UAE

Contract Types

Contracts in the United Arab Emirates (UAE) can only be fixed term. The duration of the contract usually aligns with the (foreigner’s) residence visa and will thus be for 2 or 3 years. 

Salaries are always quoted on a monthly basis in the UAE and can be paid in currencies other than AED.

Probation

Probation cannot be more than 6 months and is agreed in writing in the contract. Typically, the probation period is 3 months and there can be no extension, even with a new contract.

Working Hours

The normal working week is from Monday to Friday for 40 hours, 8 hours per day. This reduces to 6 hours per day during Ramadan.

Overtime

Overtime is limited to 2 hours per day and 144 working hours over a 3 week period. Overtime is paid at 125% of normal pay between 4.01am and 9.59pm and 150% outside these hours or on weekends or holidays.

Other Financial

There is no requirement for a 13th month salary though some companies may offer this, especially companies operating on the Hijri (Muslim) calendar. Bonuses are common.

Other

Non-compete clauses are legal in the UAE but can only last for a maximum of 2 years and should be reasonable in scope.

Tax rates valid for 2024

Corporation Tax: 9% of profits on income over AED375,000

15% for companies with global revenues above AED3.15 billion

Consumption Tax: 5%

Employers’ Social Security: 12.5% except Dubai where it is 15%

For Emiratis and GCC nationals only

Based on minimum monthly salary of AED 1,000 and maximum of AED 50,000

Employees’ Contributions: 5% for Emiratis only

Income Tax Rates: No income tax

Notice

The notice period should be stated in the contract and must be between 30 and 90 calendar days. There is no notice required for those who are dismissed with just cause.

Payment in lieu of notice is allowed.

During Probation

14 days’ notice should be given during probation by the employer. For the employee, 14 days’ notice should be given if they are planning on leaving the UAE or 30 days if they are taking another job within the UAE. In this latter case the old employer can ask the new employer for compensation to cover the costs of recruitment.

Process

There are several grounds for summary dismissal, or dismissal with just cause, including, for example, gross misconduct, but also abusing position with the aim to obtain personal benefit, and joining another establishment without complying with controls and procedures in place. To dismiss for failure to perform duties the employer must go through a set process of investigations and warnings.

Employees on fixed term contracts can be dismissed with the correct notice period with no additional compensation due apart from the gratuity payment.

Discrimination laws apply in the UAE in terms of dismissal but note that positive discrimination against Emiratis is a protected category under law.

Severance Pay

In the UAE this is known as a gratuity payment and is payable in all circumstances after 1 year service, including for employees who are dismissed with cause. The calculation is 21 calendar days’ basic pay (not including allowances) per year of service for the first 5 years and 30 calendar days’ basic pay thereafter. This is capped at 2 years’ pay.

Additionally, when a foreign employee’s contract comes to an end they are entitled to a repatriation ticket from the employer to their country of origin.

National Public Holidays: 13

Please note: Local Emirate governments decide on a case-by-case basis whether a holiday should be given in lieu when it falls at the weekend.

New Year’s Day – 1st January

Eid Al Fitr* – 9th – 12th April

Arafat Day* – 15th June

Eid Al Adha* – 16th – 18th June

Islamic New Year*- 7th July

Mouloud* – 15th September

National Day – 2nd – 3rd December

*Muslim holidays move forward by 11 days each year and dates are tentative as they are subject to sighting of the moon.

Paid legal entitlement

In the UAE employees are entitled to 30 calendar days’ annual leave after 1 year of service, though in practice most employers will allow staff to take accrued holiday during their first year of employment.

Carry over permitted

There is no requirement to allow carry over.

Payment in lieu allowed

With the employer’s agreement payment in lieu of holiday can be made. Note that on termination, holidays are paid out at the basic rate of pay, ie not including allowances.

Sick

Employees are entitled to paid leave of 90 calendar days per year in the event of a serious illness (a doctor’s note is required within 3 days). The first 15 days are paid 100% by the employer. From the 16h to the 45th day, employees receive 50% of salary from the employer. From then until the 90th day sick leave is unpaid. Employees are eligible for sick leave after 3 months of employment.

Maternity

In the UAE, new mothers are entitled to 45 calendar days of maternity leave fully paid by the employer. They can then take an additional 15 days at half pay. A further 45 calendar days of unpaid leave are available in cases where there are medical complications for the mother or child. Maternity leave can start 30 calendar days before the due date.

Employees are eligible for maternity leave after 1 year of employment; those with less than 1 year service are entitled to half the maternity benefits.

Employees have security of tenure during maternity leave.

Paternity

Fathers are entitled to 5 working days’ paid leave within the first 6 months of the child’s birth.

Parental

There is no parental leave in the UAE.

Bereavement

Employees are entitled to paid leave of 5 working days in the event of the death of a spouse and 3 days for the death of a relative within 2 degrees of relationship. In practice up to 3 days is often given for deaths beyond 2 degrees of relationship.

Hajj Leave

Muslim employees can take up to 30 calendar days of leave to perform the Hajj pilgrimage. This is available only once during the employee’s employment with the present company.

Study Leave

Employees studying at a Government approved UAE institution can take 10 days’ leave after 2 years’ service

Medical

A basic level of medical insurance is required in order for foreigners to obtain a work visa. Most employers will in addition offer private medical insurance policies which will cover a range of in and outpatient treatments plus dental and optical options. This will commonly be offered as family cover in professional companies.

Life

Most companies will offer a Group life insurance policy.

Allowances

The following are commonly offered in the UAE:

• Housing Allowance
• An annual air ticket to the country of origin for expatriate employees
• Car or transport allowance
• Education allowance for school age dependents in the UAE