The UAE Labour Law (Federal Law No. 8 of 1980, as amended) (“UAE Labour Law”) is a law that widely regulates the employment relationship between the Employers and Employees in all seven emirates of the UAE.
The latest UAE Labour Law changes were brought with three decrees that came into effect in early 2016, aiming to balance the Employee-Employer interests, make the hiring procedures more clear, ease the process for Employees to end contracts, and safeguard Employees so that they are paid with correct wages.
As regards to free zones, in addition to the UAE Labour Law, the free zones may have their own rules which they may follow. Nevertheless, the rules of the free zones has to be in compliance with the UAE Labour Law and the benefits allotted to the Employee should not be less than those provided under the UAE Labour Law.
In many cases, a lot of corporations are reluctant to adhere to the labour law policies in the UAE including the UAE Labour Law.
Company policies that are illegal according to the UAE Labour Law
Corporate policies/handbooks, disciplinary codes, code of ethics, etc., cannot conflict with the UAE Labour Law.
Below are some common examples of these conflicts:
Withholding an employee’s passport
- Employers do receive the passports of the new employees in order to sort out residency related issues. However, beyond the acquisition of a new visa, unless it is specifically asked by the employee to keep the passport (though it might not be legally allowed for some passport holders in their home countries), it is illegal for corporates to withhold the passports of their Employees.
- The UAE is a signatory to the International Labour Organization on the Abolition of Forced Labour and withholding an Employee’s passport without their consent is strictly illegal according to the UAE labour law policies.
Unregistered staff and allowing sponsored workers to work for other companies
- Corporations cannot employ staff who does not have residence visas and valid employment contracts under the respective Corporations. They also cannot allow Employees that they sponsor to work in other companies, unless there are special permits issued from the Ministry of Human Resources and Emiratization.
- Two days leave for every month if an Employee’s service is more than six months and less than a year. However, after a year of employment, Employees are entitled to annual leave.
- According to Article 80 of the UAE Labour Law;
“the employer shall pay to the employee, prior to the annual leave thereof, the entire wage due thereto in addition to the leave pay determined by virtue of the provisions hereof.”
Therefore, unlike the policies of some companies, the law dictates that the Employee must receive not only the basic salary, but also the annual leave salary to be paid to the Employee before taking his annual leave. That is, the Employee shall be paid his full wage, plus the wage of his leave days he deserves according to the provision of the UAE Labour Law.
- Maternity leave is a highly discussed topic all over the world. Like most countries, new mothers are entitled to a maternity leave in the UAE and the leave cannot be considered as part of annual leave.
- Another unlawful practice that causes labour law conflicts in the UAE is when companies do not let their Employees take their annual leave, citing the reason as for “the benefit/interests of the company.” This is only lawful once every two consecutive years according to Article 78 of the UAE Labour Law.
- Official holidays, such as the New Year’s Day or the National Day or other public holidays declared by the Ministry of Human Resources and Emiratization, cannot be considered as unpaid holidays by companies, even though some companies choose to do so.
- Employees can file a complaint to the appropriate government authorities for their Employer’s violation of the UAE labour law policies.
- Pursuant to the new Ministerial resolution no. (765) of 2015 on rules and conditions for termination of employment relations, Limited Contracts can be terminated by the Employer by adhering to the legal procedures and by bearing the consequences of such termination which are stipulated in the Ministerial Resolution mentioned above.
- The Employer must give the Employee a written notice of his intention to terminate the contract prior to the specified termination date by a period to be agreed upon by both parties that is neither less than one (1) month nor more than three (3) months. If renewal took place prior to entry into force of this Resolution and both parties failed to agree on a notice period, such period shall be three (3) months.
- Also, the Employer shall pay the Employee a payment of a consideration for termination as agreed by both parties. Such consideration shall not be more than the total pay of three (3) months. If renewal took place prior to entry into force of this Resolution and both parties failed to specify the amount of such consideration, it shall be equivalent to the total pay of three (3) months.
- In light of the above, Employers are shifting the limited contracts to be unlimited contracts to avoid the payment of the compensation for terminating the Limited contract within its period (Term) which is the salary of three (3) months to be paid by the Employer if it was not agreed to a shorter period as per the regulations of the new Resolution No. 765. However, it is to be noted that the up-to three (3) months compensation for unlimited contracts may also be adjudged in the sole discretion of the court.
- As per the Resolution No. 765, the limited contract is now limited with 2 years term and may be renewed for similar periods without any restrictions, however, if the employment relationship continued without renewing, the limited contract turns to be unlimited contract as per Article No. 39 (3) of the Labour Law.
- Nevertheless, as per Article No. 38 of the Labour Law any renewal employment contract shall be added to any previous employment period the matter which some of the Employers tries to overlook specially when calculating the worker’s total period of service.
Changes to Employment Contract
- Although several corporations are attempting to reduce the salary or amend other terms in the Employment Contract, the Employer does not have the power or authority to amend the contracts which has been concluded and still valid and effective unless it agreed with the Employee to amend the same.
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The Ministry of Human Resources and Emiratization has been inspecting corporations and small businesses for compliance with the UAE labour law changes, as well as with the labour law policies. Employees can also bring complaints against corporations that violate their rights. It is highly advisable for Employers to completely follow the UAE Labour Law since the Ministry of Human Resources and Emiratization can impose heavy fines and penalties as a result of non-compliance.
Our specialized legal professionals are ready to help your business with all labour law matters in the UAE as well as provide legal assistance in other matters relating to your company.