Labor & Employment Law

Siraj Ahmed Law Firm represents individuals, corporations, free zones, and other business entities in a wide range of labor and employment matters. We assist with routine employment matters as well as complex litigation mandates, and represent individuals and businesses, and both employers and employees. When representing employers, our objective is to proactively protect our clients by offering audit services of their employment arrangements, and amending these as necessary to protect against liability in litigation. With employees, we advise on the numerous pitfalls present when commencing an employment relationship in the UAE without being aware of the applicable law and customs, and vigorously pursue employee claims in the event of litigation.

UAE Labour Law

Employment relationships in the UAE for both UAE nationals and expatriates are generally governed by Federal Law No. 8 of 1980 Regulating Labour Relations, as amended. the “UAE Labour Law”), the various relevant resolutions [and executive council decisions], and current practices/customs of the Ministry of Labour (“MoL”). Certain employees are exempt from the application of the Labour Law, such as government employees. Further, contrary to a common misconception, free zone employment agreements are still subject to UAE Labour law, though such employees are subject to free zone rules and regulations, and may be exempt from local laws pertaining to labour bans.

Commencing the Employment Relationship

We assist clients from prior to the inception of the employment relationship. Services include (1) advising on and drafting employment agreements, (2) providing counsel in relation to the UAE Ministry of Labour agreements (colloquially referred to as a “labour contract” or “green form contract”), and (3) drafting/preparing personnel and human resource policies & procedures/manuals. As the adage goes, an “ounce of prevention is a pound of cure”; ensuring that employment agreements are drafted by a professional, while considering a client’s commercial objectives and expectations, is crucial in guarding against subsequent disputes.

Proper drafting of employment agreements requires a thorough understanding of applicable UAE law and customs. Even seasoned UAE employers/employees have difficulty understanding the application of the law to their situation, particularly so in a climate where many turn to the local newspapers to attempt to understand the interpretation of a particular law or regulation.

Ministry of Labour Contract v. Internal Employment Contract

Both employers and employees must fully understand the legal repercussions of documentation that is executed. It is common practice for employees to arrive in Dubai on the representations and provisions set forth in an official employment agreement on the employer’s letterhead — however, this employment agreement soon becomes relegated to an “internal contract,” and in general is superseded by the MoL contract once issued. The MoL contract is a green-colored form agreement issued by the Ministry of Labour, in English and Arabic, where the parties simply fill in the blanks (and then file with the MoL). Employers and employees must be fully aware of the significance of a discrepancy among these contracts, and how the courts address these issues. In general, the MoL contract will supersede any internal employment agreement to the extent there is a conflict; however, in the absence of a conflict, both documents will govern the employment relationship. Clients must be keenly aware of the pitfalls that arise in the interplay between the MoL contract and the internal employment contract, including employees commencing work for an employer pursuant to a duly executed internal employment contract (but where the MoL contract and visa have not yet been issued), amendments to the employee’s compensation and duties that are reflected in the course of employment but not in the employment agreements, confusion arising from “limited” and “unlimited” MoL and/or internal employment agreements and rights of termination. Parties may elect to use their own form of employment agreement filed with the MoL, but this agreement must be in Arabic.

Terms and Conditions of Employment Contracts

Employment contracts may be “unlimited” or “limited” (fixed term). Despite the terminology, unlimited contracts are easier to terminate and may in general be terminated at any time, so long as the terminating party complies with notice requirements. Limited or fixed term contracts specifcy a time period for the contract, and generally cannot be terminated without liability prior to the conclusion of the term.

Employment agreements should clearly set forth what is expected of each party, to avoid disputes down the road. Under applicable law, they must set forth certain terms, including wages/compensation, date of employment commencement and contract, the location, nature and scope of the work to be performed, and whether the contract is unlimited or limited (and the term for limited contracts). To the extent there are gaps in the agreements, UAE law (including the Labour Law, regulations/resolutions, UAE Civil Code, etc.), and MoL practice and custom will fill in these gaps. Furthermore, employers should be aware that some provisions inserted in internal employment agreements are patently unenforceable if they inure to the employee’s detriment. Many employees are unaware of the law’s built-in protection for overreaching by employers.

