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Employment issues in The United Arab Emirates

This guide was last updated in December 2012.

Employers in the UAE face not only the common challenges of all employers – including the increasing pressure to keep overheads at realistic levels – but also some more unique challenges arising from a transient and multi-cultured work force.

Immigration & Labour Cards

New businesses established in mainland UAE will need to register with:

  • The Department of Naturalization and Residency (DNR); and
  • The Ministry of Labour (MOL).

These steps will allow the business to source and employ any necessary labour and professional staff from overseas (if required).

For businesses established in a Free Zone, the procedure is slightly different. Upon registration of the Free Zone entity, the managers must liaise with the Free Zone Authority to initiate the process of obtaining residence visas and work permits. Usually, the relevant department of the Free Zone Authority will liaise with the Ministry of Labour and Immigration Department on behalf of the Free Zone entity.

Employment Visa & Residence Permit

For a person to enter, and work over the long term in, the UAE, both an Employment Visa and Residence Permit are required. These documents will be processed by the LLC or branch office, if the employer is based in mainland UAE, or the relevant Free Zone Authority, if the employer is based in a Free Zone.

Employment contracts

The relevant legislation relating to labour relationships in the UAE is contained in Federal Labour Law No. 8 of 1980 (the Labour Law). The Labour Law will generally apply to employers established within a Free Zone.

However, a notable exception to this general approach is DIFC, which has its own comprehensive Employment Law (DIFC Law No. 4 of 2005).

Dubai Chamber of Commerce, Dubai Abu Dhabi Investment Authority, Abu Dhabi

Key points to note:

  • The Labour Law governs most aspects of employer/employee relations, such as hours of work, leave, termination rights, medical benefits and repatriation;
  • All foreign employees (with the exception of those employed by a Free Zone entity) are required to execute an employment contract in the form, or substantially in the form, required by the Federal Ministry of Labour. This employment contract is registered with the Federal Ministry and constitutes the governing contract between the parties in any dispute in the UAE;
  • The Arabic language is the official language to be used in all employment contracts (with the exception of contracts for employees employed in DIFC). Where a foreign language is used by the employer in addition to the

Arabic, the Arabic version shall prevail;

  • Employment contracts in the UAE may either be for a limited period (a fixed term not to exceed four years) or unlimited period. An employment contract is considered unlimited if it is not made in writing;
  • Upon the termination of employment, an employee is entitled to an end of service gratuity, calculated by reference to length of service.

Dispute Resolution

Where there is a dispute between an employee and mainland employer, an application must be made to the MOL in the Emirate in which the employer is located. The complaint must be submitted in writing to the complaints department at the MOL, setting out a summary of the facts, calculation of the amount due to the employee, and enclosing copies of the labour contract and labour card. The employer and the employee will be summoned to state their respective cases before the labour office at the MOL, which will make a recommendation as to the resolution of the matter within two weeks from the date in which the application is filed. Should a party fail to settle the dispute as recommended by the MOL, the matter will be referred to the Courts.

In the case of a dispute relating to a Free Zone entity, the employee must submit a complaint to the relevant Free Zone Authority, which will attempt to mediate between the parties. If the parties are unable to agree a resolution, the Free Zone Authority will refer the matter to the Ministry of Labour, and the procedure outlined above will apply. In the case of dispute relating to a DIFC entity, the matter would ultimately be referred to the DIFC Courts.

Movement of workers between jobs

The rules relating to workers changing jobs from one company to another are restrictive, complex and subject to change. One of the key features of the labour rules is the concept of the "ban".

A ban is where an employee working in mainland UAE is not allowed to work for another company in the UAE (outside of the Free Zones) upon termination of his employment contract (as per the rules stipulated by Ministerial Decree

The conditions are as follows:

  • If the employment contract is a limited contract, and the employee's contract is terminated prior to the term of the contract having expired, the employee is restricted from working for another company in the UAE for a period of one year following termination;
  • If the employment contract is an unlimited contract, and the employee's contract is terminated before he has completed a year of employment, the employee is restricted from working for another company in the UAE for a period of six months following termination.

Engineers, doctors, pharmacists and hospital attendants are exempt from the ban and are permitted to transfer their residence visas to a new sponsor.

There are some limited exceptions to this position and the DNR, may, at its own discretion, grant exceptions.

Contact

Alison Hubbard, Partner

alison.hubbard@pinsentmasons.com / + 971 4 373 9693

Björn Gehle, Partner

bjorn.gehle@pinsentmasons.com / +971 4 373 9642

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