When working in the UAE, it is important to have an understanding of the Labour Law and its regulations to maintain a good relationship with your employer and ensure that your rights are protected. The UAE Labour Law, also known as Federal Law No. (8) of 1980, comes under the Ministry of Labour and Social Affairs and the Ministry of Human Resources and Emiratisation (MoHRE). This article delves into some of the most important aspects of Labour Law in the UAE and its implications for you and your employer.

The Labour Law is a federal law that applies to all workers in the United Arab Emirates (UAE) and is enforced by the Ministry of Labour and Social Affairs. Litigation is decided by federal and local courts in the UAE. The Labour Law is considered the leading labour law in the UAE and has the most influential power. It applies to all UAE workers, including foreigners and nationals, and it should be enforced and respected in accordance with Article 3 of the Law. Many free zones have their own labour laws.

Employment Contracts: An employer has to know that the concerned Labour Law defines an employment contract as an agreement, with a determined or undetermined term i.e., time till which the contract continues to operate, where a worker agrees to work under the employer for the payment of wage committed to by the employer. However, these provisions will not be applicable to employees and workers of the Federal Government, members of the armed forces, police and security, domestic help, workers in farms or pasture, except the ones working in agricultural institutions.

The Law, under Article 36, lists out the essential ingredients of the Employment Contracts including the date of conclusion of the contract, date from when the work begins, the type, location and duration of the term, if it is for a determined period, and the wages. Even if the term is determined, the term of the contract cannot be more than 4 years.

If the said period elapses and both parties mutually act to continue the operation, the same will be deemed impliedly extended. If the term is not mentioned, then that implies that the term is for an undetermined period.

The Law also provides for probation periods and training contracts. The probation period, limited to one period of probation, shall always be less than or equal to 6 months. However, employees on probation can be terminated without notice or benefits. The Law on training contracts, however, makes it mandatory to be in writing lest it becomes void. The said contract should have the identities of the parties listed, method of the training, duration, phases in the training and the subject listed. Individuals employed under this are entitled to wages, which should not be less than the minimum set for similar work. If the trainee is a minor, they need to be represented by someone else and also needs to undergo a medical check-up.

Furthermore, an employer who has employed more than five workers need to maintain a personal file for each worker and prepare a leave card for each of them. Additional specific information is needed if 15 or more people are employed.

Payment: At the outset, it is important to understand that there are two types of wage under the Law, ‘basic wage' and ‘total wage'. Basic Wage is the salary of an employee excluding all allowances and is specified in the Labour contract. The total wage, on the other hand, is an employee's salary including all allowances, such as accommodations and travel allowances. It is important to note your basic and total wages, since the end-of-service gratuity is calculated based on the basic salary and not the total salary. Employers must register with the Ministry of Human Resources and Emiratisation (MoHRE) and then subscribe to the UAE electronic salary transfer system known as the Wage Protection System (WPS) to guarantee timely payment of wages.

Since 2009, all institutions registered with the Ministry of Labour and Social Affairs are required to make wage payments to their workers through the Wages Protection System, involving the transfer of sums through a few selected financial institutions which are authorized and regulated by the Government. Also, it is important to note that there shall be no deductions in salary, except under conditions mentioned under Article 60 of the Law, which includes fines, instalments legally payable, contribution to saving fund and so on. Loss damage or destruction caused by the worker may also be a reason for the deduction.

Technically, there is no minimum wage prescribed in the UAE Law. However, please note that workers earning a monthly salary of less than AED 4,000 won't be able to sponsor his wife or children to reside in the state

Work Timings and Leaves:  The maximum amount of work hours for an adult worker is set at 8 hours a day, or 48 hours a week. An additional hour may be added to the daily work hours in specified sectors with the prior permission of the Labour Department. Furthermore, there are provisions for limiting the work hours of harmful or strenuous workers. Article 65 of the labour Law states that the time a worker moves to the place of residence or work is not calculated during working hours. This circular is in accordance with the provisions of the Federal Labour Law on reduced official working hours during Ramadan.

The Decree introduces a new Article 74 of the Labour Code, which provides for a maximum of five paid parental leaves. Furthermore, annual leaves are granted as per Article 75, which mandates that an annual leave of 2 days per month, if the period of working ranges across 6 months to a maximum of one year, and 30 days a year if the service is to exceed one year. The worker is entitled to basic wage and housing allowance, if any, on the days of the annual leave. Furthermore, holidays by Law or by agreement or sick leaves, are included within the annual leaves. However, if the illness is caused by the workers own behaviour, such as consumption of alcohol, no wages shall be entitled under the Law.

Article 83 of the UAE Labour Code states that workers are not entitled to paid sick leave or probationary period at first. In addition, the UAE Labour Law gives female workers the right to take up to 45 days of maternity leave, upon completion of one year of work. Post the outbreak of COVID-19, it must be noted that employers are not permitted to abruptly terminate employment contracts or force employees to take unpaid leave.

Penalty for Employees in the UAE That Don’t Pay Salaries on Time

If two months pass without the employees being paid, the company will be fined 50,000 Dirhams for each employee it does not pay. In the event of multiple employee protests, administrative penalties can range up to a maximum fine of 50,000 Dirhams Per employee. Companies with fewer than 100 employees can get bans on work permits, fines or court referrals. The Government can track payments through the wage system mentioned above, and hence, the Government has the means to know the defaults in payments.  If a worker's wages are paid more than 10 days after the due date, the government will stop issuing additional work permits to the company from the 16th day of the delay, or if they have to pay their wages for more than 10 days.

In 2018, the Ministry had announced an insurance policy called Taa-meen, which requires new recruits to either be covered via a bank guarantee or 3000 Dirhams or an insurance cover which will typically cost about 120 Dirhams for two years. In the case of Bankruptcy, this policy gets the employees a maximum coverage of 20,000 AED.

If you have any concerns or complaints about salary, employees can contact the Ministry of Personnel and Emiratisation (MoHRE) and report salary complaints. You can lodge a complaint with about employer with the Ministry of Labour, stating that you have not been paid your salary.