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Country snapshot

Key considerations

Which issues would you most highlight to someone new to your country?

Unique employment framework The Dubai International Financial Centre (DIFC) is a unique free zone operating under a common law jurisdiction. It is not subject to the same employment framework or regime as applied to the other UAE free zones or mainland United Arab Emirates. The DIFC’s standalone employment regulation, the DIFC Employment Law (DIFC Law 4/2005, as amended), regulates employment matters in the DIFC. Uniquely, there is no express concept of unfair dismissal in the DIFC and therefore no unfair dismissal compensation award. However, there are specific and express anti-discrimination provisions in place. Unlike the position outside the DIFC, there are no Emiratisation requirements or policies for employers in the DIFC to abide by, or any protective dismissal legislation for UAE nationals.

Immigration and visa requirements  The employment regime in the United Arab Emirates is inextricably linked to the immigration regime. Without a valid work permit and residency visa sponsorship through a locally licensed and registered entity, it is not possible for expatriates to work lawfully in the DIFC. UAE and other Gulf Cooperation Council (GCC) nationals (ie, citizens of Bahrain, Kuwait, Oman, Qatar and Saudi Arabia) are treated slightly differently, in that there is no requirement for them to procure or obtain a UAE residence visa due to the concept of freedom of movement across the various GCC member states. However, a requirement to obtain a DIFC access card still exists. The duration of residency and work permits is three years and these are renewable.

Pension schemes and end of service gratuity payment Pension schemes for expatriates are not common practice and neither are they a mandatory requirement (although UAE and other GCC nationals are treated differently). The closest equivalent to a pension is a statutory service-related end of service gratuity payment, which is payable based on a fixed formula and on termination of employment, subject to certain qualifying conditions. The gratuity entitlement can be replaced by a company pension scheme (subject to specific written election requirements under the DIFC Employment Law).

What do you consider unique to those doing business in your country?

Trade unions, collective associations and workers’ councils are illegal in the United Arab Emirates. Any industrial action would be viewed as a public disorder offence. This is a unique feature of conducting business in the DIFC and removes the complexities of certain employment practices and processes.

For companies with operations in the DIFC as well as mainland United Arab Emirates or other free zones, the differing employment regimes can often create issues with companies having to grapple with differing considerations, entitlements and practices.

Is there any general advice you would give in the employment area?

The employment and immigration regime, which is fairly static, is a key consideration, particularly in the context of employees assigned or temporarily seconded from a non-UAE home country jurisdiction. Employees require local sponsorship through a locally licensed and registered entity in the DIFC, which is both employer-specific and location-specific, permitting the employees to work only at the premises of the employer through which they have obtained their visa. Very limited exceptions to third-party working exist in the DIFC, including provision of temporary work arrangements.

Emerging issues/hot topics/proposals for reform

Are there any noteworthy proposals for reform in your jurisdiction?

The DIFC Employment Law was amended in 2012 and there have been no formal announcements regarding any additional updates or revisions to the law since. The Emirate of Abu Dhabi recently introduced its own free zone, broadly mirroring the regime in the DIFC, but in certain cases providing for slightly more enhanced benefits. It will be interesting to see whether the DIFC Employment Law will be amended to reflect the Abu Dhabi Global Market regime.

What are the emerging trends in employment law in your jurisdiction?

None. 

The employment relationship

Country specific laws

What laws and regulations govern the employment relationship?

The DIFC has its own legal jurisdiction and common-law based court systems, where employment issues are regulated by the DIFC Employment Law.

Who do these cover, including categories of worker?

The DIFC Employment Law applies to employees who are based within or ordinarily work within or from the DIFC. The law does not differentiate between categories of workers. All employees are entitled to the same leave and benefits as regular full-time employees.

Misclassification

Are there specific rules regarding employee/contractor classification?

There are no specific or express rules in the DIFC Employment Law regarding employee or contractor classification. Currently, the concept of ‘contractor’ or ‘self-employed’ (as commonly understood in Western jurisdictions) is not expressly recognised under the DIFC Employment Law. It is possible for an individual to set up his or her own consultancy company (akin to a contractor) and render services within the confines and terms of his or her trade licence, but such arrangements are limited.

