How to Prepare an Employment Contract as per UAE Labour Laws: A Step-by-Step Guide

Creating an employment contract in the UAE requires careful attention to detail to ensure compliance with Federal Decree-Law No. 33 of 2021 (the UAE Labour Law). A well-drafted contract protects both the employer and the employee by clearly outlining the terms and conditions of employment. Below is a step-by-step guide to building an employment contract, followed by a sample template.

 Recommended Book for the new managers:

1- Navigating Managerial Challenges: Practical Solutions for Everyday Success

2- Update yourself with HR Knowledge :The Evolved HR

3- Enhance Your career as HRBP: Becoming HRBP ( harvard Listed Book, organically. 

Step-by-Step Process to Build an Employment Contract

Step 1: Determine the Type of Contract

1.   Limited (Fixed-Term) Contract: Specifies a start and end date. It automatically terminates upon expiry unless renewed.
2. Unlimited (Open-Ended) Contract: No fixed end date and can be terminated by either party with notice.

Step 2: Include Basic Information

1. Employer Details: Company name, address, and trade license number.
2. Employee Details: Full name, nationality, passport number, and visa details.
3. Job Title and Description: Clearly define the role and responsibilities.

Step 3: Specify Employment Terms

1. Start Date: The official date the employee begins work.
2. Probation Period: Maximum of 6 months. Include notice period (14 days) for termination during probation.
3. Work Location: Specify the workplace location (e.g., Dubai, Abu Dhabi, or a specific free zone).

Step 4: Define Working Hours and Overtime

·       Working Hours: Standard working hours are 8 hours per day or 48 hours per week.

·       Overtime: Specify overtime rates (125% of basic salary for regular overtime, 150% for night work).

Step 5: Outline Compensation and Benefits

• Salary: Specify the basic salary, allowances, and payment frequency (monthly).
• End-of-Service Gratuity: Mention the calculation method (21 days’ salary for the first 5 years, 30 days thereafter).
• Additional Benefits: Include health insurance, annual airfare, housing allowance, or other perks.

Step 6: Include Leave Entitlements

• Annual Leave: 30 days per year after completing one year of service.
• Sick Leave: Up to 90 days per year (full pay for 15 days, half pay for 30 days, unpaid for the remaining 45 days).

• Maternity Leave: 60 days (45 days full pay, 15 days half pay).
• Other Leave: Include provisions for compassionate leave, study leave, or unpaid leave if applicable.

Step 7: Add Termination Clauses

• Notice Period: Typically 30 days, but can be extended to 90 days if agreed.
• Termination Reasons: Specify valid reasons for termination by either party.
• End-of-Service Benefits: Clarify entitlements upon termination.

Step 8: Include Non-Compete and Confidentiality Clauses

• Non-Compete Clause: Restrict the employee from working with competitors for a specified period after leaving.
• Confidentiality Clause: Protect sensitive company information.

Step 9: Specify Dispute Resolution Mechanism

• Mention that disputes will be resolved through the Ministry of Human Resources and Emiratisation (MOHRE) or the Labour Court.

Step 10: Signatures and Attestation

·       Both parties must sign the contract.

·       The contract must be registered with MOHRE to be legally valid.

---

Sample Employment Contract Template

---

EMPLOYMENT CONTRACT
This Employment Contract is made and entered into on [Date] by and between:

Employer:
[Company Name]
[Company Address]
Trade License Number: [XXX]

Employee:
[Employee Full Name]
[Nationality]
Passport Number: [XXX]
Visa Number: [XXX]

---

1. Position and Duties

The Employee is employed as [Job Title] and shall perform the following duties:

·       [List of Responsibilities]

---

2. Contract Type

This is a [Limited/Unlimited] term contract.

·       Start Date: [DD/MM/YYYY]

·       End Date (if Limited Contract): [DD/MM/YYYY]

---

3. Probation Period

The probation period is [X] months, during which either party may terminate the contract with 14 days’ notice.

---

4. Working Hours

·       Standard Working Hours: 8 hours per day, 48 hours per week.

·       Overtime: Overtime will be compensated at 125% of the basic salary (150% for night work).

---

5. Compensation and Benefits

·       Basic Salary: AED [XXX] per month.

·       Allowances: Housing AED [XXX], Transportation AED [XXX].

·       Payment Frequency: Monthly, by [Payment Method].

·       End-of-Service Gratuity: Calculated as per UAE Labour Law.

---

6. Leave Entitlements

·       Annual Leave: 30 days per year after one year of service.

·       Sick Leave: Up to 90 days per year (15 days full pay, 30 days half pay, 45 days unpaid).

·       Maternity Leave: 60 days (45 days full pay, 15 days half pay).

---

7. Termination

• Notice Period: 30 days (or 90 days if specified).
• Termination by Employer: Valid reasons include poor performance or misconduct.
• Termination by Employee: Employee may resign with proper notice.

---

8. Non-Compete and Confidentiality

• The Employee agrees not to work with competitors for [X] months after leaving the company.
• The Employee agrees to maintain confidentiality of company information.

---

9. Dispute Resolution

Any disputes arising from this contract will be resolved through MOHRE or the Labour Court.

---

10. Signatures

Employer:
[Authorized Signatory Name]
[Signature]
[Date]

Employee:
[Employee Name]
[Signature]
[Date]

---

Key Notes for HR Professionals

1. Language: Contracts must be in Arabic, but a dual-language contract (Arabic and English) is acceptable.
2. MOHRE Registration: Ensure the contract is registered with MOHRE to avoid legal issues.
3. Free Zone Contracts: If the employee is working in a free zone, check the specific regulations of that zone.

By following this step-by-step guide and using the sample template, HR professionals can create compliant and comprehensive employment contracts that align with UAE Labour Laws. Always consult with a legal expert or MOHRE for specific cases or updates to the law.