Labour matters in the UAE are governed by Federal Law No. 8 of 1980 Regulating Labour Relations as amended by Federal Laws No. 24 of 1981, No.15 of 1985 and No.12 of 1986 (the “Law”). There are special labour related regulations applicable in some of the free zones in the UAE, such as the Jebel Ali Free Zone.
According to Article 3 of the Law, the Law applies to all staff and employees working in the UAE, whether UAE nationals or expatriates. However, there are certain categories of individuals who are exempted from the Law as listed below:
- Staff and workers employed by the federal government, government departments of the member emirates, the
- municipalities, public bodies, federal and local public institutions and those staff and workers employed in federal and local governmental projects.
- Members of the armed forces, police and security units.
- Domestic servants.
- Agricultural workers and persons engaged in grazing (this exemption does not include persons who are employed in corporations which process agricultural products and/or those who are permanently engaged in the operation or repair of machines required for agriculture).
A partner in a business is not considered an employee and is therefore not required to obtain a labour card from the UAE
Ministry of Labour and Social Affairs (the “Ministry”), as outlined below. For immigration purposes therefore, a foreign partner will be sponsored by the entity he is a partner in, as an investor rather than as an employee and will deal with the immigration authorities directly rather than through the Labour Office, provided that his name is on the business entity’s licence and subject to a minimum investment requirement in the entity. However, if the partner holds an employee position additional to his partner status, he will be considered as an employee for the work he is doing in the company.
On the other hand, employees working on a commission basis are considered as employees even if they are partners in the entity they are working for.
Although the Law stipulates that all employees other than the ones listed above are subject to it, in practice employees in the free zones, such as the Jebel Ali Free Zone and the Dubai Airport Free Zone, are subject to the rules and regulations of the free zone concerned and maintain their own employment contracts. However, as mentioned above, the Law will still apply and the provisions in the employment contract must be in accordance with the Law. Moreover, it should be noted that free zone employees are sponsored by the relevant free zones and not by their employers.
Such employees are seconded by the free zones to companies established in the free zones in return for, amongst other things, a bank guarantee which is required to secure the employees’ dues and any end of service benefits which may be payable on termination of their employment contracts. However, although the free zones are technically the employees’ sponsor, the employees do maintain their right of action against their employers before the courts.
In addition, as will be discussed in section 19 below, when a new business is established it has to be registered with the Ministry prior to the employment of staff.. The free zones authority sponsoring the employees, refer directly to the immigration authorities and not to the Ministry. This is not to say that disputes between employees and their employers in the free zones will not first be heard at the Ministry. The Ministry may entertain such claims and there is nothing as yet under UAE law precluding that unless the Free Zone Authority has a special ordinance governing the relationship between employee and employer.
The Law covers all aspects of the employer-employee relationship (Chapter 12), including matters related to employment contracts, restrictions on the employment of juveniles and women, maintenance of records and files, wages, working hours, leave, safety and protection of employees, medical and social care, codes of discipline, termination of employment contracts, end of service benefits, compensation for occupational diseases, labour inspections, penalties and employment related accidents, injuries and death.
The UAE does not allow the formation of trade unions.
The Law is federal and is therefore applicable to all the emirates of the federation. It is enforced by the Ministry. Labour related litigation is adjudicated by the federal and local courts of the UAE, however, all disputes relating to labour matters must first be referred to the Ministry. If either of the parties involved (employer or employee) is unhappy with the Ministry’s decision and the matter cannot be settled amicably, the dispute may then be referred by the Ministry to court, within two weeks from the date in which the complaint was filed, after which either party may revert to the court directly.
In order to employ any expatriate employee in the UAE, an application must be made to the Ministry. The application has to be approved by the Ministry prior to the employee entering the UAE. It should be noted that new businesses are required to register or open a file with the Ministry before they can employ staff (as will be discussed in section 19). In addition to obtaining the Ministry’s approval to employ non-UAE nationals, certain immigration procedures need to be followed as explained below.
There is also a requirement for certain employers to submit to the Ministry a bank guarantee as security for end of services benefits and repatriation costs related to their employees. This procedure is also applicable to employers in most of the free zones in the UAE.
Where the intended employee is a UAE national, an employment contract may be entered into at any time. Employment contracts for non-nationals must be drawn in the format approved by the Ministry on an application made by the employer.
Employment contracts for national employees need not, however, be in writing and the terms and conditions of employment may be proved by any means of proof admissible by law. A labour permit for an expatriate employee will not be issued by the Ministry unless a formal written labour contract is filed with the Ministry.
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