GUIDE TO UNITED ARAB EMIRATES LABOUR REGULATIONS | NuSmart HRMS
 

GUIDE TO UNITED ARAB EMIRATES LABOUR REGULATIONS | NuSmart HRMS

Introduction

The purpose of this guide is to provide general information about the statutory requirements as per the labour regulations and common practices on employment in United Arab Emirates (UAE). The guide tries to explain the different laws and regulations concerning employment and should be taken for reference only.

When in doubt or if further clarification is required, please refer to or contact the relevant Government authority for assistance.

UAE Labour Regulations

The various labour regulations in Indonesia are:

  • Regulation of Employment Relationship (2021) or UAE Labour Law
  • Dubai International Financial Center (DIFC) Employment Act
  • Federal Law on Pensions and Social Security

UAE Labour Law and DIFC Employment Act

The Regulation of Employment Relationship or UAE Labour Law is applicable to people working in UAE and it’s Free Zones. However, those working in the Dubai International Financial Centre (DIFC)  is governed by the DIFC Employment Act.

  • Coverage

The UAE Labour Law and DIFC Employment Act covers all employees and workers in the private sector regardless of their wages or salaries as well as job grades/levels or types of employment, that is, permanent or temporary.

  • Hours of Work

Both the UAE Labour Law and the DIFC Employment Act stipulate that all employees should not work more than 8 hours a day or more than 48 hours a week. During the Ramadan period, the working hours will be reduced by 2 hours to 6 hours a day. There shall be no reduction in employee’s salary or wage during the Ramadan’s reduced working hours.

Under the UAE Labour Law, an employee must not work for more than 5 consecutive hours without a break of 1 hour. The break is not included in the normal working hours.

Under the DIFC Employment Act, an employee must not work more than 6 consecutive hours without a break of 1 hour.

  • Overtime

Under the UAE Labour Law, an employee cannot work more than 2 hours a day of overtime work and the total working hours (normal and overtime) for every 3 weeks must not exceed 144 hours. No employee is allowed to work for more than 2 consecutive weekend days.

The overtime rates payable are as follow:

Condition Overtime Rate
Normal Working Day
Overtime hours before 10pm 1.25 times the hourly rate of pay
Overtime hours from 10pm to 4am 1.5 times the hourly rate of pay
Weekend (Off & Rest Days)
Overtime hours 1 day replacement, or

1.5 times the hourly rate of pay

 

The DIFC Employment Act does not cover overtime.

  • Rest Day and Public Holidays

Both the Labour Law and Employment Act state that all employees must have at least 1 rest day per week.

There are 7 gazetted National public holidays in UAE.

  • Probation Period

Under the UAE Labour Law, employer may establish a probation period of no longer than 6 months when appointing a new employee. The employer can terminate the employment during the probationary period by giving the employee 14 days’ notice in writing.

On the other hand, if the employee wants to resign during the probationary period to join another employer in UAE, he/she needs to give 1 month notice in writing to the employer.  At the same time, the new employer needs to compensate the original employer the costs of recruitment or contracting with the employee.

Under the DIFC Employment Act, the probationary period is also limited to 6 months. However, there was no mention of notice period by either party during the notice period or compensation of recruitment costs to the new employer in the Employment Act.

  • Leaves

3.7.1  Annual Leave

Under the UAE Labour Law, an employee is entitled to annual leave as follow:

Length of Service Number of Days Entitlement
More than 6 months but less than 1 year 2 days per month
1 year or more 30 days

 

However, under the DIFC Employment Act, an employee who has worked for at least 90 days with the employer is entitled to 20 working days of annual leave per year. The employee can carry forward up to 5 days of his unconsumed annual leave balance to the following year which if remain unconsumed shall be forfeited.

