Labour Contract in UAE

What is a UAE Labour Contract?

A UAE labour contract is a legally binding agreement between an employer and an employee that outlines the terms and conditions of employment. It ensures clarity regarding job roles, salaries, benefits, and other key employment conditions. The contract is regulated under UAE labour laws and must be registered with the Ministry of Human Resources and Emiratisation (MoHRE).

Definition and Purpose

A labour contract serves as the foundation of the employer-employee relationship in the UAE. It defines the rights and obligations of both parties and ensures compliance with labour regulations. This document provides job security for employees while giving employers legal protection in case of disputes. Having a proper contract is also essential when individuals go through business setup in Dubai, as companies must comply with employment laws when hiring staff.

Key Elements Included in a Labour Contract

A standard UAE labour contract includes:

• Job Title and Description: Clearly defines the employee’s role and responsibilities.
• Salary and Allowances: Specifies basic salary, additional allowances (such as housing and transportation), and payment frequency.
• Work Hours and Overtime Rules: States official working hours and overtime compensation.
• Contract Type: Identifies whether it is a limited (fixed-term) or unlimited (open-ended) contract.
• Probation Period: Defines the trial period during which employment can be terminated with reduced notice.
• Leave Entitlements: Includes annual leave, sick leave, maternity leave, and public holidays.
• End-of-Service Benefits: Covers gratuity payments and other final settlement terms.
• Termination Conditions: Lists valid reasons for contract termination by either party.
• Non-Compete Clauses: Restricts employees from working with competitors under certain conditions after leaving the company.

Each contract must be drafted in Arabic and English (or any other applicable language) and approved by the MoHRE to be legally valid.

Limited vs. Unlimited Contracts in the UAE

What is a Limited (Fixed-Term) Contract?

A limited contract, also known as a fixed-term contract, is an employment agreement that specifies a defined duration, typically linked to a project or a predetermined period. Under this type of contract, the employee and employer agree on a start date and an end date. The contract automatically expires at the end of the agreed term unless both parties decide to renew it.

Limited contracts are commonly used in industries where work is project-based or seasonal. Employers favor this type of contract when they require employees for a specific timeframe, ensuring workforce flexibility.

Key characteristics of a limited contract include:

• A fixed duration, usually ranging from one to three years.
• Automatic termination at the end of the term unless renewed.
• A legal requirement for both parties to adhere to the agreed duration, with penalties applicable for early termination.

What is an Unlimited (Flexible) Contract?

An unlimited contract does not have a fixed expiry date and continues until either the employer or employee decides to terminate it, subject to proper notice periods. This type of contract is considered more flexible, allowing both parties to adapt to changing circumstances without being tied to a specific end date.

Unlimited contracts are commonly used for permanent employment, where an employer intends to retain staff for the long term. Employees on unlimited contracts generally have greater job stability and more flexibility in changing jobs compared to those on limited contracts.

Key features of an unlimited contract include:

• No fixed expiration date.
• Can be terminated by either party with notice as per UAE labour law.
• Suitable for employees in long-term or permanent roles.

Key Differences Between the Two

The choice between a limited and unlimited contract depends on the nature of employment and the expectations of both the employer and the employee.

Types of UAE Labour Contracts

Fixed-Term Contracts (Limited)

A fixed-term contract, also known as a limited contract, is an employment agreement with a specific duration. It clearly defines the start and end date of employment, and unless renewed, it expires automatically at the end of the agreed period.

These contracts are typically used for project-based, seasonal, or temporary work where an employer requires staff for a set timeframe. Employees working under fixed-term contracts are expected to complete the agreed period, and early termination may result in financial penalties for either party.

Flexible Contracts (Unlimited)

An unlimited contract does not have a defined end date and continues until terminated by either the employer or the employee. These contracts offer greater flexibility in terms of employment continuity and notice-based termination.

Employees on unlimited contracts can resign at any time with the required notice, and employers can terminate employment following the conditions outlined in UAE labour law. This type of contract is widely used for permanent job roles.

