EMPLOYMENT CONTRACTS IN THE UAE

An employment contract in the UAE is a legal agreement that binds an employer and an employee. It outlines important details like job title, pay, start date, and the terms of the working relationship. Essentially, every job in the UAE is governed by an employment contract.

As we step into 2023, there are significant changes happening in the job market in the UAE. Whether you're an employee or an employer, it's crucial to understand the rules and requirements to stay relevant. We're here to simplify the often complex world of UAE employment contracts for you. Let's dive in!

There are two main types of employment contracts in the UAE: Limited and Unlimited. Here's what you need to know:

Limited Contract

This contract has a set duration and is typically for temporary or project-specific roles. It usually lasts up to three years.

Unlimited Contract

This type of contract doesn't have an end date, making it suitable for permanent positions or long-term projects. However, it may not apply to all private-sector jobs as of 2023.

When it comes to ending a contract, there are rules for both employers and employees:

Termination of Contract

 Employers must follow UAE Labor law and provide notice, usually 1-3 months in advance. Some situations might allow for immediate termination.

Employees also need to give 1-3 months' notice. If they leave without notice, they may need to pay compensation, usually half of three months' pay.

Contract Renewal & Expiration

In the UAE, both employers and employees have options when a contract expires:

1. Renew the existing contract for a longer term.

2. Extend the contract by signing a written variation agreement.

3. Choose not to renew, letting the contract end.

Employers can renew or extend contracts multiple times as they see fit.

Whether you're an employee or an employer ending a contract, a written notice must be submitted 30-90 days in advance. If an employer wants to skip the notice period, they may need to pay the full notice period's worth of compensation.

Employees in the UAE usually go through a probationary period at the beginning of their contract. This period typically lasts 3-6 months, allowing employers to evaluate performance. During probation, specific rules apply, including a maximum six-month probation period and the need for written notice before termination.

End-of-Service Gratuity Calculation

Gratuity is an important benefit for employees in the UAE. The calculation depends on who ends the contract:

If the employer terminates the contract, gratuity is calculated based on the number of years worked.

If the employee resigns, gratuity is also calculated based on their years of service.

Your employment contract should include key details based on its type: Limited or Unlimited. Here's a checklist for each:

Limited Contract: Includes details like the contract's expiry date, start date, job nature, workplace, and compensation.

Unlimited Contract: Contains information about the contract's start date, job type, workplace, compensation, and potential non-compete clauses.

Non-compete clauses are common in UAE employment contracts. They restrict employees from working for a similar company after leaving their current job. The legality of these clauses varies, but they must meet specific requirements to be valid.

Aside from full-time work, part-time, temporary, remote, flexible, and job-sharing arrangements are widely accepted.