UAE Labour Law

UAE Labor Laws

The United Arab Emirates (UAE) has a dynamic and evolving labor legal framework, primarily governed by Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationship (the "New Labor Law") and its subsequent amendments, along with various Ministerial Resolutions and Cabinet Decisions. This glossary provides a comprehensive overview of key terms and concepts essential for understanding UAE labor laws, applicable primarily to the private sector and Free Zones (with some variations).

Annual Leave:

Employees in the UAE are entitled to paid annual leave. For employees who have completed one year of service, the entitlement is 30 calendar days per year. For those with more than six months but less than one year of service, the entitlement is two days per month. The employer has the discretion to determine when the annual leave is taken, provided it's within the entitlement period.

Arbitrary Dismissal:

Under the previous labor law, "arbitrary dismissal" referred to termination of employment without a valid, justifiable reason related to the employee's performance or conduct, or the operational needs of the employer. While the New Labor Law emphasizes termination for legitimate reasons, the concept of unfair or unjustified dismissal leading to potential compensation remains. The law aims to prevent employers from terminating contracts without due cause or proper notice.

Basic Salary:

This refers to the fixed remuneration stipulated in the employment contract, paid to the employee for their work, excluding any allowances, benefits in kind, or bonuses. End-of-service gratuity calculations are typically based on the basic salary.

Bereavement Leave (Compassionate Leave):

Employees are entitled to paid leave in the event of the death of a close family member. The New Labor Law provides for:

• Five days for the death of a spouse.
• Three days for the death of a parent, child, sibling, or grandchild. This leave must be taken within a specific period from the date of death.

Continuous Service:

Refers to an uninterrupted period of employment with the same employer, which is a key factor in calculating entitlements such as end-of-service gratuity and annual leave.

Contract Conversion:

With the introduction of the New Labor Law, all "unlimited" employment contracts were required to be converted to "limited" or "fixed term" contracts by a specific deadline. This aimed to standardize contract types across the private sector.

Discrimination:

The UAE Labor Law prohibits discrimination in employment based on race, color, sex, religion, national or social origin, or disability. It aims to promote equality, fairness, and a healthy work environment, with provisions for equal pay for men and women for the same work. Positive discrimination in favor of Emirati nationals is an exception.

Domestic Workers:

A specific category of workers (e.g., housemaids, nannies, drivers) who are governed by separate legislation (Federal Decree-Law No. 9 of 2022 concerning Domestic Workers) and not primarily by the general UAE Labor Law.

Emirates ID Card:

A mandatory identity card for all residents of the UAE, applied for in conjunction with the Residence Visa. It serves as the primary identification document for various government and private services.

Emiratisation (Tawteen):

A national initiative and set of policies aimed at increasing the employment of UAE citizens in the private sector. This includes quotas, training subsidies, and preference for Emirati nationals in recruitment.

Employee:

Any natural person working for an employer under an employment contract, for a wage, and under the employer's management or supervision, regardless of gender or nationality.

Employer:

Any natural or legal person who employs one or more workers in exchange for a wage.

Employment Contract:

A legally binding agreement between an employer and an employee outlining the terms and conditions of employment, including job title, duties, remuneration, working hours, leave entitlement, and duration. All contracts must comply with the UAE Labor Law and be registered with MOHRE. As of the New Labor Law, all contracts in the private sector are limited/fixed-term.

End-of-Service Gratuity (Severance Pay):

A lump sum payment provided to expatriate employees by their employer upon termination of employment, provided they have completed at least one year of continuous service. The calculation depends on the basic salary and the length of service. It is generally calculated at 21 days' basic salary for each of the first five years of service and 30 days' basic salary for each additional year, with certain conditions and reductions for resignation.

Entry Permit:

A document required for individuals entering the UAE for employment purposes, initiating the process of obtaining a Residence Visa through employer sponsorship.

Federal Decree-Law No. 33 of 2021 (The New Labor Law):

The primary legislation governing labor relations in the UAE private sector, which came into effect on February 2, 2022, replacing the previous Federal Law No. 8 of 1980. This law introduced significant changes, including the shift to limited-term contracts, new leave types, and stricter provisions on discrimination and harassment.

Fixed-Term Contract (Limited Contract):

The standard type of employment contract in the UAE private sector under the New Labor Law. It has a clearly defined start and end date. While there's no maximum duration specified in the law for the term, they are typically issued for up to three years and are renewable or extendable. Early termination of a limited contract may entail compensation.

Flexible Work:

A work model introduced by the New Labor Law, allowing for varied work schedules and hours, including full-time, part-time, temporary, and remote work arrangements. This aims to provide greater flexibility for both employers and employees.

Free Zones:

Designated areas within the UAE that have their own specific regulations and laws, including labor laws, which may differ from the mainland UAE Labor Law. Companies operating in Free Zones are generally governed by the Free Zone authority's rules and relevant federal decrees. However, the overarching federal labor law often provides a baseline for worker protection.

Gross Salary:

The total remuneration an employee receives, including basic salary, allowances (e.g., housing, transport), and any other benefits. While basic salary is used for gratuity, gross salary is important for overall compensation understanding.

Harassment (Workplace):

The New Labor Law explicitly prohibits sexual harassment, physical or psychological violence, and bullying in the workplace, emphasizing a safe and respectful work environment.

Labor Card (Work Permit/Employment Card):

A document issued by the Ministry of Human Resources and Emiratisation (MOHRE) that officially permits an expatriate employee to work legally in the UAE. It identifies the employee and their place of work. The validity is typically linked to the Residence Visa.

