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Written Agreements

Written employment contracts are mandatory in the UAE. When the contract is concluded in writing, it has to be duplicated, and a copy is to be provided to the employee and the employer. The agreement must include the date of its conclusion, the date on which the job begins, the nature and place of work, the duration of the contract in case of limited-term agreements, and the amount of remuneration.

The law permits employers to include non-compete restrictions in employment contracts. These restrictions must be limited to the extent necessary to protect the business’s legitimate interests and defined in respect of time, place, and the nature of work. The maximum restrictive period is two years from the date of the employment contract's expiry.

Oral Agreements

Under the previous federal decree, oral contracts were allowable as they applied to unlimited contracts. The current federal decree regulating employment relationships limits employment contracts to fixed-term and requires written contracts, thus prohibiting the use of oral agreements. Employees may prove by all possible means of proof the existence of the employment contract, the amount of the wage, and any of the rights they are entitled to receive.

Implied Agreements

Under previous federal decree, implied contracts were allowable under unlimited contracts. The Federal Decree Law No. 33 of 2021 limits employment contracts to fixed-term and requires written contracts thus prohibiting the use of implied agreements. However, under civil law, the actions of parties can create a duty between them which will result in a contractual relationship. If a person performs work for another, the receiving party has an obligation to compensate the worker. If a person pays for a service, the person paid has an obligation to perform the work or return the amount which was paid.

According to the labor code of the United Arab Emirates, the standard workweek comprises 48 hours per week or 8 hours per day. Work in arduous or unhealthy jobs and industries is limited to 7 hours daily.

Employees under 18 are prohibited from working over 6 hours a day.

Hijra New Year (date may vary), Christian New Year (January 1), Eid Al Fitr – two days holiday (date may vary), Eid Al Adha and Wqfa Day – three days’ holiday (date may vary), Birthday of Prophet (date may vary), Ascension Day (date may vary), Commemoration Day - 30th November, National Day (December 2), Arafah Day - Date subject to change.

In the UAE, the probationary period is counted towards the period of employment. During the probation, the employee can be dismissed without a notice period or end-of-service allowances. Employees are not entitled to paid sick leave while on probation.

Employers are required to provide a minimum of 14 days notice to employees if they wish to terminate employment during the probationary period.

Notice Period

According to labor law, employers can terminate an employment contract by providing written notice of at least 30 days up to 90 days. The party (employer or employee) who does not abide by the notice period is required to pay the other party compensation equal to the employee's wage for the full notice period or whatever time is remaining.

If the employer terminates the employment contract, the employee shall have the right to be absent during the notice period for 1 working day without pay per week to search for another job. They must notify the employer at least 3 days before the absence day.

Severance Benefits

The labor code states that employees must be provided with end-of-service remuneration if they have completed 1 year of service with the employer. Foreign employees are also entitled to a severance gratuity.

Under federal law, the severance is paid as follows if the employer terminates the employee's contract:

• 1 to 5 years of service - 21 days' salary for each year of service
• More than 5 years of service - 30 days' salary for each additional year, provided the entire compensation does not exceed 2 years' pay

Employers are obligated to have a bank guarantee of AED 3,000 for each employee or an insurance policy that covers every employee's severance entitlements in the case of bankruptcy.

Employers can register with the Ministry of Human Resources and Emiratisation for a voluntary program that is an alternative to the statutory end-of-service benefits. It is known as the Savings Scheme. In this program, employers contribute 5.83% of an employee's salary monthly for any employee with less than 5 years of service. The contribution rate increases to 8.33% for employees with 5 years or more of service.

Minimum Wage

The new UAE Labour Law of 2021 introduced the provision for mandatory minimum wages for all private sector employees to be determined by the Minister of Human Resources and Emiratisation, effective February 2, 2022. The wage is yet to be determined as of October 2024.

Additionally, employees are entitled to receive their wages on the due dates in accordance with the regulations approved by the ministry, conditions and controls, and procedures specified by the Executive Regulations of this Decree-Law.

Employee salaries can be paid using currencies other than AED. Dubai Court of First Instance ruled in August 2024 that a part of an employee's salary can be paid in cryptocurrency without requiring it to be converted into national currency, as determined by the employment contract. Depending on the agreement between employer and employee, salaries must be paid either monthly or biweekly. Salaries must be paid biweekly if the contract does not specify the pay period.

Overtime, Holiday & Vacation Pay

The remuneration for overtime work equals 125% of the regular hourly pay. For overtime work between 9:00 PM and 4:00 AM, employees are entitled to 150% of the normal hourly remuneration. The law limits overtime work to two hours daily. Employees in managerial or supervisory roles and ship crews who work under special service conditions are exempt from overtime regulations.

During annual leave, employees are entitled to their basic salary and a housing allowance (if stipulated in the contract).

If the employer requests that the employee work during annual leave and the leave is not carried over to the next year, the employee must be paid their regular wages and the basic salary they are entitled to for the leave. The annual leave salary must be issued before the leave is taken. If an employee is dismissed or resigns, they are entitled to pay in place of unused annual leave.

Friday is the official weekend for all employees except for daily wage workers. If circumstances require the employee to work overtime on that day, they will be entitled to regular working hours' pay, plus an increase of at least 50% of that amount.

If the employee is required to work during a public holiday, they will be granted another rest day and an increase of 50% of the basic wage for that day. If the employee cannot be granted another day off, they are entitled to receive an additional 150% of the basic wage for that day. Employers should be mindful of the religious significance of some public holidays when requiring employees to work.

Visas

• Business visa - professionals from any country with entrepreneurial experience or having a majority stake in a startup are eligible to apply for a business visa. This multiple-entry visa allows visitors to enter the country for six months
• Tourist visas - can be issued for 30 days or 90 days for single or multiple entries and extended for 30 days twice without having to leave the country
• Transit visa - this type of visa applies to passengers traveling to another country via the UAE
• Medical visa - foreign patients can enter the UAE for treatment under the sponsorship of the medical establishment where they would be seeking treatment
• Retirement visas - are issued to retired residents for a five-year term, provided they fulfill investment or savings requirements
• Student visa - issued to expatriate students who are over 18 years old for a year. Outstanding students can get a long-term visa for 5 years

Work Permits

The Emirati Ministry of Human Resources and Emiratisation (MoHRE) issues work permits to foreign employees. Work permit applications must include a written and authenticated employment contract. The MoHRE forwards the approved applications to the Directorate of Naturalization and Immigration or the embassies of the United Arab Emirates State abroad to issue visas or work permits.

"False Emiratisation" refers to employers misleading authorities about the number of Emiratis (UAE nationals) they've hired. This practice is illegal. If caught, employers face fines that increase based on the number of employees affected, of no less than AED 100,000 and no more than AED 1 million. They may also face additional penalties if they violate other UAE laws, like immigration regulations.

Employers who hire employees who are not authorized to work for them or use work permits for a purpose other than that for which they were issued can also be penalized with a fine of no less than AED 100,000 and no more than AED 1 million.