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Employment Contract in UAE

Employment Contract in UAE

The UAE is a land of opportunities and a large number of expats enter the country for getting employment. The employment law of UAE is specifically designed to protect the interest of both the concerned parties i.e., employer and the employee. The Federal Law No. 8 of 1980 is the principal legislation and it applies to all employers in UAE (except in Dubai International Financial Centre). It provides for an “employment contract” to govern the relationship between employer and the employee.

What is an Employment Contract?

As per UAE labour law, it is an agreement entered between the employer and the employee, either for a limited or unlimited period, in which the employee undertakes to perform certain work in return for a specific remuneration.

It is provided that the contract should be written in Arabic and English language. In the contract, the starting date, type of employment, terms and conditions, etc. should be specifically provided.

This employment contract is issued and attested by the Ministry of Human Resources and Emiratisation (MOHRE). If it is not issued by the MOHRE, the employee can prove his employment through other evidence such as appointment letter, payroll, attendance sheet, etc.

Types of Employment Contract

The UAE labour law provides for two types of employment contract: Limited term and Unlimited term. However, nowadays, a new form of “part time contract” is also gaining popularity.

  • Limited Term Employment Contract

As the name suggests, this contract is entered for a specific period and it normally relates to the UAE residence Visa (2-3 years depending on location). After the completion of the defined period, the contract is automatically terminated unless renewed by the parties. This type of contract is preferred when the employees are needed for a specific project and its duration can be assessed in advance. It doesn’t have a notice period and simply expires after the completion of the term.

The employer can dismiss his employee on the basis of one of the 11 grounds provided under Article 88 and 120 of the UAE Labour Law. As per Article 121, the employee is also empowered to resign from the job by citing legitimate reasons.

The contract can be renewed by mutual consent of both the parties. The parties can also convert their limited contract into an unlimited one after its expiry. The UAE labour law provides that if the employer terminates the contract, the employee is entitled to “early termination compensation” which includes a minimum 3 months remuneration.

  • Unlimited term Employment Contract

It refers to that contract which does not have a specified time period of completion. In simple words, a contract other than the limited term contract is considered as an unlimited one. This type of contract is more flexible, user friendly and used widely among the masses in UAE. This contract is generally resorted by the employees who want to be permanent or the time period of a project is too long that can’t be predicted in advance.

In case of an unlimited contract, the employer can terminate the employee through two ways-

  1. By notice – When there is a serious discrepancy or incapability in the performance of the employee, the employer gives a 30 days notice to its employee. It is important that the parties may agree to a longer notice period in the employment contract.
  2. Without Notice – If the employee is involved in any of the 11 gross misconduct provided under Article 88 and 120 of the UAE labour law, the requirement of providing notice is relaxed.
  • Part Time contract

In the year 2018, the Ministry of Human Resources and Emiratisation (MoHRE) came up with a new rule that enables the companies to recruit skilled workers under multi employer contract (part time contract).  It is important that this type of contract is limited to skilled workers i.e., University degree holders of those who have completed a 2-3 year diploma in any technical or scientific field.

Under this contract, the employee can take several part time jobs without the consent of the original employer. However, they need to take permits from the MoHRE. This type of contract is also subject to the same rules and regulations as applied to limited and unlimited contracts.

Conclusion

The employment contract set out the detailed terms and conditions between the employer and the employee. It is highly recommended to take assistance of a legal attorney while drafting such a contract in order to protect the interest of both the parties while complying with the requirements provided under the UAE Labour Code.

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