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Whether an employer or employee, labor and employment issues are bound to arise during the course of business in the UAE. Employers are primarily concerned with minimizing costs and reducing risk through the use of effective audit services and diligent representation when litigation is inevitable. Employees, on the other hand, must beware of the numerous pitfalls relating to employment in the UAE and must be prepared to vigorously pursue claims when necessary so as to ensure not only their continued employment but also a fair work arrangement.
Employment relationships, whether they be between UAE employers and UAE nationals or UAE employers and expatriates, are governed by Federal Law No. 8 of 1980 Regulating Labour Relations (“Labour Law”), various relevant resolutions and executive council decisions, and current practices/customs of the Ministry of Labour. That said, government employees and certain others are exempt from the Labour Law. Yet the Labor Law has far-reaching application, and actually governs free zone employment agreements even though such employees are otherwise subject to free zone rules and regulations and are often exempt from local laws relating to labour bans. While not always applicable, all parties should be familiar with the Labour Law.
The employment relationship often begins with an agreement, and proper drafting of such agreements requires a deep understanding of relevant UAE law and custom. There are myriad customary and legal practices of which one needs to be aware; for example, it is often the case that employees will arrive in Dubai based on promises made in an official document only to learn that the employment relationship itself is in fact governed by an altogether separate document, namely a Ministry of Labor contract. Furthermore, employees in particular should be mindful of the difference between “unlimited and “limited ” contracts, which can be misleading in name. “Unlimited” contracts are actually akin to employment at will, and are easier to terminate than limited contracts provided the terminating party gives appropriate notice. “Limited” contracts are not so easy to terminate without cause, and so it is particularly important that such agreements set forth each party’s expectations, duties, and obligations clearly and concisely. The agreement should also include provisions relating to compensation, allowances, bonuses/commissions, and end-of-service benefits (based on salary and recurring bonuses). Meanwhile, employers should concern themselves with limiting liability for their employees’ actions, and with making clear the terms under which an employee can reasonably be fired.
Ultimately, whether employer or employee, the goal is to reduce costly and needless litigation. When disputes arise in the UAE, the department of reconciliation will try to reconcile the dispute among the parties. If that effort is ultimately unsuccessful, litigation will commence. Legal proceedings are in Arabic, whether it be spoken or written, and non-Arabic speaking litigants are encouraged to hire diligent local counsel to represent them in the event that litigation does in fact commence. Above all, there is no substitute for an understanding of the local court system.