Part-Time, Full-Time, and Temporary Contracts

• Full-Time Contracts: Employees work a standard workweek as per UAE labour law (typically 8 hours per day, 48 hours per week).
• Part-Time Contracts: Employees work fewer hours than a full-time employee, with pro-rated benefits depending on the agreement. Part-time work is common among students, freelancers, and those seeking flexible employment arrangements.
• Temporary Contracts: These contracts apply to employees hired for a short-term assignment or specific project. They are similar to fixed-term contracts but generally have shorter durations.

Freelance Contracts

Freelance contracts allow individuals to work independently without being tied to a specific employer. Freelancers operate under a permit issued by the relevant UAE authority, and they are responsible for managing their own taxes, insurance, and compliance with regulations.

This type of contract is ideal for professionals offering specialized services, such as consultants, designers, writers, and IT specialists. Unlike traditional employment contracts, freelance contracts do not include benefits like paid leave or end-of-service gratuity.

To legally work as a freelancer in the UAE, individuals often obtain a professional license in Dubai, which allows them to offer their services legally without the need for a traditional employment contract. This setup is particularly popular among self-employed professionals looking for flexibility and independent career opportunities.

Job Sharing Contracts

Job sharing is a work arrangement where two employees share the responsibilities of one full-time position. Each employee works part-time under a structured agreement with the employer. This model is commonly used for roles that allow flexible work arrangements and is beneficial for those seeking work-life balance.

The UAE labour market offers a variety of employment contracts to cater to different job roles, industries, and employee preferences. Each type of contract has its own regulations, rights, and obligations, making it essential for employers and employees to understand their specific terms before entering into an agreement.

An option to include an English or another language translation for clarity. Any discrepancies between language versions will defer to the Arabic version as the legally binding document.

Probation Period and Notice Period Rules

Employers in the UAE can impose a probationary period of up to six months. During this period, employment can be terminated with a shorter notice period or immediate dismissal, depending on the circumstances. If an employee resigns during probation to join another employer, they may be required to serve a one-month notice and compensate their original employer for recruitment costs.

Notice periods for confirmed employees depend on the contract type but typically range from 30 to 90 days. Employers and employees must provide written notice before terminating an employment contract, except in cases of gross misconduct or legal violations.

Overtime Regulations and Work Hours

The standard working hours in the UAE are 8 hours per day and 48 hours per week. During Ramadan, Muslim employees work reduced hours—typically 6 hours per day.

Overtime rules include:

• Employees working beyond their standard hours are entitled to overtime pay.
• Overtime is compensated at 125% of the regular hourly rate, increasing to 150% for work conducted between 10:00 PM and 4:00 AM.
• Senior management and specialized professionals may be exempt from overtime pay based on their contract terms.

Rest Days and Public Holidays

Employees in the UAE are entitled to at least one rest day per week, usually on Friday, unless specified otherwise. In addition, all employees are granted paid public holidays as per UAE law, including New Year’s Day, Eid holidays, and National Day. If an employee is required to work on a public holiday, they are entitled to either compensatory time off or additional pay.

Currency and Salary Payment Requirements

UAE labour law mandates that salaries must be paid in UAE dirhams (AED) through the Wage Protection System (WPS), a government-regulated payment system ensuring transparency. Employers must adhere to salary payment deadlines, and delays may result in penalties or legal action.

End-of-Service Gratuity and Benefits

Employees who complete at least one year of continuous service in the UAE are entitled to an end-of-service gratuity upon contract termination. The gratuity is calculated based on the employee’s basic salary and length of service, as follows:

• 21 days’ basic salary per year for the first five years of service.
• 30 days’ basic salary per year for service beyond five years.

Gratuity is not payable in cases of termination due to gross misconduct. Employers must settle gratuity and final payments within 14 days of the employee’s last working day.

These regulations ensure fair working conditions and protect employees’ rights in the UAE labour market.

Non-Compete Clauses and Employee Rights

When Are Non-Compete Clauses Enforced?

