Landing a new job doesn’t automatically mean you’re employed for good. Most employers in the UAE include a ‘Probation Period’ in their employment contracts. But what does it mean and what is the probation period in the UAE?
Employment contracts have many important terms and UAE compliance is important. One of the most crucial is the probation period. Both employees and employers must understand what the term entails to ensure they are complying with the UAE laws. It can bear many consequences for both and staying on top of it guarantees a good start for a new hire.
What is a Probation Period?
Let’s first look at the definition of a probation period. It’s the period at the start of employment that you, the employer, can use to evaluate how well a new hire will fit into the role. If everything goes well and both parties are happy, the official employment contract can begin. In a way, you could view the probation period as a trial run.
For example, you can hire an employee who starts working in June. The probation period could be four months. During this time, the employee is not yet officially hired but you can test to see if they are the right fit. If everything goes well, the official employment contract can start after the probation period ends.
Recent developments in the UAE
As you know, laws around the world are constantly changing and being updated. The UAE labour law is no exception. The most recent changes to the probation period in the UAE took place earlier in 2022 where they changed the length of the probation period and the way termination works. Let’s take a closer look…
What are the Probation Period Rules in the UAE?
Probation period rules in the UAE are set by the Ministry of Labour and both you and your employees should have a sound understanding of them before venturing into new contracts. It guarantees that both parties are protected and know your rights under the UAE labour law.
Here are the UAE probation period rules and regulations:
Rule #1: The maximum period of probation under any organization is Six months in the UAE
According to the ministry of labor, an employee can be kept under a probation period for a maximum of six months. Some companies also choose to have a shorter probation period of about two or three months. It is prohibited by law to extend the probation period of an employee beyond six months.
Rule #2: A Company is entitled to terminate your employment without notice during the probation period
If you are deemed as unqualified for the job position you are currently enrolled during the probation period, an employee has every right to terminate your services without providing any severance pay and compensation benefits.
Rule #3: As an employee, you have the right to resign at any time during your probation period
The employee has the right to resign at any point during the probation period. It is important to make it a point for the employee to carefully read the contract as some companies might keep a clause that you have to serve a notice period even during the probation period. The duration of this notice depends upon what is mentioned in the contract.
Rule #4: An employee is not entitled to any paid sick leaves during the probation period
This is an important rule for all of you out there. An employee is not entitled to any paid sick leaves during the probation period according to the ministry of labor. So, if the employee is genuinely unwell, the best suggestion is to speak to your employer about it.
Rule #5 You are entitled to gratuity only after completing 1 year of service at your company
This is self-explanatory, but according to the ministry of labor, you are entitled to gratuity only after completing a year of service at the company you are currently employed with. You are not paid gratuity if you leave during the probation period. If a company hires you as a permanent employee after the probation period and you complete an entire year of service, you are entitled to the end of service remuneration in which the probation period is included as well.
Difference between Unlimited Contract vs Limited Contracts
There are two types of employment contracts. In the UAE, an employee could work under:
- A limited contract – an employment contract that determines the start and end date of employment. Limited contracts can be for a maximum duration of two years. You can end it with a notice of termination, but it also automatically expires at the predetermined date.
- An unlimited contract – a more flexible, open-ended employment contract. There is no given end date but it can be terminated with mutual consent or by serving notice.
Unlimited contracts are more commonly used by organizations in the UAE, but both types of contracts come with a probation period.
Period of probation in the UAE
Article 37 of the Federal Labour Law No. 8 of 1980 states that the official probation period cannot exceed six months. Some companies in the region opt for a short probation period. If your probation period is more than six months, your organization will be held accountable and the employee could seek compensation. If you, as an employer, ask your employees to extend the probation period beyond six months, you are deemed to be breaking the law.
Termination without notice during the probation period
Article 120 of the UAE Labour Law determines the termination of employment during the probation period. Previously, employees on probation could face termination without more than one day’s notice. However, the new law states that all employees on probation must be given 14 days’ notice.
But what if the employee wants to leave? The exact number of notice days depends on the employee’s intent. According to the law:
- If the employee intends to leave the UAE, they need to give you 14 days notice.
- If the employee is moving to a new job within the UAE, they must give 30 days’ notice.
Employees can also terminate or leave the employer under a few exceptional situations. These are outlined in Article No. 121 of the Labour Law. According to the clause, an employee can leave without notice if the employer breaches its obligations towards the employee or if there is an assault on the employee by the employer or a legal representative.
Resignation during the probation period in the UAE
If the employee wishes to terminate the contract during the probation period, the employer might be entitled to some level of compensation. As mentioned above, the notice period is longer if the employee resigns to move to a new job. On top of this, the new employer would be obliged to compensate the previous employer for any costs incurred. For example, visa fees.
Employees should also keep in mind that if they intend to leave the UAE but then return within three months to start new employment, the new employer might be obliged to compensate the previous employer.
Do note that employers cannot ask employees to pay for any costs you have already incurred.
Taking time off during the probation period
While employees have the right to sick days and paid time off in the UAE, these rules do not apply to the probation period. An employee is not entitled to paid sick leave during their probation period.
If an employee falls ill, they should speak to you, the employer, to discuss how you want to approach the matter.
Gratuity after the probation period
According to the Labour Law, an employee is only entitled to gratuity after completing a year of service at an organization. You do not need to pay your employees gratuity if they leave during their probation period. If your employee is a permanent one (after their probation period) and has completed an entire year of service, they are entitled to the end-of-service remuneration in which the probation period is included as well.
Understanding Employment Contracts in UAE
The above guide helps employers understand the main rules about the probation period in the UAE.
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