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October 12, 2016
Employment issues in the UAE are governed by Federal Law No. 8 of 1980 regulating Labor Relations as amended by Federal Laws No. 24 of 1981, No. 15 of 1985 and No. 12 of 1986 (the "Law"). According to Article 3 of the Law, the law applies to all employees and workers in the UAE including UAE nationals and expatriates.
It may be noted that partners in businesses are not considered as "employees"; instead they are known as "investors" in their businesses. However if the partner holds an employee position besides his status as a partner, he will be considered as an "employee" working in the company in addition to his position as partner.
The law is protective of employees in general and supersedes conflicting contractual provisions agreed under another jurisdiction, unless they are beneficial to the employee. For the UAE, respect for labor rights is a moral, cultural and economic imperative.
All expatriate employees who wish to work in the UAE must be employed by an appropriately licensed and approved company and must be issued with a residence visa. The law covers every aspect in relation to the employee-employer relationship including employment contract, wages, working hours, incentives, medical and social care, restrictions on the employment of women and juvenile, safety and protection of employees, penalties and employment related accidents, injuries and death.
Furthermore, this rule is also applicable to the various free zones within the UAE. The employees in a free zone are sponsored by relevant free zone(s), and not their employers. Free zones may have their own rules and regulations and they maintain their own employment contracts.
However, the law will still apply and the provisions should be in accordance with the law. In the event of a dispute, the employees maintain their right of action against employers, not the relevant sponsoring free zone authority. It is important to note that any provision of the labor contract is invalid if it either contradicts the UAE labor law or conflicts with the public interest. These provisions can relate to establishment of probation period, gratuity, notice period, salary or to any penalty applied to the employee.
According to the Federal Law No.8 of the year 1980 probation period cannot exceed six month. The Labor Law provides the employees with mainly seven rights that have to be followed by the employer upon the termination of the labor contract.
According to the Labor Law, an employee terminating his contract has rights to get: Unpaid salary till last date of employment. Charges for extra hours of work or overtime; Notice period salary; Any unpaid annual leave allowance; Gratuity if employee has completed one year of service; air ticket allowance; Compensation in case of unfair or arbitrary dismissal It needs to be noted that in addition to the above mentioned rights, an employee can be entitled to additional rights if such are included in the contract, such as commission and bonuses.
However, if the termination happens within the probation period, which can be 6 months or less depending on contract, the employee will not have right to claim the rights mentioned above. He will only be entitled to unpaid salary, charges for extra hours of work and air ticket. The period of limitation (within which a claim needs to be made) on labor matters for UAE based companies is 1 year from the date on which such claims became due.
How to claim the rights
It is significant that for an employee to be able to apply for UAE Labor Authorities regarding any legal matter, he/she should have or had a work permission and/or company sponsorship. Otherwise UAE Labor Authorities will not deal with a matter. The Ministry of Labor and Social Affairs (the Ministry) is the main body responsible in settling labor differences between employers and employees.
It should be noted that all labor disputes must initially be submitted to the Labor Department of the Ministry for amicable settlement if the company is onshore. However, Free Zones have their own Legal Departments which hears labor complaints. In order to file a case in the Labor courts one should take a letter of reply from the concerned Free Zone Legal Department first.
In a case an employee who works for Governmental Entity, he should apply to the Ruler's office first and obtain a Non-Objection Certificate (NOC). If an amicable settlement is not reached in a settlement meeting called by the concerned authority, then the concerned authority as the case may be could delegate the matter to the court for litigation.