Contracts

Must an employment contract be in writing?

Yes, employment contracts must be in writing. The DIFC Employment Law requires provision of written contracts containing key terms and conditions of service (including vacation leave entitlements, public holidays and hours of work), but no prescribed template is mandated (in contrast to the position outside the DIFC). Moreover, as a mandatory pre-condition to the issuance of a DIFC work permit and residency visa, employers must submit a signed employment contract with the employee to the DIFC’s Government Services Office. English is the prevailing language in the DIFC and there is no requirement for an Arabic-drafted employment contract.

Are any terms implied into employment contracts?

For those companies based within the DIFC free zone (which is a common law jurisdiction), certain implied terms feature as part of the overall employment contractual documentation by default. However, uniquely, the DIFC courts have made clear that the implied term of mutual trust and confidence does not exist in the context of any claims regarding the manner or circumstances under which the employment is terminated – thereby denying the right of DIFC employees to pursue constructive unfair dismissal claims.

Are mandatory arbitration/dispute resolution agreements enforceable?

Employment disputes for DIFC licensed companies are subject to the forum of the DIFC courts. It is not possible to arbitrate employment disputes, as the DIFC Employment Law has mandatory application to employment matters and employee disputes are subject to determination or resolution through the applicable courts – not through arbitration or dispute resolution mechanisms.

How can employers make changes to existing employment agreements?

Employee consent is generally required before effecting any change to key terms and conditions of employment. Changes to core contractual terms (eg, remuneration package details) will likely necessitate formal amendments to the employment agreements registered with the Government Services Office. 

However, employers and employees cannot opt out of the minimum requirements as stated by the DIFC Employment Law.

Foreign workers

Is a distinction drawn between local and foreign workers?

UAE and other GCC nationals (ie, citizens of Bahrain, Kuwait, Oman, Qatar and Saudi Arabia) are not required to obtain UAE residence visas. However, they must still obtain a DIFC access card for employment.

UAE and GCC nationals are also required to be registered with the applicable state pension scheme, whereas foreign workers are required to be paid an end-of-service gratuity lump sum payment at the end of employment (subject to certain qualifying conditions). There are provisions in the DIFC Employment Law permitting employees to elect to opt in to receiving contributions into an employer-maintained scheme (thereby extinguishing the requirement for a gratuity payment), but employer pension schemes are rare in practice.

Recruitment

Advertising

What are the requirements relating to advertising positions?

There are no specific requirements, rules or regulations governing the advertisement of positions in the United Arab Emirates. It is common to find advertised posts being restricted to Western-qualified candidates only, specific genders or nationals of specific countries. The DIFC Employment Law’s anti-discrimination provisions do not extend to capture job applicants or candidates.

Background checks

What can employers do with regard to background checks and inquiries in relation to the following:

(a) Criminal records?

Certificates of good conduct from the UAE police can be requested of employees as part of pre-employment and recruitment checks.

(b) Medical history?

As a pre-condition to the issuance of a UAE residency visa (and part of the general visa sponsorship application process), all expatriates in the DIFC must undergo a medical test at the DIFC’s own dedicated medical test centre. This test is intended to screen for certain infectious diseases (eg, HIV/AIDS and tuberculosis). A UAE residency visa will not be granted if an expatriate fails this test.

(c) Drug screening?

There are no general restrictions contained in the DIFC Employment Law regarding employer screening for drugs or the implementation of drug-testing measures as part of the pre-employment stage. The UAE adopts a zero-tolerance approach to possession and misuse of narcotic drugs. Such pre-employment checks are rare in practice.

(d) Credit checks?

In November 2014 the UAE Central Bank set up the Al Ittihad Credit Bureau, which checks the creditworthiness of individuals (www.aecb.gov.ae). Timelines for reports on credit checks will vary depending on the bank.

(e) Immigration status?

Expatriate employees will require a DIFC work permit and residency visa through a locally licensed and registered entity in order to lawfully reside and work in the United Arab Emirates (and in particular, the DIFC). There is also a unified identification card issued by the Emirates ID Authority, which residents should carry at all times.

(f) Social media?

