Employment contracts in the UAE differ based on the type of company, nature of work, and duration of employment. You need a contract when you start working in the UAE. They are a quintessential part of Human Resources. As an HR professional, knowing the ins and outs of employment contracts is essential.
What are employment contracts in UAE?
Employment contracts are a vital part of work in the UAE. The document sets out the terms and conditions between the employee and the employer. They outline things such as the duration of the work, the salary, and the specific requirements the employee has to fulfill in terms of duties. The document also is proof that the person is hired and has a reason to stay in the region, as well as proof that the employer is making all the necessary payments.
Working without an employment contract in the UAE can be detrimental for both employees and employers. The worker could lose their right to stay in the country. Businesses that employ employees without contracts will be fined and could lose any business licenses they hold.
The main types of employment contracts in the UAE
As mentioned, the UAE employment contracts will either be public sector or private sector contracts.
Private sector companies are common and with them, you’ll be working with a specific private sector business. These could be small or large businesses, as well as international companies. You would be creating a contract directly with the company based on your talents and their needs.
Public sector organizations, on the other hand, are governmental organizations. You’ll create the employment contract directly with the governmental organization.
Differences in Private & Public Sector work arrangements
The terms and conditions of the employment contract depend on whether you are working in the private sector or the public sector.
Public sector employment contracts
Public sector companies have four different types of employment contracts in the UAE. The contract types and terms are set in as per the Cabinet Decision No. 13 of 2012, Executive Rules for Decree under Law No. 11 of 2008, and Articles 9 to 16.
For public sector companies, there are four different types of employment contracts:
- Full-time employment contract
- Part-time employment contract
- Temporary contract
- Special Contract
- Full-Time Contracts: Under this contract, the employee works in the concerned position full-time and receives the total salary and allowances allocated to the position. This contract is like any other full-term employment contract and the employee is expected to deliver services to the company for full working days or hours as specified.
- Part-Time Contracts: Under this contract, the employee is expected to work limited hours of the total working hours or days. The salary received by the employee is calculated proportionately to the number of working hours or days, plus the benefits and allowances. It is important to keep in mind that transferring the contract from part-time to full-time and vice versa is possible upon the employee’s request, provided that the financial allowances for the same position are available.
- Temporary Contract: The employee under this contract works the full working hours, throughout the working days, for a period of three months. This contract is renewable for similar periods. At the end of the temporary contract, the employee can be appointed to a full-time job that matches the employee’s qualifications, experiences and abilities. Make sure you modify the contract type and include the temporary contract period in the service period to make this change.
- Special Employment Contract: The special employment contract is to appoint any employee with distinctive experience at a high post within the organization. The employee on a special contract is appointed by the minister. The contract period shall not exceed two years and may be renewed for another two years. The terms of the remuneration are determined by the ministry in coordination with the Ministry of Finance and approved by the Cabinet.
Private sector employment contracts
The private sector employment contracts are set in the UAE Labour Law No. 8 of 1980. It outlines three types of employment contracts.
- Limited Contract
- Unlimited Contract
- Part Time Contract
- Limited Contract: Also known as a fixed term contract, this type of employment contract mentions the start and end dates of the employment period. The contract is canceled when it expires unless it is renewed before the expiry date. These contracts are commonly used for employees needed for a specific project or for a specific duration. Limited contracts have a maximum term of two years and can be renewed for a similar time period on expiry. As per the UAE Labor Law, the limited-term contract must specify the start and end date, the remuneration and benefits, the nature of work, the workplace, and the duration of the contract.
- Unlimited Contract: These contracts are more open-ended and flexible as compared to Limited Contracts and are also known as Standard Employment Contracts. Unlimited Employment contracts can be terminated with mutual consent, and by giving a notice of 1-3 months, as specified in the contract. The contract must also specify the details of the employment like salary, benefits and allowances, date of joining, probationary and notice periods, leave cycle, annuals leave and working hours.
- Part Time Contract: It is also worth mentioning that there was a Part-Time Contract in place in 2018. This was for part-time employees and it allowed organizations to recruit skilled workers based in the UAE or abroad under a part-time work system. Employees on a part-time contract could take up several part-time jobs without the approval of the original or secondary employer. However, they must obtain a permit from the MoHRE. As mentioned, these contracts were last implemented in 2018.
Can you have multiple employment contracts?
Typically people only have one employment contract at any given time. But if you work part-time and limited hours, you might want to know if you can seek other employment. The good news is that the UAE allows multi-employer contracts under the new provision implemented by MoHRE.
Probation and notice periods in the UAE
It’s also important to note what probation periods are like under the UAE employment contracts. The law states that the probation period of the employee should not exceed six months. It also cannot be extended for another term. Once the employee completes the period, the probation period will count as part of their actual service to the organization.
Employers also cannot just end an employment contract during a probation period. The employer has to give 14 days prior written notice. The employer, on the other hand, must give written notice of a minimum of one month. The notice period is only 14 days for the employee as well if they resign with the intention of leaving the job and the UAE.
Read More : Ultimate Guide to Probation Period in the UAE
Help managing your employment contracts
It’s important to manage employment contracts as part of your payroll systems. Bayzat has a tool that allows you to create contracts and have employees sign them easily. These will integrate with your payroll system, making it easy to manage salaries and other employment benefits. Having HR software that communicates with these different pieces can be vital.
Contact us today if you want to learn more about our employment contract management system.
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