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Employer sponsorship

i Residence visa

An employer that wishes to hire a foreign national in the UAE must fulfil a number of obligations. The most important obligations are to obtain immigration approval from the GDRFA and then to obtain labour approval from the MOHRE. The following is a general outline of the process for recruiting an employee from overseas. Similar but somewhat abbreviated procedures would apply to recruitment of an employee who is already present in the UAE.

Typically, an employer would file an application with the GDRFA for an entry permit for the prospective employee. It would be necessary to attach an offer letter signed by both parties outlining the general terms and conditions of employment; identification documents for the employee (usually a passport copy); and copies of the prospective employee's educational qualifications if the employee will be hired in a managerial, professional or executive capacity. The application must also be supported by a certificate of good conduct issued by the law enforcement authorities in the employee's home country or in the country where the employee resided during the five years immediately preceding the filing of the application.

Based on these documents, the GDRFA reviews the application and either grants or denies the entry permit. As part of the application, internal verifications are conducted to determine whether the prospective employee presents any security or law enforcement risks.

If granted, the employee then enters the UAE under the entry permit. Following the employee's arrival, the employer begins the process of obtaining a residence visa and labour permit for the employee.

In this connection, the foregoing documents are submitted once again to the authorities. However, each of the documents noted above must now be fully authenticated, which means a chain of authentications culminating with the UAE Embassy in the country of origin of the document, followed by authentication by the UAE Ministry of Foreign Affairs and, finally, by translation into Arabic by a UAE Ministry of Justice-licensed translator. (An abbreviated authentication process is followed in respect of free-zone applications). The employee is required to undergo a local health check, in which persons are specifically screened for tuberculosis, HIV, leprosy and hepatitis B and C; applications of persons who test positive will be denied. In addition, the employee must sign an employment contract substantially conforming with the terms stated in the offer letter. This employment contract is filed with the MOHRE. Following these procedures, the employee will be issued a residence visa and a labour permit, upon receipt of which the employee will be able to formally commence employment duties in the UAE.

The procedure for employees who will be hired by a free-zone employer are very similar, although the authentication process is somewhat shortened (as noted above). In addition, the employment contract will be filed with the relevant free-zone authority, not with the MOHRE.

ii Labour market regulation

A unique feature of the labour market in the UAE is the significant presence of non-UAE national employees. The process for admitting such persons to the UAE for the purpose of employment is administered by the GDRFA, while the process of granting employment permits is administered by the MOHRE. The right to reside in the UAE is closely tied with employment in the UAE and generally one cannot reside in the UAE if one is not employed.

For nationals of the UAE, there are substantial incentives to find employment in the private sector and there are generous pension benefits provided to UAE national employees as well as protections from termination. Nevertheless, the economy is so large that the local private sector labour market is still dominated by foreign employees.

iii Rights and duties of sponsored employees

The UAE Labour Law is Federal Law No. 8 of 1980, as amended. It governs the rights of employees in the private sector. The Labour Law deals with matters related to working hours, vacations and public holidays, sick leave, the employment of juveniles, maternity leave, employee records, safety standards, termination of employment and end-of-service payments. The Labour Law applies to all employees working in the UAE, whether UAE nationals or expatriates, except for following categories of employees:

  1. officials, employees and workers in federal and local government departments, or appointed for federal or local government projects;
  2. members of the armed forces, police and security officers;
  3. domestic servants working in private residences; and
  4. workers employed in agriculture, apart from employees of agricultural companies engaged in processing products, or operating or repairing machinery required for agriculture.

In addition, employees in the Dubai International Financial Centre and the Abu Dhabi Global Markets, two financial free zones in the UAE, are subject to the labour laws specific to those free zones, and not to the UAE Labour Law.

Probation period

It is often the case that a new employee is hired under a probation period. Under the UAE Labour Law, the probation period may be up to six months. No employee may be required to serve two probation periods with the same employer.

Minimum wages

There is no minimum salary stipulated in the Labour Law. The GDRFA requires an employee to receive a minimum salary of 8,000 UAE dirhams per month if the employee wishes to sponsor residence visas for dependent family members.

Working hours

Article 65 of the UAE Labour Law provides that the regular working hours for the private sector are eight hours per day and 48 hours per week. An employee who works in excess of either threshold will be entitled to overtime compensation. Overtime compensation is 25 per cent more than the employee's salary during the normal working hours, which increases to 50 per cent for overtime between 9pm and 4am.

For some employees, working hours may be extended to nine hours per day. This primarily benefits employers in the hospitality (hotels, restaurants and cafes) and retail sectors.

Regular working hours are reduced by two hours daily during the holy month of Ramadan.

Reduction in working hours

Construction and industrial workers are not permitted to work outdoors during the peak hours of the day during the summer. Any firm found to have staff working during the designated break time would be fined 5,000 dirhams per worker up to a maximum of 50,000 dirhams.

