Demystifying the UAE Employment Contract: What You Need to Know

Employment in the UAE is governed by laws that aim to protect both employers and employees. Central to this relationship is the employment contract, a legal document that outlines the terms and conditions of employment. Understanding the intricacies of the UAE employment contract is crucial for both employers and employees. 

Employment in the United Arab Emirates (UAE) is governed by a set of laws and regulations that aim to protect both employers and employees. Central to this relationship is the employment contract, a legal document that outlines the terms and conditions of employment. Understanding the intricacies of the UAE employment contract is crucial for both employers and employees to ensure a smooth working relationship and avoid any legal complications. In this article, we delve into the key aspects of the UAE employment contract to provide clarity and guidance. 

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Types of Employment Contracts

In the UAE, two primary types of employment contracts are prevalent: 

  1. Limited-term contracts: These agreements, also known as fixed-term contracts, establish a defined duration of employment between an employer and employee. Typically utilized for project-specific or temporary positions, these contracts often have a predetermined end date, typically lasting up to three years from the commencement of employment. They are commonly employed for roles of a temporary nature or specific projects.
  2. Unlimited-term contracts: Unlike limited contracts, unlimited contracts do not have an expiration date. They are suitable for permanent roles and long-term projects, offering greater job security for employees. However, it’s important to note that as of 2023, private sector employees, with the exception of those in the DIFC and ADGM, are predominantly under fixed-term contracts. Unlimited contracts are more commonly associated with employees seeking long-term employment stability within a company.

Essential Elements of the Employment Contract 

Regardless of the type of contract, certain elements must be included to ensure its validity and compliance with UAE labour laws. These elements typically include: 

  1. Personal details of the employer and the employee.
  2. Job title and description.
  3. Start date and duration of employment (for limited-term contracts).
  4. Salary and benefits.
  5. Working hours, rest days, and holidays.
  6. Probation period (if applicable).
  7. Termination terms and notice period.
  8. Confidentiality and non-compete clauses (if applicable).

Probation Period

Employees in the UAE are typically required to undergo a mandatory probationary period at the beginning of their employment contract. This probation period varies depending on the company but typically lasts between 3 to 6 months. The purpose of the probation period is to assess the employee’s performance and suitability for a permanent role before confirming their designation. During this time, the employee’s work approach is evaluated, and performance screenings are conducted. 

Article 9 of the UAE labour law outlines specific regulations governing the probation period: 

  • The maximum duration of the probationary period is six months from the start of the contract. Any period exceeding six months is considered unlawful. 
  • In the event of termination by the employer during the probation period, a notice period of 14 days is required. 
  • If an employee wishes to resign and join another company during probation, they must provide written notice at least one month in advance. 
  • Paid sick leave is not granted during the probationary period. 
  • Employees undergoing probation are not entitled to gratuity. 
  • Extending the probationary period is prohibited if the employee has met the company’s performance standards. 

Termination of Employment

UAE labour law regulates the termination of employment contracts, outlining the circumstances under which termination is permissible and the procedures to be followed. Both employers and employees are required to provide notice before terminating the contract, the duration of which depends on the length of service and the type of contract. 

Legal Considerations and Dispute Resolution 

It’s essential for both parties to ensure that the employment contract complies with UAE labour laws and regulations. Seeking legal advice before signing the contract can help clarify any ambiguities and protect the interests of both the employer and the employee. In the event of disputes or disagreements, the UAE has established labour courts and dispute resolution mechanisms to address employment-related issues. 

Types of Work Arrangements in UAE  

While full-time employment is commonly practiced, the UAE also embraces various alternative work arrangements: 

  • Part-time: This arrangement allows employees to work for one or more employers for specified hours or days. 
  • Temporary work: Employees engage in specific assignments, and the employment contract concludes upon project completion. 
  • Remote work: All job tasks are performed outside the traditional workplace setting. 
  • Flexible work: Employees are granted the flexibility to select their working hours. 
  • Job sharing: This arrangement involves two or more individuals sharing a full-time workload, often alternating days and dividing working hours. 

The UAE employment contract serves as a cornerstone of the employer-employee relationship, providing clarity and structure to the terms of employment. Understanding the key elements of the contract, including its types, essential components, probationary periods, termination clauses, and legal considerations, is vital for ensuring compliance with UAE labour laws and fostering a positive working environment. By adhering to the legal requirements and seeking appropriate guidance when needed, employers and employees can mitigate risks and build a mutually beneficial relationship based on trust and transparency. 

About ATB Legal

ATB Legal is a full-service legal consultancy in the UAE providing services in dispute resolution (DIFC Courts, ADGM Courts, mainland litigation management and Arbitrations), corporate and commercial matters, IP, business set up and UAE taxation. We also have a personal law department providing advice on marriage, divorce and wills & estate planning for expats. Please feel free to reach out to us at office@atblegal.com for a non-obligatory initial consultation.

by Reshma Rose Jacob

Reshma is a legal consultant at ATB Legal. She is a law graduate from St. Joseph’s College of Law, Bangalore, and is enrolled with the Bar Council of Kerala.

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