UAE Law and Practice Contributed by: Amir Alkhaja, Areen Jayousi, Gulsun Ozmen and Alia AlMarzooqi, Habib Al Mulla & Partners
4.2 Characteristics of Employment Contracts All employment contracts in the UAE must be con - cluded in writing and registered with MOHRE using the prescribed standard form. Under the Labour Law, all contracts must be fixed-term, and the previous dis - tinction between limited and unlimited-term contracts has been abolished; the original statutory maximum term of three years has been removed, and the par - ties may now agree a fixed term of any duration, with contracts being renewable upon expiry for equivalent or shorter periods. Where a contract is executed in more than one language and a dispute arises as to its interpretation, the Arabic version prevails unless the parties have expressly agreed otherwise. 4.3 Working Time The standard maximum working time is eight hours per day and 48 hours per week. During the holy month of Ramadan, working hours are reduced to six hours per day and 36 hours per week, subject to limited exceptions. Overtime work is generally permitted up to two additional hours per day and is compensated at the basic wage plus a premium of at least 25%, rising to at least 50% for overtime performed between 9 pm and 4 am. Employees are entitled to a minimum of one rest day per week and to annual leave of a minimum of 30 calendar days per year following the first year of service. 4.4 Termination of Employment Contracts The UAE does not operate an “employment at will” system. An employment contract may be terminated by either party by serving the contractually agreed notice period, which must be no less than 30 days and no more than 90 days. If either party terminates without serving the agreed notice, it is required to compensate the other party with an amount equal to the employee’s remuneration for the full notice period or the remaining part of it. Termination will be considered unlawful in the specific cases set out in Article 47 of the Labour Law, including where the reason for dismissal is that the employee has filed a serious complaint with MOHRE or has brought a successful claim against the employer; in such circumstances, the court may award compen - sation of up to three months’ wage in addition to any other entitlements.
All employees are entitled to an end-of-service gratu - ity upon termination, except where dismissal occurs on grounds of gross misconduct as specifically enu - merated in the Labour Law. Gratuity is calculated on the basis of the last basic salary as follows: 21 days’ basic salary for each completed year of the first five years of service and 30 days’ basic salary for each subsequent completed year. Total gratuity is capped at two years’ total remunera - tion. There is no formal collective redundancy proce - dure under UAE federal law; however, employers pro - posing significant workforce reductions are expected to notify MOHRE in advance and must, in all cases, comply with the notice and end-of-service gratuity entitlements applicable to each individual employee. 4.5 Employee Representations There is no statutory requirement for employee repre - sentation, works councils or trade union recognition in the UAE mainland private sector. Employees may bring individual labour complaints before MOHRE, which operates a mandatory conciliation process prior to referral to the labour courts. Employers with 50 or more employees are required to implement internal employment policies, including a grievance procedure, and in practice typically main - tain a dedicated human resources or employee rela - tions function to handle workplace disputes. There are no obligations to inform or consult any representative body in the context of restructurings, redundancies or changes to terms and conditions of employment.
5. Tax Law 5.1 Taxes Applicable to Employees/ Employers
The UAE does not impose personal income tax on employees, regardless of nationality or residency. Expatriate employees, who constitute the substan - tial majority of the UAE private sector workforce, are not subject to any social security or pension contri - butions. UAE national and Gulf Cooperation Council (GCC) national employees in the private sector are subject to pension and social security contributions administered at federal and emirate level, including
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