Employment contract UAE What You must need to know

Employment contract in the United Arab Emirates (UAE) have particularities that you should know if you are considering working in this country, some aspects are key. Likewise, in the Dubai employment contract, when you accept a position, you will in fact receive a formal contract in which the conditions of employment, salary and fringe benefits are established.

In this article we talk about what you should know if you want to work in UAE, sample employment contract and different topics about it.

UAE Employment Contract Renewal & Expiration

Renewal and expiration of employment contract in the United Arab Emirates (UAE) are crucial aspects for foreign workers wishing to work and reside in this country. Here is a brief guide:

UAE Work Visa:

• The work visa is a legal document that allows visitors to work and live in the UAE.
• The visa is valid for up to three years and is processed through the General Directorate of Residence and Foreign Affairs (GDRFA) in the country.
• Unlike other visas, the application for the work visa begins after arrival in the country.

Renewal of Employment Contract:

• The employer may renew the employment contract for the period agreed between the parties, provided that the extension does not exceed 3 years.
• So, renewal involves updating the UAE bank account and is related to the signing of the employment contract, the bank and the telephone company.
• Besides, there are different rules depending on the duration of the contract.
• So, the fixed-term contract may be renewed for the agreed period. Meanwhile, the contract of less than one year will have an automatic renewal, but, the fourth renewal must not be less than one year.

Expiration of the Contract:

• Upon expiration of the employment contract in the UAE, the employer must cancel the visa within 30 days.
• Non-European workers must leave the country within 30 days of cancellation.

This work visa in the UAE offers exciting opportunities, so it is important to be aware of the labor policies and procedures for renewing or terminating the contract.

Notice Periods in UAE

The Federal Labor Law governs the termination of an employment relationship in the United Arab Emirates (UAE). Below, I provide you with essential information on notice periods in this context:

Fixed Term Contracts:

• Employment contracts in the UAE may be for a fixed term.
• Also, these contracts have a specific term, which may not exceed 3 years.
• As well, the maximum renewal or extension period is three years, therefore, it cannot be extended beyond this period.

Abolition of Permanent Contracts:

• Under the old labor law, indefinite contracts were common. However, the new law no longer contemplates them.
• According to Article 68, it is now possible to enter into fixed term contracts.
• Also, these contracts may be renewed or extended after the expiration of the period, up to a maximum of 3 years.

Notice periods:

• In case of ordinary termination until 01.02.2023, the following notice periods must be observed:
  • Less than 5 years in the company: 30 days.
  • More than 5 years with the company: 60 days.
  • More than 10 years in the company: 90 days.

Adaptation to the New Labor Law:

• The new labor law came into force on 02.02.2022.
• Persons who entered into contracts before this date must adapt them before 01.02.2023.
• Although some clauses of the old legislation may be retained, the new law introduces significant changes in matters such as dismissal and vacations.

In summary, notice periods vary according to the seniority of the employee and the type of contract.

Employer’s Obligations in Renewing Contracts

Labor contract renewal in the United Arab Emirates (UAE) is a crucial process for both employers and employees. Here are the specific obligations that fall on employers during this process:

Performance Evaluation:

• Before deciding on renewal, the employer must evaluate the employee’s performance and behavior on the job.
• This evaluation is essential to make an informed decision.

Notification of Renewal or Non-Renewal:

• The employer must notify the worker of its decision to renew or not renew the contract.
• Besides, he must give notice at least 15 days before the expiration date of the contract.
• So, to avoid misunderstandings, you must write the notice in writing.

Content of the New Contract:

• The employer must establish whether it is decided to renew:
  • The duration of the renewal.
  • The working conditions that will apply during this new period.
• Besides, these details must be included in the new employment contract to be signed by both parties.

Avoid circumventing Labor Benefits:

• Both parties must include these details in the new employment contract that will be signed.
• The employee has the right to receive all the benefits that correspond to him/her according to the law and the contract.

Legal Compliance:

• The employer must ensure compliance with labor laws related to the renewal.
• A well, timely notification and transparency are essential to avoid disputes.

Contract renewal in the UAE requires fair assessment, proper notifications and protection of the worker’s rights.

Types of Employment Contracts in the UAE

In the United Arab Emirates (UAE), there are two main types of employment contracts in the private sector. Below, I will briefly describe them for you:

Limited Duration Contract:

• This type of contract has a specific term, although it can be renewed.
• Prior to the recent reforms, the employer established a maximum duration of four years, but has now reduced this duration to two years.
• So, depending on the agreed terms, at the end of the period, the parties may renew or terminate the contract.

Unlimited Duration Contract:

• In this case, there is no specific time limit for the contract.
• The employee and the employer may continue the employment relationship indefinitely.
• Termination of this contract is subject to labor laws and specific circumstances.

