Three ministerial Decrees were recently declared which will impact on specific areas of employment relationships and work permit sponsorship within the UAE. The Decrees will be legally effective on 1 January 2016.
Standard Work Contract (Decree 764)
This Decree requires employers to provide all workers with a standard form employment contract. The contract is intended to be much more effective and detailed than the existing Ministry of Labour employment contract.
The takeaway points:
- Any employment offers provided to employees are required to be consistent with the standard contract
- The standard contract, which is divided into 11 clauses, details the rights and obligations of both employer and employee. The contract sets out a worker’s profession, job title and basic remuneration allowances
- Fixed term contracts must be for a period of two years or less
- Any renewals of existing employment contracts must also comply with the new standard contract and the terms cannot be changed without approval by the Ministry of Labour.
Terminating the employment contract (Decree 765)
This Decree outlines the conditions when an employment contract can be ended and applies to both term and non-term contracts to ensure that any termination is lawful.
The takeaway points:
- Notice periods must be between one and three months only
- It is possible to end fixed term contracts part way through the fixed term. However, this is subject to notice of termination being provided by the party serving notice and an agreed level of compensation (capped at three months remuneration) being paid
- The Decree does not significantly amend the circumstances in which employers and employees may end the employment relationship. Employment relationships may be terminated in the following way:
- by mutual agreement between employer and employee at any time
- by one party acting individually to end the contract while fulfilling their legal obligations of early termination (including written notification at least one month in advance and no longer than three months)
- if an employee breaches labour law rules under Article 120 (gross misconduct)
- non renewal of a fixed term contract after the fixed term has passed.
The new Decrees are intended to provide additional protection to employees in relation to their employment contracts, notice periods and ability to obtain alternative employment and visa sponsorship within the UAE. The Decrees reflect the growing trend within the GCC of the national authorities seeking to update their labour laws to provide more safeguards for employees around key issues such as protection of the contractual terms of employment and flexibility around visa sponsorship.
Please contact a member of the Pinsent Masons team if you have any queries relating to the new labour legislation.
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