Employment contract templates in UAE: All you need to know

A written contract for employment is necessary to establish the work relationship between the employer and the worker. It is vital to clarify the rights and obligations of both parties. Companies should use employment contract templates to comply with the UAE Labour Laws.

The employment contracts, Dubai, UAE set forth the terms and conditions necessary for both parties to establish an effective employment relationship. Without an employment contract, the employer lacks protection if workers fail to fulfill their determined duties. Workers, on the other hand, are vulnerable if the employer fails to uphold his obligations.

Using an employment contract template avoids the need for a drafting process and establishes the foundation for a successful employer-worker relationship.

What is a contract of employment?

An employment contract establishes a relationship between an employer and a worker whereby the worker undertakes to provide his work in exchange for a salary. An employment contract must be in writing and drafted in accordance with the UAE Labour Law.

Who does a UAE employment contract apply to?

A UAE employment contract applies to employers and workers in the private sector in the United Arab Emirates. It is important to note that some freezones have their own employment laws and regulations, as such, an employment contract drafted in accordance with the Federal Labour Laws must not be used.

Hiring workers is subject to certain requirements imposed by the Ministry of Human Resources and Emiratization (MoHRE) which must be adhered to, such as issuing a work permit for the worker.

What do employment contract templates contain?

An employment contract template sets the necessary information to protect the interests of the employer and the worker. The parties must agree on the work pattern involved such as but not limited to a full-time work pattern and a part time work pattern. The employment contract must also be for a fixed duration that may be renewed according to the parties’ agreement.

In addition to providing information about your business and the position for which you will recruit the worker, the contract should cover remuneration, and working conditions.  It is also important to include confidentiality clauses to protect the confidential information of the business. Dispute resolution mechanisms should also be stated.

These are some crucial clauses that all employment contracts, Dubai, UAE, must have:

Work pattern

The employment contract must set the work pattern of the worker. The work pattern may be full-time work pattern, part-time, temporary work, flexible work, remote work, and job sharing. Other work patterns may be introduced by the MoHRE to attend to the needs of the labour market.

Contract duration

The UAE Labour Law explicitly states that an employment contract must be for a fixed duration that is renewable as per the parties’ agreement.

Probation period

The probation period should not exceed six months and the employer may terminate the employment contract during this period provided that a fourteen (14) days’ notice period is provided to the worker.

In case the worker desires to terminate his employment with the employer during the probation period, he should serve a one month notice period, and fourteen (14) days’ notice in case of a foreign worker leaving the country.

It should be noted that if the parties do not adhere to the notice periods specified by the UAE Labour Law, compensation equal to the worker’s remuneration for the notice period or the remaining period of the notice period must be provided.

Duties of the worker 

 The employment contract should specify the position of the worker, it is also best to detail the tasks that the worker will undertake to avoid misinterpretation.

Remuneration

Remuneration includes the basic salary and all other benefits and allowances the worker is entitled to in exchange for his work. In other words, remuneration is the total salary of the worker.

Remuneration shall be stated in the legal contract template and given to the worker on a scheduled date, including the basic salary, accommodation expense, conveyance reimbursement, medical insurance, annual air tickets, and any additional allowances determined by the company's rules.

Working hours, weekly rest and leaves

The normal working hours for a full-time work pattern must not exceed eight hours per day or forty-eight hours per week. Working hours may be different for other work patterns.

The weekly rest should not be less than one day a week and may be increased.

Statutory leaves include annual leaves, maternity and paternity leaves, sick leaves, and other leaves. The worker is entitled to paid annual and sick leave upon the completion of the probation period. However, it is permissible for the employer to grant the worker better conditions as the UAE Labour Law allows the employer to offer the worker enhanced working conditions. All information related to leaves can be found in the UAE Labour Law, work patterns are taken into consideration when calculating leave durations.

Confidentiality

In the course of carrying out his duties, the worker will gain access to confidential information, and the employer must protect such confidential information from illegal disclosure, by placing a confidentiality clause that survives termination of the contract.