Generally, there are a number of laws in place (notably, the UAE Penal Code and UAE Cybercrimes Law and DIFC data protection laws) providing for an overarching framework of privacy and the punishment of misuse or breach. However, depending on a candidate’s user privacy settings, certain information may be publicly available. It is common for employers to use professional social media sites (eg, LinkedIn) as part of the general pre-employment and recruitment stage.

(g) Other?

None. 

Wages and working time

Pay

Is there a national minimum wage and, if so, what is it?

There is no national minimum wage in the DIFC.

Are there restrictions on working hours?

In the DIFC, weekly working hours must not exceed, on average, 48 hours over a seven-day period, unless the employer first obtains the employee’s written consent to work longer hours.

Reduced Ramadan hours are applicable only to fasting Muslim employees.

Hours and overtime

What are the requirements for meal and rest breaks?

Where an employee’s daily working time is more than six hours, he or she is entitled to at least one hour of rest and prayer break. Employees are entitled to no less than 24 hours’ rest in each seven-day work period. There are no express overtime provisions in the DIFC.

How should overtime be calculated?

The DIFC Employment Law has no specific provisions on overtime or overtime pay.

Employees can agree in writing to opt out of the maximum 48-hour weekly working limit.

However, the law does expressly prohibit excessive employee working hours practices by providing that the employer cannot require or allow (directly or indirectly) an employee to work excessive hours or hours that would be detrimental to health and safety.

There is no case law regarding the term ‘excessive’ in this context. However, it would ultimately depend on the type of role and the impact that it has on the employee’s health.

What exemptions are there from overtime?

N/A.

Is there a minimum paid holiday entitlement?

Employees are entitled to a minimum 20 working days’ paid holiday per year, accrued on a pro rata basis, for employees who have been employed for at least 90 days.

What are the rules applicable to final pay and deductions from wages?

Deductions from an employee’s wages cannot be made unless:

  • the deduction or payment is required or authorised under a statutory provision or the employee’s contract of employment;
  • the employee has previously agreed in writing to the deduction or payment;
  • the deduction or payment is a reimbursement for an overpayment of wages or expenses; or
  • the deduction or payment has been ordered by the court.

Record keeping

What payroll and payment records must be maintained?

For each employee, the employer must keep records (in paper or electronic format) of:

  • the employee's name, date of birth, occupation, telephone number and contact address;
  • the date on which employment began;
  • the employee's wages (gross and net, where applicable) and the applicable pay period;
  • the hours worked by the employee on each day;
  • the benefits paid to the employee by the employer;
  • any deduction made from the employee's wages and the reason for it;
  • the dates of the public holidays taken by the employee and the amounts paid by the employer in that respect;
  • the dates of annual leave taken by the employee, the amounts paid by the employer in respect of the leave and the accrued days and amounts owing; and
  • sick leave and other special leaves of absence.

The records must be kept in English and at the employer's principal place of business in the free zone. They must be retained by the employer for at least two years after the employment terminates.

Discrimination, harassment & family leave

What is the position in relation to:

Protected categories

(a) Age?

Under the DIFC Employment Law, discrimination is prohibited against employees on various grounds, but these do not include age.

(b) Race

Under the DIFC Employment Law, discrimination is prohibited against employees regarding employment and any terms of employment based on race.

(c) Disability?

Under the DIFC Employment Law, discrimination is prohibited against employees regarding employment and any terms of employment based on mental or physical disability. A ‘disability’ is defined as a physical or mental impairment that has a substantial and long-term adverse effect on an employee’s ability to carry out his or her duties in accordance with his or her employment contract. An impairment has a long-term effect if it has lasted at least 12 months or is likely to last at least 12 months.

(d) Gender?

Under the DIFC Employment Law, discrimination is prohibited against employees regarding employment and any terms of employment based on gender.

(e) Sexual orientation?

Homosexuality is a criminal offence under the UAE Penal Code.

(f) Religion?

Under the DIFC Employment Law, discrimination is prohibited against employees regarding employment and any terms of employment based on religion.

(g) Medical?

Where an employee takes more than an aggregate of 60 working days’ sick leave in any 12-month period, the employer may terminate employment immediately with written notice to the employee. 

