Employment Practices and Legislation in United Arab Emirates

Types of Employment

Employment in the UAE is mainly governed by the Federal Law No. 8 of 1980, as amended, also known as the UAE Labour Law. There are three types of employment contracts in the UAE:

• Unlimited contracts: These contracts have no specific duration and can be terminated by either party with a notice period, typically ranging from one to three months.
• Limited contracts: These contracts have a fixed duration, usually not exceeding four years. Early termination may result in penalties for the party that initiates the termination.
• Part-time contracts: These contracts allow employees to work fewer hours than a full-time position, with a minimum of 20 hours per week.

Human Rights Laws

The UAE Constitution ensures that all employees are treated fairly and with dignity, regardless of their nationality, religion, or gender. Additionally, Federal Law No. 2 of 2015, the Anti-Discrimination and Hatred Law, criminalizes discrimination based on race, nationality, religion, or social status. This law promotes a positive work environment and encourages diversity within the UAE workforce.

Social Welfare Taxes and Employee Rights

Social welfare contributions, such as the General Pension and Social Security Authority (GPSSA) and the Emirates Insurance Authority (EIA), are mandatory for UAE nationals employed in the private sector. Expatriates, on the other hand, are not subject to such taxes but may choose to contribute to pension schemes in their home countries.

Employee rights are protected under the UAE Labour Law, which includes provisions for fair wages, timely payment, working hours, annual leave, and sick leave. Employers must also provide employees with proper working conditions, occupational safety, and health standards.

Standard Employee Benefits

Standard employee benefits in the UAE include:

• End of service gratuity: Employees who complete one year or more of continuous service are entitled to an end of service gratuity, calculated based on their length of service and final salary.
• Annual leave: Employees are entitled to a minimum of 30 calendar days of paid annual leave after completing one year of service.
• Sick leave: Employees are entitled to a maximum of 90 days of sick leave per year, with varying levels of pay depending on the duration of the leave.

Terminating Underperforming Employees

Terminating employees for underperformance must be carried out in accordance with the UAE Labour Law. The employer must provide the employee with a written warning, stating the reasons for their dissatisfaction and giving the employee an opportunity to improve their performance within a specified period, typically 60 days. If the employee fails to improve, the employer can terminate the contract by providing a written notice.

Confidentiality of Employee Records

The UAE Labour Law does not explicitly address the confidentiality of employee records. However, the Federal Law No. 3 of 1987, the Penal Code, imposes penalties on individuals who disclose confidential information without authorization, which may apply to the unauthorized disclosure of employee records.

Non-Competition Laws

Article 127 of the UAE Labour Law addresses non-competition clauses, which prohibit employees from working with a competitor or disclosing trade secrets to a new employer after leaving their current job. The enforceability of these clauses is subject to certain conditions, such as reasonableness in terms of duration, geographical scope, and the nature of the restricted activities. The clauses must also be limited to protecting the legitimate business interests of the employer. Non-competition clauses are more likely to be enforced if the employee had access to sensitive information, trade secrets, or held a senior position within the organization. Violation of a non-competition clause may result in legal action and financial penalties.