 

Sick Leave

Under the UAE Labour Law, an employee must report within 2 days to the employer of their illness or injury and those who have completed at least 6 months of service is entitled to the following sick leave:

Length of Service Number of Days Entitlement
During probation period Not entitled to any sick leave
3 months after the probationary period 90 days as follow:

·           1st 15 days with full pay

·           Next 30 days with half pay

·           Subsequent period without pays

 

Under the DIFC Employment Act, an employee must report within 3 days to the employer of their illness or injury is entitled to the 60 days of sick leave per year as follow:

Sick Leave Entitlement Sick Leave Pay
1st 10 days of sick leave Full pay
Next 20 days of sick leave Half pay
Subsequent sick leave No pay
Excessive Sick Leave – more than 60 days of sick leave Employer may terminate the contract

Maternity Leave

Under the UAE Labour Law, all female employees regardless of length of service are entitled to 60 days of maternity leave as follow:

Maternity Leave Entitlement Maternity Leave Pay
1st 45 days of maternity leave Full pay
Next 15 days of maternity leave Half pay
Additional 45 days – if employee or child is sick due to the pregnancy or childbirth No pay
Additional 30 days – if child requires constant and permanent care/monitoring Full pay
Additional 30 days – if child continues to require constant and permanent care/ monitoring No pay

 

Under the DIFC Employment Act, all female employees who have been employed for at least 12 months prior the childbirth will be entitled to 65 days of maternity leave as follow:

Maternity Leave Entitlement Maternity Leave Pay
1st 33 days of maternity leave Full pay
Next 32 days of maternity leave Half pay

 

Under the DIFC Employment Act, the maternity leave is also available to a female  employee who adopt a child of less than 5 years old.

Paternity Leave

There is no paternity leave under the UAE Labour Law. However, the DIFC Employment Act provides up to 5 working days of paternity leave to male employee if he has been in continuous employment with the same employer for at least 12 months prior to the wife giving birth. The paternity leave is also available if the male employee adopts a child of less than 5 years old.

Special Leave

A Muslim employee who has completed at least 1 year of continuous employment with the employer is entitled to special unpaid leave not exceeding 21 days to perform Hajj pilgrimage once during the period of their employment with the company.

Other Leaves

Under the UAE Labour Law, an employee is entitled to take paid leave for the following reasons:

Type of Occasion Number of Days
Bereavement Leave – death of spouse 5 days
Bereavement Leave – parents, child, grandparents, sibling, and grandchild 3 days
Parental Leave – to take care of child during the 1st 6 months of childbirth 5 working days
Study Leave – if studying at an approved institution in UAE and employee has worked for at least 2 years with the employer 10 working days per year
Sabbatical Leave – for national or local employees requiring performing national or reserve service Based on length of the national or reserve service

 

  • Termination

Under the UAE Labour Law, either party may terminate the employment contract by giving the required notice period as stipulated in the contract, provided that such period is not less than 30 days and not more than 90 days. Either party may terminate the employment contract without notice or waiting for the expiry of the notice by paying the other party a sum equal to the wages or salary of the notice period.

Under the DIFC Employment Act, the notice period for termination by either party is as follow:

Length of Service Notice Period
Less than 3 months 7 days
More than 3 months but less than 5 years 30 days
More than 5 years 90 days

 

The above does not apply to employee under probation, agreed in contract based on expiry of fixed term, excessive sick leave, and/or where both parties agreeing to a longer period in the contract.

  • Gratuity Payment

Under the UAE Labour Law and DIFC Employment Act, an employee is entitled to gratuity payment if he/she has completed at least 1 year of continuous service with the employer. The gratuity payment shall be as follow:

Length of Service Gratuity Amount
1st 5 years of service 21 days’ salary for each year of service
Each additional year of service after the 1st 5 years 30 days’ salary for each year of service

 

The total gratuity payment must not exceed 2 times the annual salary of the employee, and any absence from work without pay shall not be included in the computing of the period of service.  For any incomplete year of service, the gratuity payment will be pro-rated in accordance with the number of completed months of service.

  • Retirement Age

The retirement age in UAE is 60 years old. However, employees are allowed to continue working till the age of 65 years old.

  • Minimum Wage

There is no minimum wage in UAE for employees.

Pensions and Social Security Law

The Pensions and Social Security in UAE is only applicable for all employers and local nationals. Foreigners are excluded from contributing to the pension and social security scheme.

The monthly contribution is 12.5% for the employer and 5% for the employee.

Income Tax

There is no personal income tax in United Arab Emirates

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We understand the changing needs of the workforce so we provide an easy-to-use mobile application for employees so that they can apply leave, expenses and check their salary slip anytime on their mobile phone. With NuSmart all the information is readily available to the employees even when they are not in the office.

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Besides offering a complete cloud-based employee life-cycle management software, we do offer the following services:

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