(h) Other?

The DIFC Employment Law also provides for protection against discrimination on the basis of marital status and nationality. 

Family and medical leave

What is the position in relation to family and medical leave?

DIFC female employees are entitled to a minimum maternity leave of 65 working days, subject to having at least one year of continuous service before the expected week of childbirth.

Employees with less than one year’s service are still entitled to 65 working days of maternity leave, although there is no entitlement to pay during this period.

Any public holidays that fall within this period will extend the maternity leave period accordingly.

The above provisions also apply to female employees who adopt a child aged less than three months. Where the above refers to childbirth, the relevant date will be the date of adoption.

There is no provision for paternity leave in the DIFC.

Employees in the DIFC are entitled to sick leave not exceeding a maximum of 60 working days in aggregate in any 12-month period. The employer is required to pay the employee sick pay at the rate of daily total salary (except where the contract is for one month or less) and subject to any sickness absence notification requirements.

Harassment

What is the position in relation to harassment?

The DIFC Employment Law prohibits harassment where, on the grounds of a protected characteristic, the employee is subject to unwarranted treatment or conduct which has the purpose or effect of creating an intimidating, hostile, degrading, humiliating or offensive workplace.

Sexual harassment is also a criminal offence in the United Arab Emirates.

Whistleblowing

What is the position in relation to whistleblowing?

The Dubai Financial Services Authority, the DIFC’s financial services regulator, requires employers to have in place appropriate procedures to allow employees to report wrongdoing (eg, market misconduct, financial crime and money laundering). The potential penalties for breach include fines and an order that remedial steps be taken to rectify breaches or undertake further steps to remediate evident deficiencies.

Since there is no specific whistleblowing legislation in the DIFC, the protections available to whistleblowers are the fairly limited protections available under the DIFC Employment Law.

Privacy in the workplace

Privacy and monitoring

What are employees’ rights with regard to privacy and monitoring?

The DIFC has in place its own free-standing data protection laws. Employers in the DIFC are also subject to the UAE Penal Code, which provides a general framework to bear in mind in the context of privacy breaches.

Employers in the DIFC are entitled to set out limitations on their employees’ use of telephones, internet and email on the employer’s own equipment and servers. This is usually contained in a policy which is available to all employees. Where such policies exist (usually with multinationals), they typically specify that:

  • private use is permitted for emergencies only or within reasonable limits, provided that it does not interfere with efficient job performance;
  • downloading or sending offensive, intimidatory or harassing material is prohibited;
  • monitoring will take place for specified reasons (eg, detection of wrongdoing, monitoring of job performance and recording commercial agreements reached); and
  • downloading software without the employer’s prior consent is prohibited.

Monitoring employees’ activities on work-based systems should respect privacy and applicable UAE and DIFC specific laws and not be disproportionate.

To what extent can employers regulate off-duty conduct?

An employer may terminate an employee without notice and with immediate effect for cause where the conduct of the employee warrants termination and a reasonable employer would have terminated the relationship. Activities outside work will be subject to disciplinary action only if the activities are connected to, or have a material impact on, the employee’s employment.

Are there rules protecting social media passwords in the employment context and/or on employer monitoring of employee social media accounts?

There are no specific rules protecting social media passwords in the employment context.

However, employers must be careful how they use the information retrieved from the Internet and social media. While job applicants have no legal protection against unlawful discrimination in the DIFC, discrimination claims can be made once an employee has been hired. This means that if an employer makes an adverse decision against an employee based on unlawful discrimination, it could face a claim for damages. Characteristics protected by discrimination laws include sex, race, marital status, nationality, religion and disability.

Trade secrets and restrictive covenants

Intellectual Property

Who owns IP rights created by employees during the course of their employment?

Generally, an inventor is the owner of his or her invention in the DIFC, unless he or she is an employee hired specifically to invent. An employer may apply for a patent for the invention where it was made by an employee in the course of employment. However, an employee is entitled to compensation for the assignment of an invention and further compensation if the economic value of the invention ends up being more valuable than contemplated on signing the contract.