Non-compete clauses in UAE labour contracts restrict employees from working for a competing business or starting a similar enterprise after leaving their employer. These clauses are legally enforceable under certain conditions, provided they are:

• Limited in Scope – The restriction must be specific to the industry and job function relevant to the employee’s role.
• Limited in Duration – The restriction period should not exceed two years from the employee’s last working day.
• Limited in Geography – The restriction must only apply within a reasonable geographic area where the employer operates.

For a non-compete clause to be legally valid, it must be explicitly stated in the employment contract and agreed upon by both parties. Employers cannot impose unreasonable or overly broad restrictions that prevent an individual from pursuing employment opportunities.

How to Challenge Unfair Contract Terms

Employees who believe that a non-compete clause is unfair or excessively restrictive can challenge it through legal means. Possible actions include:

• Filing a Complaint with MoHRE – Employees can submit a dispute to the Ministry of Human Resources and Emiratisation (MoHRE), which will review the terms for fairness and compliance with UAE labour law.
• Seeking a Court Ruling – If a dispute escalates, employees can take legal action in UAE courts to challenge the enforceability of a non-compete clause. The burden of proof lies with the employer to demonstrate that the restriction is justified.
• Negotiating a Waiver – In some cases, an employer may agree to waive or modify a non-compete clause, especially if the employee’s new role does not pose a direct competitive threat.

Non-compete clauses are designed to protect an employer’s business interests, but they must be reasonable and proportionate to be legally enforceable. Employees should carefully review contract terms before signing to ensure they do not face unnecessary career limitations.

UAE Labour Contract Termination Rules

Voluntary Termination: Employee Resignation

Employees in the UAE can resign from their job at any time, provided they adhere to the notice period specified in their employment contract. The standard notice period ranges from 30 to 90 days, depending on the agreement between the employer and the employee.

If an employee resigns during the probation period, they may be required to serve a notice period of 14 days or one month if they plan to join another UAE employer. Failure to comply with the notice period can result in financial penalties or legal consequences.

Employees who complete at least one year of continuous service are entitled to end-of-service benefits, including gratuity, based on their length of service.

Employer-Initiated Termination: Legal Grounds

Employers in the UAE can terminate an employee’s contract under specific legal grounds, including:

• Performance Issues – If an employee fails to meet job expectations despite receiving warnings.
• Misconduct – Gross misconduct, including fraud, harassment, or violating company policies, can lead to immediate termination without notice or gratuity.
• Redundancy – If a company undergoes restructuring or downsizing, employees may be dismissed with appropriate compensation.

Employers must provide written notice before terminating an employee, except in cases of serious misconduct where immediate dismissal is permitted under UAE labour law.

Early Contract Termination and Compensation

Both employees and employers can terminate a fixed-term contract before its expiry, but compensation may be required. If an employer terminates an employee without a valid reason, they may need to compensate the employee for the remaining contract duration or provide alternative compensation as per the contract terms.

Similarly, if an employee resigns before completing their contract, they may be required to compensate the employer for recruitment and visa costs, unless otherwise agreed upon.

What Happens After Termination?

Once an employment contract is terminated, employees must settle all dues and complete exit procedures, which may include:

• Final Settlement – Employers must clear all outstanding salaries, leave encashment, and gratuity payments within 14 days.
• Visa Cancellation – The employer is responsible for canceling the employee’s work visa, after which the individual has a grace period to find new employment or leave the UAE.
• Employment Ban Considerations – In certain cases, employees who resign or are terminated before completing their contract may face a labour ban, depending on their visa type and employment history.

Understanding contract termination rules helps employees and employers navigate the process smoothly while ensuring compliance with UAE labour laws.

How to Check Your UAE Labour Contract Online?

Employees in the UAE can check their labour contract details online through official government platforms. The Ministry of Human Resources and Emiratisation (MoHRE) provides multiple channels for employees to verify their contracts, ensuring transparency and legal compliance.

Via MoHRE Website

1. Visit the official MoHRE website (https://www.mohre.gov.ae).
2. Navigate to the "Services" section and select "Enquire About Labour Contract."
3. Enter your Emirates ID number, labour card number, or passport details to retrieve the contract.
4. Review the contract details, including salary, job title, and employment terms.

