The Minister of Labour recently issued three Ministerial Decisions:

  1. Ministerial Decision No. 764/2015 on using the Ministry of Labour adopted standard contracts;
  2. Ministerial Decision No. 765/2015 on terminating employment relationship conditions and guidelines; and 
  3. Ministerial Decision No. 766/2015 on granting an employee a new work permit to transfer from one establishment to another.

The Ministerial Decisions, which took effect on 1 January 2016, mark a significant change in the employment contracting procedures, as well as termination and transfer of employees.  They do not amend the UAE Labour Law but repeal any contrary or inconsistent term provided for under other decisions.

While the practical implementation and overall implications of these Ministerial Decisions remain to be seen, it is evident that they aim to better regulate the relationship between employers and employees as well as to avoid breaches of rights of respective parties to an employment contract or offer letter.  They encourage transparency in the employment contracting practices, show a clear tendency towards a more secure and liberal UAE labour market and set clear rules and conditions for flexible labour mobility for employees. 

Ministerial Decision No. 764/2015 mandates the use of standard employment contracts and offer letters adopted by the Ministry of Labour (MOL).  This decision provides that initial approval to admit a foreign employee for employment in the UAE may not be issued unless an employment offer letter presented to the employee is submitted.  This employment offer letter must:

  1. be accepted by the employee in his country (or in the UAE if the employee is already in the UAE); and
  2. conform with the standard contract to organise the employment relationship between the employee and the employer.

The decision further provides that the standard contracts must be used on renewal of the existing employment contracts at the time of issuance of the decision. 
 
It also requires employers to retrieve from the MOL the standard employment contract that captures exactly the employment offer letter accepted by the employee, and to present this contract signed by the employee to the MOL. 

The decision finally restricts (i) amending the employment contract signed by the employee, or (ii) adding new terms, without the employee's approval.  The amendments or additions must not breach employee's rights, applicable regulations or other terms and must be subject to the approval of the MOL.

Ministerial Decision No. 765/2015 provides for:

  1. the conditions and guidelines whereby an employment relationship can be terminated in limited and unlimited term employment contracts; and
  2. those whereby it must be deemed terminated (including failure of the employer to pay the employee for 60 days).

The decision also allows employers and employees recourse to courts to seek compensation and any other rights provided for under the UAE Labour Law and implementing regulations.

Ministerial Decision No. 766/2015 provides for situations whereby it may be possible to grant a new work permit to an employee after terminating the employment relationship in:

  1. limited term employment contracts;
  2. unlimited term employment contracts; and
  3. all types of employment contracts (limited and unlimited term).

It also includes that parties granting new work permits to employees in educational institutions during the academic year must ensure that approvals of the relevant governmental parties have been granted before granting these permits. 

The decision finally provides that new work permits granted under the decision may be repealed if the MOL discovers that the data based upon which the new work permit was granted is false.

It is clear from these new Ministerial Decisions that the UAE, through the MOL and the Immigration Department, is focused on continuing to improve employee rights, the work environment and career opportunities in the UAE.

As a result, employers may need to change the employment contracting procedures and processes that they currently follow to comply with the recently implemented contracting procedures and processes.  Employers and employees must also be aware of the due procedures and processes for terminating employment contracts, and for transferring to a new employer on termination of the employment relationship and being granted a new work permit in the UAE.