Employment

From a European perspective, the labour laws of the United Arab Emirates ("UAE") can be considered rather employer-friendly. Amongst others, this assessment is based on the stipulations concerning the termination of employment and the fact that neither trade unions nor work councils currently exist.

At the moment, Federal Law No. 8 of 1980 as amended ("Current UAE Labour Law") forms the primary legal basis with regard to the relation between employer and employee. However, it will be replaced in its entirety by Federal Decree-Law No. 33 of 2021 ("Future UAE Labour Law") as of 02.02.2022.

When entering into an employment relationship, special attention needs to be paid to the drafting of the employment contract. Apart from local rules and regulations, legal requirements of the home country of the employer and the employee may have to be taken into consideration as well should the employee be seconded to the UAE.

According to the Current UAE Labour Law, an employment contract may be concluded for an unlimited or a limited period. The kind of contract affects, inter alia, claims for compensation and gratuity. The Future UAE Labour Law, however, only provides for limited-term agreements. New employment contracts concluded before 02.02.2022 should already take this aspect into account. Existing unlimited employment contracts must be converted to limited-term contracts within one year of the coming into force of the Future UAE Labour Law, i.e. by 01.02.2023.

Provisions of the employment contract may only deviate from applicable UAE labour laws if they are in favour of the employee.

Relevant aspects during the employment relationship are for instance:

a. Salary

In general, the remuneration is divided into basic salary and various allowances.

There is currently no statutory minimum wage. However, the Future UAE Labour Law provides for the possibility of setting one by cabinet resolution.

b. Working Hours

The employee must be granted at least one day of rest per week. Under the Future UAE Labour Law, this day does not necessarily have to be on Friday. Therefore, a six-day workweek basically prevails in the UAE. However, most companies in the private sector are closed on two days of the week.

A four-and-a-half-day workweek was introduced for the public sector on 01.01.2022. Saturday and Sunday form the new weekend and Friday is a half working day. The changes are not binding on the private sector.

c. Public Holidays

Employees are entitled to full pay on holidays officially announced for the private sector. To date, these include, for example, the Christian New Year (1st January), the UAE National Day (2nd December), the Islamic New Year and the public holidays at the end of Ramadan.

d. Leave

An employee is entitled to a minimum of 30 calendar days annual leave provided his service exceeds one year. If the employee is employed more than six months but less than a year, the leave period amounts to two calendar days per month.

Amongst other, the employment relationship ends in any of the following cases:

• The parties agree to terminate the contract.
• The validity of the contract expires.
• One of the parties serves notice of termination.
• The employee dies or becomes wholly disabled.

An employee who completes one year or more of continuous service is generally entitled to gratuity at the end of his service. Furthermore, he may claim payment in lieu of holiday, reimbursement of repatriation costs and/or damages.