1. Legal Overview
The United Arab Emirates (UAE) legal system is a federal system comprising seven Emirates, of which Abu Dhabi and Dubai are the largest and best known. The right of non-Arabian Gulf Cooperation Council nationals to live and work in the UAE is subject to the requirement to be sponsored for a residence visa and labour card by an employer with an established corporate presence in the UAE. This requirement can cause logistical and practical issues for visiting lecturers or individuals whose role is to foster relations between a local institute and a more established institute of higher education in the US or elsewhere.
The UAE Government (particularly in Abu Dhabi) has tried to encourage foreign educational establishments with high reputations in their home countries to set up operations in the UAE (often offering government subsidies) or to develop relationships with local institutions in order to develop the educational services available in country. The focus is very much on the transfer and sharing of know how and the development of the national Emirati population. Currently 75% of the UAE’s native population are young people under the age of 25.
Certain higher education establishments are set up in free zones within the UAE, such as Knowledge Village and Academic City in Dubai. These allow a streamlined immigration and labour authorisation process in which visas and labour cards are issued to employees by the free zone authority, acting in conjunction with the university or college. Most higher education establishments, however, are established ‘on-shore’, which means they deal directly with the UAE Ministry of Labour and Immigration department to arrange the required authorisations for expatriate employees. On-shore companies must be majority owned by Emirati nationals. In free-zones it is possible to establish as a branch of a foreign company (i.e. Wellington College – Dubai) and foreign ownership requirements do not apply.
The main legislation that applies to all employers and employees with respect to employment matters is UAE Law No. 8 of 1980, as amended (the Labour Law). This is a federal law and applies to each Emirate and, with a few minor exceptions, covers all UAE employees in the private sector (including in free zones). The Labour Law sets out an employee’s minimum entitlements and employers are free to confer different terms, provided these are not less favourable to the employee. Any expatriate who is sponsored by an employer for residence and labour purposes will be deemed as an employee of that company, and will be entitled to the full protections of the Labour Law, including minimum holiday entitlements, maximum working hours and the right to an end of service gratuity.
A major attraction of working in the UAE is that there is, at present, no personal income or corporation tax. Those who own or rent property are required to pay a small social levy (currently 5% of the overall rental value of a lease).
Because of the nature of the employment sponsorship regime in the UAE, it is generally not possible for an educational professional to work for any establishment other than the company sponsoring their residence visa. Special licences, often obtained through the professional setting up their own company, are required to perform consulting services in the UAE. Part-time working for two employers is permitted as long as both employing companies sign a no-objection certificate and the Ministry of Labour issues the professional with a temporary work permit for the secondary employment.
2. Immigration Requirements
Those who are not sponsored by an employer (whether directly or indirectly as the dependant of a sponsored employee) are unable to remain in the UAE. Sponsorship applications are not normally granted to individuals below the age of eighteen and are harder to obtain for those above the age of sixty-five. That said, the maximum age limit may be discretionarily applied by the undersecretary of the Labour Department and assessed on a case-by-case basis; in the majority of cases, such applications will only be approved if the individual has specialist skills and experience and/or falls into certain professional categories including university professors.
Individuals who are nationals of one of around 30 countries (which include the USA, UK and Australia) are able to obtain a 30 day visit visa on arrival in the UAE. Such visas do not permit the individual to work in the UAE, however, and for employees being recruited or transferred to UAE operations, the sponsorship application process for a residence visa and work permit should be commenced prior to the employee’s arrival in the UAE.
This is a two-stage process where primarily the employer is required to submit a sponsorship application to the Ministry of Labour for an entry permit allowing the employee to enter the UAE and commence work. The first approval of the application can usually be obtained within fifteen days (subject to security clearance), and the entry permit is issued for a period of thirty days. A copy of the entry permit is sent to the employee with the original being collected upon arrival at the airport and stamped at the immigration clearance desk. Once in the UAE, the sponsorship application must be completed within sixty days of the employee’s entry (i.e. the issuing of the residence visa to the employee). Until an employee obtains their residence visa, they have a limited ability to rent or buy property, open bank accounts or purchase vehicles.
3. Employment Rights
An expatriate employee seeking to live and work “onshore” in the UAE must sign an employment contract, in English and Arabic, in a form prescribed by the Ministry of Labour (the MOL Contract). The MOL contract is an integral part of the sponsorship application process for a UAE work permit and residency visa. Such a contract must be entered into and registered with the MOL before it will issue a labour card for the employee. Free zones require similar short form employment contracts to be entered into.
Employers often will have a more comprehensive, supplementary contract of employment. These are similar to a normal contract seen in other jurisdictions, and will go into much more detail regarding the employee’s terms of employment. This additional contract will be construed against the employer and, therefore, will be enforceable only to the extent that it confers additional benefits on the employee and does not contradict the Labour Law and/or other laws of the UAE. Employees, who are UAE nationals or nationals of another GCC member state, will also have a MOL Contract but with slightly different provisions.
All employees are entitled to minimum rights, including areas such as:
- Working hours
- Overtime pay
- Holiday allowance
- Maternity leave
- Sick leave
- Notice periods
- End of service gratuity.
End of Service Gratuity
Generally, if an employee has more than one year of continuous service, he or she will be entitled to severance pay of up to 21 days of basic wages for every year of the first five years of service, and 30 days of basic wages for every year thereafter (provided the payment does not exceed two years of wage in total). The entitlement to severance pay is pro-rated for partial years worked once the initial year of service is attained.
Severance pay is calculated according to the last basic wage paid to the employee and is payable upon the termination or expiry of the contract of employment. Allowances and benefits are excluded from the calculation. However, payments such as bonus or commission may be included, depending on the terms for making such payments and the express provisions of the employment contract.
If an employee resigns during the first five years of service, his or her entitlement to severance pay will be reduced as follows:
- If the employee resigns between the first and third years of service, he or she will be entitled to receive only one-third of the severance pay
- If the employee resigns between the third and fifth years of service, he or she will be entitled to receive only two-thirds of the severance pay
An employee on a fixed-term contract of employment will lose his or her entitlement to severance pay if the employee resigns before the expiry of the fixed-term and has less than 5 years of continuous service.
If an employee is dismissed summarily or resigns without notice (other than in certain prescribed circumstances), he or she will lose all entitlements to severance pay.
4. End of employment
Employees can either be employed on an unlimited term basis, or for a contract of fixed duration. Employees may be entitled to compensation of 3 months’ remuneration if terminated ahead of the end of the fixed term, or if terminated for an invalid reason on an unlimited term contract. There is no set list of reasons that are ‘valid’ and ‘invalid’ under the Labour Law, and the minimum notice period (other than dismissals for ’cause’) is 30 days.
Employees are entitled on termination to notice pay, pay in lieu of untaken holiday allowance and end of service gratuity. Employees are required to cancel their residence visa and labour authorisation under their employer’s sponsorship as soon as possible following the termination of employment. Employees then have 30 days from the date of the visa cancellation to secure alternative employment or to leave the UAE. If the employee has had their employment terminated by their employer, they are entitled to an air ticket to return them to their country of origin.