UAE Labour Law – FAQ’s
With an expat community making up over 80% of the total population of the UAE, Federal Law No.8 of 1980 otherwise known as the UAE Labour Law, is one piece of legislation that every employee in the private sector should familiarise themselves with. To assist, we answer some of the most frequently asked questions.
What type of contract is available?
There are two forms of contract available under the UAE Labour Law:-
- Limited/fixed term contract – Generally a start and end date is provided for in the body of the contract up to a maximum of 2 years. Unless the contract is renewed by mutual consent prior to the end date, the contract is cancelled automatically. A renewed fixed term contract may only be for a maximum of 2 years service. An employer faces penalties for terminating a limited/fixed term contract before the end date unless it can be proved the employee breached one of the grounds provided for in Article 120.
- Unlimited term contract – An open ended contract with no specified end date. Generally seen as more flexible, an unlimited term contract may be terminated by either party provided that the notice period provisions as outlined in the contract have been correctly adhered to (UAE Labour law provides for a minimum notice period of 30 days). Similar to a limited/fixed term contract, an employee may be dismissed without notice if it can be proved that one of the grounds provided for in Article 120 has been breached.
What are the maximum working hours?
The maximum normal working hours for adult workers are 8 hours a day or 48 hours a week, although there are exceptions depending on the nature of your employment. During the holy month of Ramadan, normal working hours are reduced by 2 hours a day.
What is the maximum probationary period?
Any probationary period must not exceed 6 months and an employer is unable to place an employee on any subsequent probationary period. The probation period counts towards continuous service for purposes of gratuity calculation (see further below).
What is the annual holiday entitlement?
Employees are entitled to 2 days of annual leave per month having served between 6 months and 1 year of employment. 30 days annual leave if the employee has completed over 1 year of employment. Any annual holiday entitlement is in addition to a number of UAE official holidays.
What is the annual sick leave entitlement?
Employees are entitled to a total of 90 days sick leave a year calculated as follows:-
- Full pay for the first 15 days
- Half pay for the following 30 days
- Unpaid leave for remaining 45 days
Sick leave is not applicable during an employee’s probationary period.
Who is eligible for end of service gratuity and how is it calculated?
If an employee has completed at least twelve months in continuous employment with an employer, then they are entitled to payment of an end of service gratuity upon the termination of their employment. The end of service gratuity is calculated as follows:-
- 21 days wages for every year of employment completed, and for each year of the first five years of employment (calculated pro rata for any additional days served).
- 30 days wages for each additional year of employment after five years, (calculated pro rata for any additional days served) subject to the limitation that the total of the gratuity does not exceed two years salary.
There are several restrictions on the payment of the end of service gratuity and the amount due depending on what grounds the contract was terminated on, and whether the contract is unlimited or fixed.
What happens if there is a dispute between an employee and employer?
In the event of a dispute between an employee and their employer, a complaint must be lodged by either party at the Ministry of Human Resources and Emiratisation, in the Emirate where the company is situated. On the submission of a complaint, the Ministry will summon both parties in an attempt to amicably settle matters. In the event that the dispute is unable to be settled at the Ministry, the case is referred within two weeks to the local courts to resolve.
Any complaint must be submitted within one year from the date on which the amount or entitlement was due.
This article is intended to be an introduction to the Labour Law in the UAE and a brief summary of some of the most frequently asked questions. In any situation, the individual facts of the employment and the circumstances surrounding the termination would need to be fully explored.
For further information on how we can assist you in your enquiries regarding Labour Laws, or to discuss in more detail any of the general principles raised above, please contact us on 04 343 8897 where one of our team will be delighted to assist you.
Please note that the DIFC has a separate legal framework for Employment matters.