Compensation and End-of-Service Issues

Compensation for an employee may be a blend of salary, allowances, and bonuses/commissions. Generally, the salary set forth in the MoL contract will dictate the employer’s obligations; however, if the employee receives a raise during the course of employment, then questions arise as to the employee’s rights. On the one hand, the employee would be receiving and be accustomed to a higher salary than that set forth in the MoL contract; on the other hand, the MoL contract is generally considered the foundational document that courts consider in assessing the rights/responsibilities of the parties. Another source of confusion is calculation of end-of-service (gratuity or severance) benefits. UAE courts have ruled that end-of-service benefits must generally be based on salary and recurring bonuses. This has become a point of contention for employment arrangements where compensation is based in part on commission, and for this reason, some employers are turning to application of DIFC employment law (which can apply under certain circumstances). No end-of-service benefits are payable, however, if the employment is terminated during the probation period (which may be a maximum of six (6) months under Article 37 of the Labour Law). However, if an employee works beyond the probation period and eventually becomes entitled to end-of-service benefits, then the probation period will be included in calculation of such benefits.

Employer Liability for Employee’s Acts

Under many jurisdictions, an employer will generally not be liable for the acts of an employee that fall beyond the scope of the employee’s duties. However, UAE law, as applied, may differ from this general rule. In one instance, a court has ruled that a restaurant-employer is responsible for an employee committing an assault while delivering an order. Employers must therefore be proactive and ensure that they complete their due diligence and background checks before hiring an employee. Effective due diligence is difficult where the employee has not previously resided in the UAE, and is working in the UAE for the first time. Thus, employers must be particularly careful to ensure that their employment agreements contain the requisite language and protective provisions to help guard against liability for the acts of an errant employee.

Termination

As noted above, parties may agree to unlimited or limited (fixed term) employment contracts. Where a contract is for an unlimited term, either party may terminate upon thirty (30) days notice or mutual consent. However, if a contract is for a fixed term, parties may terminate only for cause, or by compensating the other party for a premature termination. While employers have the right to terminate for cause, employers must carefully document such a termination, and follow certain procedures under the law (which may include, for example, issuing warnings, investigating breach of duty, meeting with employees suspected of breaching duties and documenting the meeting in the employee’s file, etc.). Employer are also responsible for repatriation expenses for an employee to the original venue from which the employee was recruited or as otherwise agreed upon by the parties.

Ministry of Labour Bans

Employees must be careful not to prematurely terminate their employment relationship, or they may be subject to a Ministry of Labour ban on employment for a term of six (6) months in the UAE. This ban however is subject to certain exceptions, and does not apply where an employee has completed a minimum period of service for the employer and/or where the employer is a skilled professional. Where an exempt employee prematurely terminates his or her employment relationship for a better opportunity, the new job opportunity must denote a minimum salary figure to avoid application of the ban. Separate from the Ministry of Labour ban, employers themselves may seek, under certain circumstances, a ban of up to one (1) year against absconding employees.

Dispute Resolution

Our primary objective is preventing litigation, and in the case of litigation, we work to minimize exposure and liability. In the event of a dispute in the UAE, the department of reconciliation first attempts to resolve matters. If the case is not settled, then it will proceed to litigation. Litigation is challenging in particular for non-Arabic speaking expatriates as legal proceedings are in Arabic, and all documents must be translated to Arabic before submitting to the court. In addition, parties must be sensitive to local customs and procedures and be aware that their rights and defenses, which if not timely asserted, may be waived. We have extensive employment litigation experience in the UAE courts, and can represent you in filing or defending against an employment claim.

We can assist in all facets of the employment relationship, from drafting the employment agreements and related contracts, to assisting in dispute resolution (whether in litigation or arbitration), including:

• Compensation (salary, allowances, bonuses, and end-of-service benefits)
• Wrongful termination
• Protection of intellectual property (trade secrets, assignment of copyrighted works, etc.)
• Non-compete and non-solicitation covenants
• Passport confiscation
• Ministry of Labour and employer ban issues
• Visa processing
• Employee background checks and due diligence, hiring, disciplinary action and warnings, and termination
• Drafting employee handbooks/policies, addressing issues such as electronic communications and privacy policies