An Introduction to UAE’s Labor Law That Affects Millions of Lives

United Arab Emirates is an attraction for a large number of people due to its lavish and opulent lifestyle, awe-inspiring modern architecture, and high-end shopping that is tax-free. However, the life in UAE is not as easy and affluent as it appears. There is a hidden, much darker side of life in the UAE mainly due to its complex political and legal system.

The UAE, which is a federation of seven emirates i.e. Dubai, Abu Dhabi, Sharjah, Ajman, Al Khaimah, Al Fujairah and Um Al Quwain, was meant to be a democratic regime in an Arab and Islamic society as is declared in the preamble of its constitution. The constitution that was adopted upon the country’s formation on December 2, 1971, provides framework for political and legal operations of the country.

Egyptian and French law had heavily influenced the nation's constitution; hence, the legal system adapted is an amalgamation of European laws combined with Islamic principles. Since it’s an Islamic country, the core principles of all laws are drawn from the Islamic legal system called Sharia. However, when it comes to implementation, most laws are a mix of the European and Islamic legal system.

Although the UAE’s legal system is structured and comprehensive; there are a specific set of laws for labors, businesses, intellectual property, women, migrants, tourists and commercial and civil codes. It is highly rigid and complex. What makes it more difficult to understand is the presence of two courts, civil and Sharia, that operate parallel to each other. Though they deal with different sets of laws, it is highly for a layman to figure out and understand their working. This is why only a handful of people, out of more than 9 million, actually understand the UAE’s legal system.

For foreigners, this problem increases manifold mainly due to a difference of language.  

Whether you are a UAE a visitor, migrant or an investor, make sure you are on the right side of the law in order to stay out of trouble. This becomes all the more important if you are a laborer because they are considered the most ill-treated group and employers often take advantage of their lack of legal knowledge or awareness with regard to their rights.

Arming yourself with the right basic knowledge with regard to the UAE’s labor law is the key to not only avoiding legal problems, but also to know your rights and to not fall into any traps that employers might set out for the foreign workers.

Wondering where would you find all the relevant information?

Do not worry; we have got you covered!

UAE Labor Law – A Short Introduction

Here, we present the important information regarding the UAE’s Labor Law that one needs to have to survive in the country.

Labor Law

Labor Law in UAE is a comprehensive document that contains rules and regulations with regard to employment. The Federal Law Number 8 that was then called ‘Regulating Labor Relations’ was passed in 1980, but was later amended to be named the ‘Labor Law’.

This law of the UAE applies to all the people working in the country as an employee, in any capacity, with only few exceptions. Those who are not covered by the labor law include government employees, both working at the emirate and federal level and the people working at the Dubai International Financial Center.

Since UAE has huge numbers of foreign workers (according to an estimate, the figure is as high as seven million), the country faces numerous and unique challenges when it comes to regulating the system. Hence, there is a strong need for a framework to ensure the rightful implementation of labor laws, which is there on paper, but largely absent in reality.

Due to the fact that the majority of people who come to the UAE for work are unaware of the laws governing employment and do not know about their rights, they are one of the most ill-treated groups and subsequently taken advantage of. To avoid being abused or misguided, it is important that every person employed in the UAE should know about the following:

Employment Contract

The UAE’s Ministry of Labor requires each employee and the employer to sign the Labor of Department Contract and register it with the Ministry of Labor. This contract covers the basic terms and conditions with regard to employment in the UAE and is a requirement to obtain a permit for work and residence.

In addition to this, many employers make workers sign an additional contract that is often more comprehensive and complex. This is where there exists hidden traps and pitfalls, so employees should be very vigilant while signing this contract. It is highly important for an employee to read and understand each and every clause of the employment contract to avoid being mistreated by the employer.

  • Types of Contract   

According to UAE labor law, there are two different types of employment contracts; the fixed and unlimited term. Each contract has different conditions with regard to resigning, termination and other related issues.  

The limited term contract automatically gets terminated upon the end of the preset time period. Termination for cause is another condition upon which the contract could be cancelled at any time. Termination for cause simply means firing a person upon action(s) that are considered as misconduct by the employer.

The second type of contract i.e. the one signed for unlimited time, could be cancelled any time either by the employer or the employee. However, the terminator needs to give a notice in advance. The notice period, according to the country’s labor law, should be 30 days.

The problem that many workers face in the UAE arises from the condition that gives employers a tool they can easily misuse. The condition for giving a notice period does not apply to the cases of ‘termination for cause’. Many employers take advantage of this clause and often cancel the contract without any prior notice; this obviously creates huge problems for the worker.    

  • Employee Rights

The labor law of United Arab Emirates gives certain rights to the employee, in case of termination of contract. However, employees, particularly the foreigners, do not know that they can claim for ‘End of Service Entitlement’ and for ‘Compensation for Arbitrary Dismissal’ if applicable.

What is End of Service Entitlement?

The End of Service Entitlement makes a worker eligible for:

  1. Paid notice period or full payment in case when the employer does not want the person to serve the notice period.

  2. Gratuity

  3. Expenses of repatriation (if applicable)

  4. Money for all remaining holidays

What is Compensation for Arbitrary Dismissal?

The labor law in United Arab Emirates contains rules and guidelines for situations when a worker is unfairly dismissed from the job. This is another of the rights that employers in UAE generally are not aware of.

According to the Article 122 of labor law, dismissal of an employee for any reason that is not related to the work will be considered unfair or arbitrary.

If the employee is able to prove that his/ her termination was unfair, he/ she is entitled for a compensation of amount equal to the salary of 3 months, under Article 123 of the law.  

Compensation for Arbitrary Dismissal only applies to contracts signed for unlimited time period.

Final Word

Having knowledge about the basic labor laws that govern the employment system in United Arab Emirates is crucial to sustain in the highly complicated and often unfair corporate world of the country. Every employee should read and understand all the terms and conditions with regard to every aspect and have them in written before the commencement of job. To ensure you clearly understand each and every clause of the employment contract, discuss it with the employer.

It is an established practice in UAE that the sponsor keeps the passport of a foreign employee for the whole duration of the contract. Many foreigners assume it to be a law, but in reality this is just a common practice of employers to ensure that the worker could not leave the work or country without their approval. The UAE’s labor law does not have any such thing.

To avoid being trapped by an employer, it is important that every person considering to work in the UAE should gain at least the basic knowledge about the labor law before signing any document.