It is important for workers and employers to understand the differences between these types of contracts and to comply with labor regulations in the UAE.

Limited Contract in UAE

In the United Arab Emirates (UAE), the limited duration employment contract is an agreement between the employer and employee that has a specific term. Here are the key aspects of this type of contract:

Specific Duration:

• In a limited duration contract, the parties agree on a specific term for the employment relationship.
• The maximum duration allowed for these contracts used to be four years, but has now been reduced to two years.

Renewal and Extension:

• The contract may renew or extend at the end of the initial period.
• Extension refers to the extension of its duration under the same conditions, without changing other elements of the contract.

Notification of Renewal:

• The employee must be notified by the employer at least 15 days in advance before the expiration date of the contract if it is planned to renew.
• This notice may be in writing and must be transparent.

Early Termination:

• The employee’s decision to resign before the end of the contract constitutes a breach.
• For limited contracts, the employer can stipulate a notice period within the agreement, which generally ranges from 1 to 3 months.

Employer Responsibilities:

• The employer must comply with labor regulations and ensure that the contract complies with the law.
• In addition, the employer is responsible for sponsoring the employee with the local authorities, which implies a relationship beyond the employment relationship.

The limited duration contract in the UAE provides a specific time structure and requires both parties to comply with the obligations set forth.

Unlimited Contract in UAE

An unlimited time employment contract in the United Arab Emirates (UAE) is an employment agreement that lacks a specific end date. Below, I provide you with a brief description of this type of contract:

1. Flexibility and Permanence:

• • An unlimited contract has a start date, but no end date. The contract may renew or extend at the end of the initial period.
  • The contract can be terminated when there is a signed agreement between the employer and the employee with 30 days’ notice.
  • Employers and employees choose this type of contract when seeking greater flexibility and job stability.

2. Employee Benefits:

• • Employees prefer open-ended contracts to limited-term contracts.
  • Long-term employees perceive them as more permanent, they offer greater job security and allow for more long-term planning.

3. Requirements and Qualifications:

• • According to the UAE Labor Law, an unlimited duration employment contract must specify at least, the following:
    • The date of commencement of work.
    • The amount of remuneration.
  • Employees may apply for an unlimited term contract after commencing their sixth year of employment.

Unlimited employment contracts in the UAE are a more flexible and stable option for employees, providing security and allowing for a long term employment relationship.

Probationary Periods: Their Role in Contract Renewal Dynamics

The probationary period in employment contracts plays a crucial role in the dynamics of contract renewal. Here I explain the key aspects:

1. What is the probationary period?

During the probationary period, the company and the employee mutually evaluate their employment relationship. The employee evaluates whether the conditions meet his or her expectations, while the company verifies the employee is suited to the position. In this way, if either party is not satisfied, it can terminate the contract without justification or compensation.

2. Duration of the trial period:

• • Temporary contracts: cannot exceed one month, unless the collective bargaining agreement provides otherwise.
    • Qualified technicians: Maximum six months.
    • Other workers: Maximum two months.
    • Unqualified technicians in companies with less than 25 workers: Maximum three months.

3. Renewal of contracts and probationary period:

• • If the worker has already performed the same job previously, they may not establish a new trial period when renewing the contract.
  • The seniority calculation considers the time worked during the probationary period.

This trial period allows both parties to evaluate the employment relationship before making a long-term commitment. Thus, it is essential to understand its implications when renewing contracts.

What is the difference between a limited and unlimited contract

The difference between a limited and an unlimited contract lies in the restrictions and scope that each type of contract imposes. Below, the key characteristics:

1. Limited Contract:

A limited contract establishes specific and temporary conditions for the labor or commercial relationship:

• • • Duration: It has a defined period, like a fixed-term contract.
    • Restrictions: May include limits on time, resources or activities.

Examples:

• • • Fixed-term employment contract: Valid for a specific period (e.g., 6 months).
    • Limited data phone plan: Restricts the amount of data that can be used per month.

2. Unlimited Contract:

An unlimited contract has no specific time or usage restrictions.

• Features:
  • Permanence: No pre-determined end date.
  • Freedom: Allows flexibility and unrestricted use within legal limits.
  • Fixed-term employment contract: it is valid for a specific period of time (for example, 6 months).
  • Unlimited data plan: Offers unrestricted use within network capacity.

3. Limited and Unlimited Liability (in the business context):

• • Limited Liability: The owners of a business are not personally liable for the debts of the business. The personal assets are protected by them.
  • Unlimited Liability: Owners are personally liable for the debts of the business and may lose their personal assets.

Limited contracts have time or use restrictions, while unlimited contracts offer more flexibility. However, the choice depends on the specific circumstances and needs.

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