The employment contract is an essential commercial contract that ensures transparency and legal compliance. It plays a vital role in defining the terms of a professional relationship between an employer and an employee, helping ensure transparency. In addition, the agreement minimises the risk of any potential disputes in the workplace.
This article builds on our broader discussion of commercial contracts in UAE, focusing specifically on the employment contract as one of the most prevalent agreements.
Whether you are an employer, legal professional, or employee, understanding the structure and legal implications of these agreements is vital to maintaining compliance with UAE labour laws and fostering professional stability. Continue reading this blog to gain a clear picture of how the employment contract in UAE functions.
Back to topWhat is an Employment Contract in UAE?
An employment contract in Dubai, UAE, is a mandatory agreement formalised between an employer and an employee. It is a legally binding document that outlines key details such as job role, salary, working hours, leave entitlements, and termination conditions. In the UAE, having a written employment contract is required by the law to ensure clarity, protect rights, and comply with local labour law. The labour contract in UAE is governed by Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations, commonly referred to as the UAE Labour Law.
Back to topUnderstanding the Elements of an Employment Contract in UAE
The labour contract in Dubai, UAE, includes several key clauses. Check out the components of an employment contract for your business setup in UAE:
Clause | Details |
Parties Involved in an Employment Contract | Includes the full names, nationalities, and identification details of both the employer and the employee. |
Job Title and Description | Clearly defines the employee’s job title, duties, and responsibilities. |
Work Location | States the primary place where the employee will perform their duties. |
Contract Duration | Starting in 2022, all jobs in the UAE must have fixed-term contracts. This means the contract should have a clear end date, up to 3 years, which can be renewed. Contracts without an end date (unlimited contracts) are no longer allowed. |
Working Hours | Working hours are usually 8 hours a day or 48 hours per week; however, during the month of Ramadan, working hours are reduced by 2 hours. Additionally, if you work extra, it counts as overtime and follows special rules. |
Salary & Benefits | Salaries must be paid through the Wages Protection System (WPS) for mainland and some free zone companies in the UAE. The monthly salary must be stated and typically includes: 1. Basic Salary 2. Allowances (e.g., housing, transport) |
Leave Entitlements | Employees are entitled to 30 calendar days of annual leave per year. Other leave includes sick leave, maternity/paternity leave, and official UAE public holidays. Sick leave: Up to 90 days per year (first 15 days full pay, next 30 days half pay, remaining unpaid). Maternity leave: 60 days (45 days full pay if completed 1 year of service, otherwise half pay; remaining 15 days unpaid). Paternity leave: 5 working days with full pay. |
Probation Period | It can be up to 6 months. If an employee is on probation, they may resign by serving the required notice period: 14 days if they are leaving the UAE, or one month if they are joining another employer within the UAE. |
Termination and Notice Period | Contracts can be terminated by either party, with a 30 to 90-day notice. The employee is entitled to avail end-of-service benefits, such as gratuity and unused leave, as per the UAE law. |
Non-Compete Clause | Under certain conditions, employees are restricted from joining a competitor for a certain period post-employment. |
Dispute Resolution | Disputes are usually handled by the UAE Ministry of Human Resources and Emiratisation (MOHRE) or the authority governing the relevant free zone. |
What are the Types of Employment Contracts in UAE?
In the UAE, employment contracts differ based on the employer’s jurisdiction. There are three types of employment contracts in the UAE. Let us have a look at them:
- Mainland Contract - The employee agreement must follow the UAE Labour Laws and is registered with the MOHRE.
- Free Zone Contract - The contract is provided by the relevant free zone authorities.
- DIFC/ADGM Contract - This is for the employees working in the Dubai International Financial Centre (DIFC) or the Abu Dhabi Global Market (ADGM). These contracts are governed by independent legal systems based on common law and are not covered by the regular UAE Labour Law.
What are the UAE Labour Law Protections?
According to the UAE Labour Law, employers are not allowed to withhold an employee's passport, employees cannot be fired without a valid reason, and those who complete a minimum of one year of service can receive gratuity. Additionally, the labour law includes anti-discrimination rules to protect employees from unfair treatment in the workplace.
Back to topHow Can Commitbiz Help?
Experts at Commitbiz LLC have a deep understanding of labour law in Dubai, employment contracts in Abu Dhabi, UAE, and employment regulations. We assist with drafting the employment contract, other commercial contracts, complying with legal requirements, and abiding by industry standards.
Additionally, we provide comprehensive end-to-end support, ensuring that your employment agreements are transparent and tailored to your specific business needs. Contact us to learn more about the employment contract in UAE.
Back to topWhat are the types of work arrangements in UAE?
The models of work arrangements in UAE include full-time, part-time, temporary, flexible, remote, and job-sharing.
What is the difference between a job offer and a labor contract in UAE?
A job offer is a preliminary offer, while a labor contract in UAE is the official, signed agreement that outlines all employment terms and legal obligations.
Can parties to an employment contract change terms after signing?
Yes, parties to an employment contract can change terms if both agree in writing and the changes comply with UAE labor laws.
