Understanding Employment Law in UAE: An Overview for Business Owners

Navigating employment law is essential for startups in the UAE to ensure compliance and foster a positive work environment. NH Management provides insights into key aspects of UAE employment law, including contracts, worker rights, and termination procedures, to help startups stay compliant and avoid legal pitfalls.

Critical Aspects of Employment Law in UAE
Employment Contracts

• Contract Types: There are two employment contracts in the UAE: Fixed-term and Unlimited-term.
  Ensure clarity on the nature and duration of employment through selection. Usually, fixed terms could be 2 to 3 years, depending on the business license’s jurisdiction. For example, within DMCC, employment contracts generally last three years. Meanwhile, only 2-year agreements are standard for the UAE mainland.
• Contract Inclusions: Contracts must include job title, job description, start date, working hours, compensation, benefits, and termination conditions.
• Arabic Translation: Employment contracts must be in Arabic or have an Arabic translation, as it is the official language for legal documentation.

Worker Rights

• Working Hours: The standard working week is 48 hours, typically 8 hours per day, with a daily 1-hour break. During Ramadan, working hours are reduced by 2 hours per day.
• Overtime: Employees are entitled to overtime pay if they work beyond the standard hours. Overtime is 125% of the regular wage and 150% for late-night or public holiday work.
• Leave Entitlements: After one year of service, employees are entitled to 30 days of annual leave. Other leaves include sick leave, maternity leave (45 days), and special leave for various circumstances.
• Health and Safety: Employers must provide a safe working environment and adhere to health and safety regulations.

Termination Procedures

• Notice Period: The notice period for terminating an employment contract is typically 30 days but can vary based on the contract terms.
• Grounds for Termination: Either party can initiate termination, but it must be based on valid reasons stipulated in the contract or the UAE Labor Law.
• End-of-Service Gratuity: Employees are entitled to end-of-service gratuity based on the length of service. The calculation is 21 days of basic salary for each year of the first five years and 30 days for each subsequent year.

Compliance Tips for Human Resources Law in UAE

• Legal Consultation: Engage with UAE legal advisors to ensure all employment contracts and policies comply with UAE labour laws.
• Clear Policies: Develop internal policies regarding working hours, leave entitlements, and employee benefits to avoid misunderstandings.
• Employee Handbook: Create an employee handbook that outlines all key policies, rights, and obligations and distribute it to all employees.
• Regular Training: Provide training sessions for management and HR staff on employment law and compliance requirements.

Ensuring Employment Law in UAE Compliance with NH Management

NH Management aims to help startups in the UAE understand and adhere to employment laws, ensure legal compliance, and foster a healthy work environment. By following these guidelines, startups can mitigate legal risks and build a strong foundation for sustainable growth. In addition to business setup in the UAE, NH Management offers human resources assistance such as employment contract drafting and other local employment compliance. To learn more about how we can support you, reach out to info@nhmanagement.com or +971 4 2221327.