Working in remote areas

Every employer who employs staff in remote areas that are not served by public means of transportation must provide the employees with the following services:

  1. suitable transportation;
  2. suitable accommodation;
  3. suitable drinking water;
  4. suitable food;
  5. first aid services; and
  6. means of entertainment and sports activities.

All the above services, apart from food, are provided on the employer's account.

Labour accommodation

In June 2009, the UAE Cabinet issued a General Standards Manual for Group Labor Accommodation and Related Services. The Manual sets minimum standards for facilities that must be provided to labourers while adhering to the established environmental and health and safety laws. It also recommends providing recreational amenities. Municipal authorities regularly inspect labour accommodation.

Ministerial Resolution No. 591 of 2016 requires employers with 50 or more employees who each earn less than 2,000 dirhams per month to provide accommodation for its employees.

Insurance

Employers in the Emirates of Abu Dhabi and Dubai are required to provide medical insurance to all employees.

Official leaves and vacations

Friday is the official weekend for all employees, except for daily wage workers. If circumstances require an employee to work overtime on that day, the employee will be entitled to regular working hours' pay, plus an increase of not less than 50 per cent of that amount.

Employees are entitled to paid leave on the following public holidays:

  1. Hijri New Year – one day;
  2. Gregorian New Year – one day;
  3. Eid Al Fitr – two days;
  4. Waqfa day and Eid Al Adha – three days;
  5. Prophet Mohammed's birthday – one day;
  6. Isra and Miraj or the Ascension Day – one day;
  7. Martyr's Day – one day; and
  8. National Day – one day.

In addition, employees are entitled to annual leave of:

  1. two days per month, if they have completed six months of service but not one year; or
  2. 30 days, if they have completed one year of service.

An employee's annual leave is not extended by any weekends or official holidays that fall during the course of the annual leave.

Employees are entitled to sick leave of not more than 90 days per year subject to conditions stipulated in the law. They will receive full pay for the first 15 days, half pay for the next 30 days and no pay for the final 45 days. Employees are not entitled to any paid sick leave during the probation period.

An employee may be granted special leave not in excess of 30 days, without pay, for the performance of Hajj. This is granted only once during the employee's years of employment.

Wage Protection System

The Wage Protection System (WPS) is intended to ensure that all employees are paid salary in a timely manner. WPS requires that employers pay all their employees their monthly salaries in UAE dirhams via the local banking system. Payments are monitored by the MOHRE to ensure compliance and it conducts inspections and takes other remedial measures in the event of discrepancies.

Termination

The UAE Labour Law places some limitations on the circumstances in which an employer may terminate the services of an employee. An employee may serve under a contract of specified term or unspecified term. An employee serving under a specified-term contract may have services terminated only for one of the specific reasons of employee misconduct that are listed in Article 120 of the Labour Law. In contrast, an employer may terminate services of an employee who is serving under an unspecified-term contract by providing at least one month notice of termination on the basis of a 'legitimate reason' for termination. A legitimate reason is a far less demanding standard than the grounds listed in Article 120. If the termination is done improperly or for an arbitrary reason, then the employer could be required to pay up to three months' salary as damages for wrongful dismissal. The UAE Labour Law does not provide for damages in excess of this figure.

End-of-service benefits

At end of service, an employee becomes entitled to a severance payment known as an 'end-of-service gratuity'. This payment is equivalent to 21 days of salary for each of the employee's first five years of employment, plus 30 days of salary for each year thereafter. The end-of-service gratuity is based on the employee's total salary excluding any allowances or in-kind payments, which is roughly equivalent to basic salary. The end-of-service gratuity obligation can be replaced, in some circumstances, by an employer-funded pension or savings scheme.

Grievances

Employees with grievances may file the grievance directly with the labour disputes section of the MOHRE. Collective bargaining is not permitted in the UAE and there are no labour unions. The MOHRE serves as the principal body charged with protecting employees' rights.

Renewal and transfer

Most employer-sponsored UAE residence visas are valid for a two-year term, after which they must be renewed for the employee to stay in the country. Employers are subject to numerical limitations depending on the employer's business activities. Some of the free zones give employers visa quotas that depend on the size of the employer's business premises.

Visa transfers within the UAE are generally possible for employees who hold bachelor's degrees or higher educational qualifications. The specific requirements on transfers vary somewhat from time to time and from place to place.

Free-zone employees

There are numerous free zones in the UAE and most of them have their own separate employment regulations that apply in addition to the provisions of the UAE Labour Law. The exceptions are the Dubai International Financial Centre and the Abu Dhabi Global Markets, which have their own stand-alone labour regulations that apply in lieu of the Labour Law.

As noted above, employees in free zones do not generally hold labour permits issued by the MOHRE. Instead, they are granted residence visas by the GDRFA under the sponsorship of the free-zone authority where they are employed.