Non-compete and non-solicitation

The employer may place non-competition and non-solicitation clauses if the worker is aware of the trade secrets of the company and there is a risk that he may work with competing businesses or solicit the clients/workers of the employer. Such clauses are post-termination restraints and must be limited by geographical scope, term (not exceeding two years in the case of non-compete) and nature of work.

Termination, notice period and dismissal

As per the UAE Labour Law, termination of employment may be agreed upon by the employer and the worker in writing, or at the request of either party subject to serving a notice period of not less than thirty (30) days and not more than ninety (90) days or else pay a compensation in lieu of notice as specified in the UAE Labour Law. The UAE Labour Law states other basis for termination which must be referred to.

There may be cases where the employer dismisses the employee without notice as specified in the UAE Labour Law. Furthermore, there are cases where the employee is entitled to leave his work without notice.

Governing law and jurisdiction

The terms and conditions of the contract are interpreted in accordance with the governing law. An employment contract made in the United Arab Emirates is consequently governed by the UAE labour law. The parties must also agree upon dispute resolution mechanisms such as litigation (Courts) or arbitration.

End-of-service gratuity

The foreign worker in a full time work pattern who completed one year of service is entitled to end of service gratuity upon the end of his service which is calculated according to his basic salary as follows:

• Twenty-one (21) days for every year of service for the first five years of service.
• Thirty (30) days for each year after the completion of the first five years of service.

The above clauses are not exhaustive, they are the most common clauses, however, the employment contract should be as specific as possible stating all clauses that protect the interests of both parties. The employer should also have in place rules and policies that comply with the UAE Labor Laws.

Advantages of employment contract templates

The legal contract templates implementation is quickly spreading throughout the industry as companies continue to realize how beneficial they can be in streamlining their operations. While you use contract templates, you may often gain several advantages, including speedier contract drafting and more satisfied and pleased relations.  Some advantages include the following:

Shorter contract drafting time

By using a standard legal template, you avoid having to draft a contract from scratch. You may use the same employment contract for all workers. However, tasks and obligations of workers vary depending on the position they hold in the company and the sensitivity of their work. The employer must ensure that each contract is customized according to the needs of the work relationship.

Compliance with applicable laws

Employment contract templates are drafted in a manner consistent with the UAE Labour Laws.

Lower cost

The expense of drafting is significantly higher than using a standard employment contract template. Using a template extinguishes the requirement to draft.

Consistent contracts

The consistent structure provided by a template foster uniformity and makes it simpler for you, as the main clauses are described in the template. Updating employment contract templates is effortless and may be done to reflect applicable laws, evolving industry or worker requirements.

Clear rights and obligations

Contracts of employment specify the duties for workers along with their rights and entitlements. If applied properly, you may make your staff more productive or provide yourself with legal protection when you eventually have to dismiss a worker.

Contract templates improves adaptability

You can adapt the template's information to meet your precise company's requirements with the legal contract templates. The ability to utilize one template for different workers enables smooth company activities.

Who requires a legal contract template?

Having employment contracts, Dubai, UAE implemented is crucial since these contracts are an obligation by law. Through an employment contract, you make sure that you and your worker are aware of the duties rights, and entitlements, and you might also offer everyone involved an understandable framework for addressing any potential conflicts.

Recommended procedures for managing employment contracts

Personalize the contract

An employment contract template is a standard document, the contract may be customized according to the needs of the employment relationship, certain additional obligations may fall upon the parties and additional entitlements may be granted by the employer.

Continually update the contract

Revisions to the contract are necessary to reflect modifications to the employment relationship, like updates to work responsibilities, pay, and entitlements.  Applicable laws may also be amended or abrogated from time to time, the employment contract must be in compliance with all applicable laws.

 Conclusion

It is essential to use employment contracts, Dubai, UAE, when you recruit any workers. For companies of every kind, legal contract templates remain a great option. You may personalize your contract to match any requirement of your company and verify that all relevant information has been incorporated.  Using an employment contract template that is compliant with the applicable Labour Laws will safeguard your business interests.