Labor Disputes:

Disagreements or conflicts between an employer and an employee regarding their employment relationship. The Ministry of Human Resources and Emiratisation (MOHRE) plays a crucial role in mediating and attempting to resolve such disputes. If amicable settlement fails, the matter may be referred to the competent court.

Leave Entitlement:

Refers to the various types of paid or unpaid leave an employee is entitled to under UAE Labor Law, including annual leave, sick leave, maternity leave, paternity leave, bereavement leave, and potentially study leave or unpaid leave.

Limited Contract: See Fixed-Term Contract.

Maternity Leave:

Female employees are entitled to paid maternity leave. The New Labor Law provides 60 days of maternity leave, with the first 45 days at full pay and the remaining 15 days at half pay. Additional unpaid leave may be granted under certain conditions.

Minimum Wage:

As of the current UAE Labor Law, there is no universal minimum wage prescribed for all sectors. However, the law states that the wage should be sufficient to meet the employee's basic needs, and the Ministry of Human Resources and Emiratisation has the authority to set minimum wages for certain occupations or categories of workers if deemed necessary.

Ministry of Human Resources and Emiratisation (MOHRE):

The primary government entity responsible for overseeing and regulating labor relations in the private sector of the UAE. MOHRE issues work permits, registers employment contracts, resolves labor disputes, and enforces the UAE Labor Law.

Nafis Program:

A comprehensive federal program designed to support Emiratisation efforts by providing training, subsidies, and job opportunities for Emirati nationals in the private sector.

Non-Compete Clause (Restrictive Covenant):

A contractual provision that restricts an employee from working for a competitor or starting a competing business for a certain period after their employment with the current employer ends. Under the New Labor Law, non-compete clauses are generally enforceable for a maximum of two years, with specific conditions for their validity.

Notice Period:

The period of advance notification required by either the employer or the employee when terminating an employment contract. The New Labor Law stipulates a minimum notice period of 30 days and a maximum of 90 days, unless otherwise agreed upon in the contract. Failure to observe the notice period may result in compensation (payment in lieu of notice).

Occupational Health and Safety:

Employers are obligated to provide a safe and healthy work environment, implement necessary precautions to prevent work-related injuries and diseases, and adhere to health and safety standards prescribed by law.

Overtime:

Additional hours worked beyond the standard working hours. Employees are generally entitled to a pay supplement for overtime. The New Labor Law specifies that overtime is paid at 25% above the regular wage, or 50% for work performed between 10 PM and 4 AM. Total working hours (normal + overtime) must not exceed 144 hours over any three-week period.

Paternity Leave (Parental Leave):

Male employees are entitled to five days of paid parental leave, which can be taken continuously or intermittently, within six months from the date of their child's birth.

Probation Period:

An initial period at the start of employment (typically up to six months) during which either the employer or the employee can terminate the contract with a shorter notice period (usually 14 days for the employee, and the employer must give a minimum of 14 days notice if terminating the employee during probation if the employee is moving to another employer in the UAE, or 30 days if the employee is leaving the UAE).

Recruitment Agencies (Private Recruitment Agencies):

Entities licensed to act as intermediaries for employment, connecting job seekers with employers or facilitating temporary employment. Their activities are regulated by MOHRE.

Residence Visa:

A permit allowing foreign nationals to live and work in the UAE for an extended period, sponsored by an employer. It is typically valid for two years for employees and can be renewed.

Rest Day (Weekly Rest):

Employees are entitled to at least one paid rest day per week, usually Friday, but it can be any day specified in the employment contract.

Sick Leave:

Employees are entitled to paid sick leave after the completion of their probationary period. The New Labor Law provides for:

• First 15 days: Full pay.
• Next 30 days: Half pay.
• Remaining 45 days: Unpaid. This entitlement is for a maximum of 90 days per year, and typically requires a medical certificate from an approved medical authority.

Suspension from Work:

An employer may suspend an employee from work, with half pay, for up to 30 days, if there is an ongoing investigation into an alleged violation of company rules or labor law. If the employee is found innocent, their full salary for the suspension period must be paid.

Temporary Work:

A work model for employment that requires completion within a specified period or for a specific project.

Termination of Employment:

The cessation of the employment relationship, which can occur through mutual agreement, resignation by the employee, or termination by the employer for legitimate reasons (e.g., end of contract term, misconduct, poor performance, redundancy). The New Labor Law outlines specific procedures and grounds for termination, including notice periods and end-of-service entitlements.

Unlimited Contract:

A type of employment contract that had no fixed end date under the previous labor law. These contracts were phased out with the introduction of the New Labor Law (Federal Decree-Law No. 33 of 2021) and were required to be converted to limited/fixed-term contracts.

Wage:

Any consideration (cash or in-kind) paid to a worker in return for their service under an employment contract. This includes basic salary and any allowances.

Wage Protection System (WPS):

A mandatory electronic payroll system implemented by the UAE government to ensure that private sector employees receive their wages on time and in full. Employers are required to process salaries through WPS-approved banks or financial institutions. Non-compliance can lead to significant fines and penalties.

Worker: See Employee.

Work Permit: See Labor Card.

Working Hours:

The standard working hours in the UAE are generally eight hours per day or 48 hours per week. During the holy month of Ramadan, working hours for Muslim employees are reduced by two hours per day. Employees cannot work for more than five consecutive hours without a break. Overtime provisions apply for hours worked beyond the standard limits.