Welcome to our comprehensive suite of payroll services, tailored to meet the diverse needs of businesses operating in today’s dynamic environment. We understand that navigating the complexities of labour law, ensuring accurate payroll auditing, and considering the benefits of payroll outsourcing can be challenging. That’s why we are excited to announce that our experienced regional payroll provider is now available for personalized consultations.

With a deep understanding of regional labour laws and a commitment to delivering precise payroll solutions, our team is equipped to address your specific requirements. Whether you’re looking to streamline your payroll processes, seek advice on compliance with labour regulations, or explore the advantages of outsourcing your payroll functions, we’re here to provide expert guidance and support.

Now let’s deep dive in the basis of UAE labour law:

The relationship between employers and employees in the United Arab Emirates is governed by the UAE Labour Law, specifically established under Federal Law No. 8. This law, along with various Decrees and Resolutions, sets out the legal framework for employment contracts, wage payments, and dispute resolution, primarily in the private sector.

Essentials of UAE Labour Law
UAE Labour Law provides a structured approach to managing employment relationships. It details rules for wage payment methods, types of permissible employment contracts, and guidelines for resolving workplace disputes.

Dynamics of Employment Contracts in the UAE
Employment contracts in the UAE, whether in the private or public sector, form the legal basis of the employer-employee relationship. They define the scope, rights, and obligations of both parties.

Private Sector Employment Contracts: An Overview
In the private sector, employment contracts can be full-time or part-time. A significant change came with the Federal Decree Law No. 33 of 2021, which mandated fixed-term contracts from 2 February 2022. These contracts have a specific duration and conditions for renewal or extension.

Probation Period In The Private Sector
The probation period in the UAE can’t exceed six months or be extended. When the employee finishes the probation and continues working for the company, the probation period will amount as part of their service.
If the employer wants to terminate the contract during probation, they must give 14 days prior notice. Suppose the employee resigns during the probation period with the intention of leaving the UAE. In that case, they must provide a 14-day prior notice in writing.
Suppose the employee wants to change jobs to join another UAE company. In that case, they must provide a written notice of a minimum of one month. The new employer must also compensate the current employee’s recruitment costs unless otherwise agreed.

Different Work Arrangements in the UAE
The UAE Labour Law accommodates various work arrangements:

  • Full-time: Exclusive work for one employer.
  • Part-time: Work for one or more employers for specified hours or days.
  • Temporary: Task-specific work with a set completion date.
  • Flexible: Variable working hours or days.
    Remote: Work conducted outside the traditional office setting.
  • Job Sharing: Shared tasks and duties among employees, similar to part-time roles.

Public Sector Employment Contracts
The public sector offers different contract types, including full-time, part-time, temporary, and special contracts for high-ranking positions, each with its own set of rules and duration.

Overtime Regulations in the UAE
In the UAE, employers are permitted to require employees to work overtime, provided that it does not exceed two hours per day. If an employee is required to work beyond their normal working hours, they are entitled to their regular wage plus an additional 25%. This overtime rate increases to 50% for hours worked between 10 pm and 4 am, except for shift workers.
Employees working on their designated day off should either receive a substitute rest day or be paid their standard wage plus a 50% premium.

Working Hours in the Public Sector
Working hours in the public sector vary slightly across the seven emirates:

  • Federal Government Entities: The standard is a four-and-a-half-day work week, with eight hours from Monday to Thursday (7.30 am – 3.30 pm) and a half-day on Fridays (7.30 am – 12 pm). The official weekend is Saturday and Sunday.
  • Local Government Entities: In Abu Dhabi, Dubai, Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah, the work week mirrors the federal government. Sharjah’s government employees work a four-day week (Monday to Thursday), with a three-day weekend (Friday to Sunday).

Leaves and Holidays in the UAE
Employees in the UAE’s private sector are entitled to various leaves and holidays:

  1. Annual Leave: After six months of service, employees are eligible for 30 days of fully paid annual leave per year. For service between six months and one year, the leave entitlement is two days per month.
  2. Sick Leave: Employees can avail more than 90 days of sick leave per year, post-probation. The first 15 days are fully paid, the next 30 days at half pay, and no salary for the remaining 45 days. A medical report from an authorized entity is required within three days of absence.
  3. Study Leave: Employees with at least two years of service are entitled to ten days of study leave per year for exams in UAE-certified educational institutions.
  4. Maternity Leave: Female workers are entitled to 60 days of maternity leave (45 days full pay and 15 days half pay), with an option for an additional 45 days of unpaid leave in case of postpartum complications.
  5. Parental Leave: A five-day paid parental leave is available from the child’s birth until six months afterward. The UAE was the first Arab country to introduce this leave for private sector employees.
  6. Compassionate Leave: Employees can take five days of paid leave for a spouse’s death and three days for the death of a parent, child, sibling, grandchild, or grandparent.
  7. Hajj Leave: Employees can take up to 30 days of unpaid leave for Hajj, granted only once during their tenure with the employer.
  8. Umrah Leave: The provision for Umrah leave is at the discretion of the employer and may be deducted from annual leave or granted as unpaid leave.

Public Holidays
Both the public and private sectors observe public holidays, which include:

  • Gregorian New Year (1 January)
  • Eid Al Fitr (4 days)
  • Arafat Day and Eid Al Adah (4 days)
  • Hijra New Year
  • Prophet Mohammed’s Birthday
  • National Day (two days)

The dates for Islamic holidays are subject to moon sightings and may vary.

Wage Payment
Employers are responsible for timely wage payments, as stipulated in the employment contract. Private sector employers must use the Wages Protection System (WPS) to pay salaries, under penalty for non-compliance. Salaries can be paid in Emirati Dirham or another agreed currency. Wages are due from the first day of the month following the salary period, or at least once a month if not specified. Employers are considered in default if they fail to pay within 15 days of the due date, unless a shorter period is agreed upon in the contract.