The UAE Ministry of Labour (the "MoL") has issued three Ministerial Decrees aimed at bringing greater transparency to labour contracts.
- Offer letters: Employers will be required to issue a standard offer letter to prospective employees in advance of the employee moving to the UAE or leaving their existing UAE employment. The signed offer letter must be filed with the MoL and the terms of the subsequent employment contract must reflect those of the offer letter. Amendments to the offer letter will only be permitted under the employment contract where the proposed amendments are favourable to the employee and approved by the employee and the MoL.
- Amendments to termination: Fixed term contracts will be terminable at any time by either party following the contractually agreed notice period (which may not be less than one month or greater than three months, with such periods also applying to unlimited term contracts). Currently, an employer is required to pay compensation to its employee where it terminates the contract prior to its expiry date. he provisions relating to the termination of fixed term contracts will apply retrospectively, with a three month notice period automatically applying where no period is specified. Notably, the duration of a fixed term contract will be limited to a maximum of two years.
- Restrictions to labour ban: The automatic six month labour ban will no longer be imposed, provided that the employee has met his or her contractual and legal obligations and has been employed for at least six months. Minimum service requirements will not apply to skilled employees. The Decree is intended to increase the mobility of employees between UAE employers.
Impact for employers
The Decrees are due to take effect from 1 January 2016, after which employers should ensure that:
- offer letters are provided to employees and filed with the Ministry of Labour; and
- the duration of limited term contracts does not exceed two years.