFC.

Jebel Ali Free Zone

W www.jafza.ae

Description. The Jebel Ali Free Zone website is maintained by JAFZA authorities. It provides information and guidelines to set up a business in JAFZA.

TECOM Investments

W www.tecom.ae

Description. The TECOM Investments website provides information and guidelines to set up a business in TECOM. It is maintained by the Dubai Creative Clusters Authority (DCCA).

Dubai Multi Commodities Centre (DMCC)

W www.dmcc.ae

Description. The DMCC website provides information and guidelines to set up a business in DMCC and is maintained by the DMCC Authority.

Dubai Silicon Oasis (DSO)

W www.dsoa.ae

Description. The DSO website provides information and guidelines to set up a business in DSO and is maintained by the DSO Authority.

Dubai Airport Free Zone

W www.dafz.ae

Description. The DAFZA website is maintained by the DAFZA authorities. It provides information and guidelines to set up a business in DAFZA.

Abu Dhabi Global Market (ADGM)

W www.adgm.com

Description. The ADGM website is maintained by the ADGM. It provides information on setting up and operating in ADGM, areas of business and laws and regulations of the ADGM.

Twofour54 Abu Dhabi

W www.twofour54.com

Description. The twofour54 Abu Dhabi website provides information and guidelines to set up a business in Abu Dhabi Media Free Zone. It also contains laws and regulations to comply with when operating as an Abu Dhabi Media Free Zone company. This website is maintained by the Abu Dhabi Media Free Zone Authority.



Contributor details

Samir Kantaria, Partner, Regional Head of Employment

Al Tamimi & Co

T +971 4 318 9963
E s.kantaria@tamimi.com
W www.tamimi.com/en

Professional qualifications. Solicitor of the Supreme Court of England & Wales, 1996

Areas of practice. Employment (contentious and non-contentious).

Non-professional qualifications. Bachelor of Law (with Honours) degree, University of Warwick, 1982-1992; Solicitors' Final Examinations, College of Law, England, 1992-1993

Recent transactions

  • Policies, procedures and contractual documentation. Service agreements, employment contracts, secondment arrangements and employee handbooks, for all categories of staff, including directors and senior executives.
  • Corporate Support. Employment aspects of acquisitions and disposals, including due diligence and related reports.
  • Business Reorganisations. Redundancy programmes, changing terms and conditions, and transfer of employment.
  • Employee Relations Issues. Disciplinary, dismissal and grievance procedures; settlement negotiations and agreements.
  • Litigation before the relevant labour authorities, labour courts and other courts, from termination and bonus claims, to protecting trade secrets, confidential information and business interests.

Gordon Barr, Partner, Employment

Al Tamimi & Co

T +971 4 364 1641
E g.barr@tamimi.com
W www.tamimi.com/en

Professional qualifications. Scottish Law Society, 2005

Areas of practice. Employment (contentious and non-contentious).

Non-professional qualifications. LLB (Hons), University of Glasgow, 1998; Dip LP, University of Aberdeen, 2003

Recent transactions

  • Advising a multinational company in respect of whistleblowing allegations and overseeing the necessary compliance and ethics investigation.
  • Advising a leading international Bank on the requirements involved in amending an incentive scheme across five Middle East countries to ensure a co-ordinated ‘joined up’ approach.
  • Advising a public sector employer on employment/immigration implications arising from the transfer of employees from the public sector to a private limited company.
  • Advising a government company on major investigations into misconduct and thereafter throughout the resultant disciplinary process.
  • Negotiating senior executive severance packages on behalf of international financial institutions.
  • Providing detailed advice to an international financial institution regarding the operation of UAE legislation and its impact upon the application of the client’s policies within the UAE.

Professional associations/memberships. Scottish Law Society.

Roxanne Vesuvala, Paralegal, Employment

Al Tamimi & Co

T +971 4 364 1641
E r.vesuvala@tamimi.com
W www.tamimi.com/en

Professional qualifications. Legal Assistance, Douglas College, New Westminster, British Columbia, Canada

Areas of practice. Employment (contentious and non-contentious).

Non-professional qualifications. Bachelor of Arts, Communication Studies, Carleton University, Ottawa, Ontario, Canada

Languages. English, Hindi


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