Where an employee invents outside the scope of employment, the employer has an option over the patent within a specific time from when the employee notifies the employer and where the invention relates to the employer’s business.

In contrast, there is no principle of automatic ownership of copyright materials by an employer. This applies even where an employee has been hired to create.

Restrictive covenants

What types of restrictive covenants are recognised and enforceable?

The DIFC Employment Law contains no express provisions governing or regulating post-termination restrictions. However, as the DIFC is a common law jurisdiction (as opposed to the United Arab Emirates’ general civil law jurisdiction), the DIFC courts recognise an employer’s ability to include post-termination restrictions in employment contracts, subject to complying with certain conditions which originate from English case law principles – namely, it must be reasonable in terms of scope, territory and duration and go no further than reasonably necessary to protect the employer’s legitimate business interests. A DIFC court can award injunctive relief against the employee, but this will be enforceable only within the DIFC free zone. If an employee chooses to work outside the DIFC, the injunction will have no effect.

Non-compete

Are there any special rules on non-competes for particular classes of employee?

The DIFC Employment Law contains no express provisions on this matter.

Discipline and grievance procedures

Procedures

Are there specific laws on the procedures employers must follow with regard to discipline and grievance procedures?

There are no specific provisions under the DIFC Employment Law in respect of disciplinary procedures or any time limits within which disciplinary action must be taken. In practice, employers generally adopt a limited disciplinary process. Nor are there any specific or express grievance procedures or policies mandated under the DIFC Employment Law.

Industrial relations

Unions and layoffs

Is your country (or a particular area) known to be heavily unionised?

Trade unions, collective associations and workers’ councils are illegal in the United Arab Emirates, including the DIFC. Any industrial action would be viewed as a public disorder offence.

What are the rules on trade union recognition?

N/A.

What are the rules on collective bargaining?

N/A. 

Termination

Notice

Are employers required to give notice of termination?

Under the DIFC Employment Law, where the employee has been continuously employed for one month or more, notice required to be given by an employer or employee to terminate his or her employment is no less than the following:

Length of service

Notice period

Continuously employed for less than three months

Seven days

Continuously employed for three months or more, but less than five years

30 days

Continuously employed for five years or more

90 days

However, it is possible for the parties to mutually agree to waive, reduce or increase notice or accept pay in lieu of notice.

Redundancies

What are the rules that govern redundancy procedures?

There is no express concept of redundancy under the DIFC Employment Law. When carrying out redundancies, the employer must ensure that they comply with the existing DIFC Employment Law provisions applicable to the termination of employment.

Are there particular rules for collective redundancies/mass layoffs?

None.

Protections

What protections do employees have on dismissal?

There is no concept of unfair or constructive unfair dismissal in the DIFC. However, employees are entitled to be paid their other legal and contractual entitlements, including notice. Any decision to terminate should not be tainted by discrimination.

The DIFC Employment Law also provides that an employer should not terminate employment because of an employee’s pregnancy or maternity leave.

Courts/tribunals

Jurisdiction and procedure

Which tribunals or courts have jurisdiction to hear complaints?

The Small Claims Tribunal or the DIFC’s main courts (eg, the Court of First Instance and the Court of Appeal) are the main tribunals having jurisdiction to hear labour complaints in the DIFC. The decision of the Court of Appeal is final.

What is the procedure and typical timescale?

Within the jurisdiction of the DIFC, the Small Claims Tribunal hears claims where either the amount or value of the claim does not exceed Dh500,000 or the claim relates to the employment or former employment of a party and the amount or value of the claim exceeds Dh500,000 and all parties to the claim elect in writing that it be heard by the Small Claims Tribunal. There is no value limit for the tribunal’s elective jurisdiction in the context of employment claims. The Small Claims Tribunal operates a type of consultation intended to resolve disputes, failing which it is escalated to the Court of First Instance.

Small Claims Tribunal cases do not permit lawyers to take part or be present.

Appeals

What is the route for appeals?

Parties have the right to appeal against decisions of the Small Claims Tribunal or the Court of First Instance. The appeal mechanism involves filing proceedings before the Court of Appeal. Typical appeal timescales vary depending on the complexity and nature of the case. Costs can be awarded in favour of the successful party.