UAE LABOR LAW

UAE Labor law



UAE Labor law

Labor law is governed in the United Arab Emirates (UAE) by Federal Law No. 8 of 1980 ("Labour Law"). In it an employee is defined under Article 1 as any individual "working for a remuneration of any kind in the service of an employer and under his management as well as every hired individual who works in the service of an employer and who is subject to the provisions of this law ". Thus, if an employer is subject to UAE law, any individual working in that entity would also be governed by UAE law(Witney, 2006).

Employment contracts

Arabic

Article 2 of the Labour Law says that Arabic must be used in all records, employment contracts, files, statements and other documents, as well as in instructions and memos to employees. Foreign language texts may be used also but, in the event of inconsistency, the Arabic text will prevail.

Duration

Employment contracts can be limited or unlimited in duration according to Article 38 of the Labour Law. A fixed-term contract must specify an end date no more than four years after the date of execution. Of course, fixed-term contracts can be renewed and, in the event such a contract continues after its expiry without a written agreement, it will become an indefinite term contract (provided there is no explicit agreement to have it remains a fixedterm contract) (Witney, 2006).

Wages

UAE Labour Law distinguishes between the "total" and the "basic" wage of an employee. Under Article 1, the basic wage does not include any allowances while the total wage refers to an employee's whole remuneration package, and may include allowances for travel, accommodation, medical insurance and any other benefit the employer has stipulated. This aspect of the Labour Law is also relevant to any termination gratuity because, under Article 134, it is only the basic wage which is taken into account when calculating a gratuity for end-of-service, not the total wage. Since allowances can be up to 40 percent of a total wage in some cases, the precise structure of a remuneration package is important for employers calculating termination costs(Kelley, 2005).

Other relevant provisions

In general, what is included in the employment contract is at the employer's discretion. Employers frequently provide allowances in the form of housing, travel and, in many instances, schooling. Many employers also include medical and health insurance although most of the Emirates do not yet require it. In the Emirate of Abu Dhabi, a law requiring employers to provide health insurance to their staff was recently announced and the Emirate of Dubai is in the early stages of pushing through a mandatory health insurance scheme. Pensions are not yet required although they are referred to in the Labour Law. Terminating employment Employers need to be aware of a number of things when letting employees go. Six-month probationary periods are commonplace and allow some flexibility in determining if an employee is right for a company and a position. Under Article 37 of the Labour Law, during a probation period an ...