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Dubai Employment Contract

26 March 2016

The subject of a contract of employment or a labor contract is somewhat confusing and with complex paper work involved. There is so much information that you need to know; but what I will do here is try to put it in a nutshell. First and foremost, the two contracts listed above differ in one aspect. The Federal labor contract needs to be printed out on X3 for distribution to various sources; and unless submitted to the labor department, you will have difficulty obtaining a work visa. That said, there are several questions that frequently come up when discussing a Dubai employment contract (which is how I will refer to both types of contracts for the remainder of this article).

employment contracts in Dubai

Termination of labour contract

Last things first, should you choose to terminate your contract before its expiration, you will need to show just cause to the labor department such as a personal assault on you by someone from the company; or your employer has not been forthcoming with your wages in accordance with the contract.

Can your employer sever the contract before its expiration? There are a whole lot of 'yeses' here. Some of the reasons for which your employer could terminate you are: excessive absenteeism with no valid reason, falsification of application information, if you physically assault someone on the job, if your mistake causes the company severe financial loss, you show up under the influence of alcohol, you violate safety protocols, a court conviction of breaking public morals, or giving away any trade secrets. There are extenuating circumstances to some of these as well as procedures that would have to be followed.

An employment contract is neither legal nor binding in Dubai if it is not translated into both English and Arabic. Though both English and Arabic are spoken in Dubai, if problems occur with translation, the Arabic text is the one that will apply to the situation. Be sure you know what you're signing; have someone you trust translate the Arabic documents for you.

Probation periods

Probationary periods usually run anywhere from 3 to 6 months during which you can be dismissed for no apparent reason. You can only be on probation once during your employment with that particular employer, after which your full employment contract applies. No sick time is given during this time and should you terminate your employment during probation, you will most likely incur a ‘labor ban’. Probation periods in Dubai are required by law.

Limited and Unlimited contracts

There are 'unlimited' and 'limited' contracts of which the ‘unlimited’ is renewable, an indefinite and is terminable with a 30-day notice after the probationary period is fulfilled. The period of your residency visa in Dubai can come into play with this contract and its length of validity. The ‘limited’ contract is for a definite period of time of employment. No renewal is guaranteed and early termination by either party carries with it certain penalties.

Although they are not mandatory, letters pertaining to the offer of acceptance by your future employer are frequently sent to applicants who have ‘passed the interview and review process’ for their perspective employer. These letters may include various details including basic salary, conditions of taking a leave of absence, benefits and a detailed job description. As long as the necessary required copies of the appropriate contract are filed with the stipulated organization, both you and your employer will have an equal legal format on which to base any complaints.

Rules to be followed when terminating Limited Contract

The UAE Ministry of Labour has made several changes in the country’s Labour Law recently, aimed at making the employee-employer relationship more transparent and mutually beneficial. It is expected that these amendments would make it easier for expat workers to terminate their employment contracts.

Earlier, employees required a No Objection Certificate (NOC) from their employer to leave the job. Therefore, it was easier for an employer to place a labour ban on employee if he had not completed a minimum of two years in his service or if he had terminated a limited contract prior to its completion.

Now, there is no requirement of an NOC, and this change is likely to improve job mobility among employees, making it easier for them to switch employers. On the other hand, employers will consider improving employee work conditions, offering better packages as a way to retain staff.

Procedure for termination of limited employment contract:

As per UAE Ministerial Decree 765 of 2015 on Termination of a Limited Contract, for employees who are on a fixed term employment contract, the relationship can be terminated based on:

  • Expiry of fixed term – not renewed. 
  • Article 120 of Labour Law (termination for a specific cause) 
  • Unilateral termination by either party subject to compliance with certain formalities.

Among the formalities or conditions included here are that, either party has to notify the other with a maximum of three month notice. Both parties have to honour this contractual obligation and indemnify the other with agreed compensation between one to three months for early termination.

It is to be noted here that the term of a limited contract cannot be extended beyond two years.

Procedure for termination of unlimited employment contract:

For those on unlimited contract, the decree states that the relationship can be terminated on mutual consent, with a one to three months’ notice period, under Article 120 of UAE Labour Law.

The concerned parties are required to honour obligations during the notice period, and follow legal procedures for termination.

Robin Vinod

Writer/blogger who writes on topics such as travel, real estate, employment and everyday life on GCC countries