Via MoHRE Mobile App

1. Download the MoHRE app from the Apple App Store or Google Play Store.
2. Register or log in using your Emirates ID or UAE Pass credentials.
3. Access the "My Contract" section to view and download your labour contract.

Through Tawjeeh Centers

Employees who prefer in-person assistance can visit a Tawjeeh Center, which provides government-authorized labour services. To check a labour contract at a Tawjeeh center:

1. Bring your passport copy, Emirates ID, or labour card number.
2. Request a printout or verification of your contract details.
3. A Tawjeeh representative will provide the necessary information or guide you on further steps if discrepancies are found.

Checking your labour contract regularly ensures that your employment terms align with the registered agreement, protecting your rights as an employee in the UAE.

How to Obtain a UAE Labour Contract?

Employees in the UAE must have a formal labour contract registered with the Ministry of Human Resources and Emiratisation (MoHRE). The process of obtaining a labour contract involves both the employer and the employee, ensuring that employment terms comply with UAE labour laws.

An essential step for employees, especially expatriates, is to open bank accounts in the UAE, as salary payments are typically processed through local banks under the Wage Protection System (WPS). Employers often require employees to have a local bank account to facilitate salary transactions.

Step-by-Step Guide for New Employees

1. Job Offer and Agreement – The employer provides a formal job offer outlining salary, benefits, and working conditions. The employee must review and accept the offer before proceeding.
2. Work Permit and Entry Visa – Once the offer is accepted, the employer applies for a work permit and entry visa for the employee. This step is essential for expatriates moving to the UAE for employment.
3. Medical Examination and Emirates ID Registration – Employees must undergo a medical fitness test and apply for an Emirates ID, which is required for contract registration.
4. Labour Contract Signing – The employer prepares an official UAE labour contract, which must be signed by both parties. The contract is then submitted to MoHRE for approval.
5. Contract Approval and Work Visa Issuance – Once the contract is approved, MoHRE issues the final work permit and residence visa, allowing the employee to legally work in the UAE.

Employer Responsibilities in Contract Registration

• Employers must ensure that all labour contracts are registered with MoHRE within 14 days of the employee’s arrival in the UAE or within 30 days for local hires.
• Any contract amendments must be formally documented and mutually agreed upon by both the employer and employee.
• Employers are required to provide employees with a copy of the signed and registered contract for reference.
• All contract terms must align with UAE labour laws, and employers cannot impose additional terms that contradict legal regulations.

A properly registered labour contract protects both employees and employers, ensuring transparency and compliance with UAE labour laws.

FAQs About UAE Labour Contracts

Can an employer change my contract terms without my consent?

No, an employer cannot unilaterally change the terms of your labour contract without your written consent. Any modifications to salary, job title, working hours, or other key terms must be agreed upon by both parties and formally updated in the contract. If an employer attempts to enforce changes without your approval, you can file a complaint with the Ministry of Human Resources and Emiratisation (MoHRE).

What should I do if my employer refuses to give me a contract?

Employers in the UAE are legally required to provide employees with a copy of their signed and registered labour contract. If your employer refuses to issue the document, you can check your contract online via the MoHRE website or mobile app. If it is not registered, you should report the issue to MoHRE or visit a Tawjeeh Center to seek assistance.

How can I report labour contract violations?

Employees who experience contract violations, such as non-payment of salary, unfair termination, or breach of employment terms, can file a complaint through the following channels:

• MoHRE Mobile App – Register a complaint through the app.
• Labour Call Center (800 60) – Speak with a MoHRE representative.
• Tawjeeh Centers – Visit a center for in-person assistance.

MoHRE will investigate the complaint and mediate between the employee and employer. If necessary, the case may be escalated to a labour court.

What happens if I work without a labour contract?

Working without a valid labour contract is illegal in the UAE. Employees without a registered contract may face visa cancellation, fines, deportation, or lack of legal protection in case of disputes. Employers who hire workers without official contracts can also be penalized, facing fines and potential business restrictions.

To ensure compliance, employees should always verify that their labour contract is properly registered with MoHRE and request a copy for their records.