UAE Labour Laws

Clarendon Parker provides some answers to frequently asked questions with specific reference to the UAE labour law and visa related issues. Clarendonparker cannot assume legal responsibility for the accuracy of any particular statement. In the case of a specific problem, it is recommended that professional advice be sought. These answers serve as guidelines only.

Can employers deduct bank guarantees from employees' salaries?

The Ministry of Labour and Social Affairs (the Ministry) has issued a statement warning employers against deducting the amount of the bank guarantee from employees' salaries saying that in such cases legal action could be taken against employers who are in violation of Ministerial Regulation No. 851 (Regulation 851). If a complaint is submitted to the Ministry against an employer for violating the provisions of regulation 851 which prohibits employers from deducting the value of the bank or other guarantee from employees' salaries, the errant employer may be subject to 6 months in jail, a fine of between AED 3,000 to AED 10,000 (inclusive) or both. For example, a clear violation of employees' rights as well as the Ministry's instructions and Regulation 851 would be a company issuing a circular to all its employees informing them of a monthly deduction from their salaries in order to cover the amount of the bank guarantee deposited by the company with the Ministry to obtain employment visas for its employees. The company would still be in violation of Regulation 851 even if the employer intends to reimburse the deducted amount to the employees at the end of their employment contracts.

Can an employee receive a one-year ban for breaking a limited contract without notice?

Employees on a limited term employment contract who resign from their employment without notice will receive a 1 year ban on employment in the UAE. Further such employees will not be entitled to end-of-service benefits if their continuous period of employment has been less than 5 years and in accordance with the Labour Law, the employees will also be subject to a salary deduction of 45 days, for breaking the limited term employment contract. According to the Labour Law, if an employee who is bound by a limited term employment contract leaves the employment on his own accord before the expiry of the term of the employment contract, the employee will not be entitled to end-of-service benefits unless the continuous period of employment exceeds 5 years

Are trade unions expressly prohibited in the UAE?

Trade unions, while not expressly prohibited, do not exist in the UAE. Strikes and lock outs are, as a form of industrial protest or economic pressure, strictly forbidden. Strikes, lockouts or any act of aggression towards employers and non-striking employees are banned in the UAE. In the case of a collective dispute between the employer and all or a group of the employees, an complaint in writing must be submitted to the Ministry of Labour & Social Affairs ("Ministry") by the employees. In an effort to resolve the matter, the Ministry adjudicates the matter through a duly appointed "Conciliation Board". The Conciliation Board will take a decision within two weeks of the submission of the dispute by majority vote. If the parties have agreed not to be bound by the decision of the Conciliation Board then, they may appeal the decision to the "Supreme Arbitration Board". The Supreme Arbitration Board has the same powers as that of the courts and one of the members of the Supreme Arbitration Board must be a judge of the UAE Federal Supreme Court. It is very rare and only in exceptional circumstances that the courts will agree to hear collective labour disputes.

How many days annual leave is permitted under the UAE Labour Law?

The UAE Labour Law states that an employees who have worked for 1 year or more is entitled to holiday leave of 30 days per year and when the employees are terminated the employees are entitled to "annual leave in respect of fractions of the last year". The terms "day" and "year" are not defined in the UAE Labour Law. According to the Labour Department "day" means any calendar day (including weekends and public holidays) and "year" means the 12 months calculated from the effective date of the employee's employment. The interpretation is therefore that this refers to 30 calendar days. 

When an employee transfers employment to another employer in the UAE, can he transfer his work permit and residence visa directly to his new employer?

If an employee who has been terminated or resigns from the employ of the employer finds alternative employment with a licensed entity in Dubai or the UAE then, the employee may elect to have his/her work permit and residence visa transferred to his/her new employer who would then replace the existing employer as the employee's sponsor. If the transfer process does not involve the employee exiting the UAE, the existing employer will not have to provide the employee and his family (if applicable) with one-way air tickets to the employee's home country nor repatriate the employee's belongings (if such repatriation is a benefit under his employment contract or the usual practice of the employer in such circumstances).

However, it should be noted that the rules relating to the transfer of sponsorship have been tightened recently and it is becoming increasingly difficult to obtain permission from the Ministry of Labour and the Ministry of the Interior for the transfer of sponsorship regardless of the fact that the existing employer agrees to the transfer. It appears that sponsorship may not be transferred unless the employee falls into one of the applicable categories for transfer and meets certain requirements laid down by the Ministries.

It is difficult to say with any certainty what these categories and requirements are as they are continually being revised and their interpretation and application is subject to the discretion of the Ministries. The requirements do, however, exclude from transfer employees who do not meet a particular educational level or who fall outside the ambit of one of the exempt categories for transfer.

As a general rule an employee wishing to be transferred from an existing employer to a new employer must do so within the same profession in which he was previously employed and must hold a valid tertiary education qualification or be employed in a managerial position with the current employer. For example a doctor cannot transfer his sponsorship to an oil company unless he is to be employed as the in house doctor for that company.

If the Ministries do not agree to the transfer of the sponsorship, the employee must leave the UAE within 30 days after the cancellation of the employee's residence permit and can only re-enter the UAE for work purposes after six months have passed.