Employment Law Considerations in the United Arab Emirates (UAE)
It’s a big world out there and employment laws vary dramatically from one country to the next. Consider for example, the United Arab Emirates, where it is illegal to establish trade unions, collective associations and workers’ councils, and any action to do so would likely be considered a public disorder offense.
The UAE, however, is much like most countries—outside the United States—in that it has specific laws governing contracts between employers and employees. Federal Law No. 8 of 1980 (the “Labor Law”) governs most employment contracts and employer/employee relationships in the UAE, and sets forth standards—which employers cannot contract around—concerning workplace conditions and employment generally.
But not all employers, or even all areas of the country, are governed by the Labor Law. To promote foreign investment into the country, the UAE established a number of “Free Zone” areas. These Free Zones have their own laws and regulations, including employment provisions. As a result, the Labor Law does not apply to employees working in the Free Zones. The most prominent Free Zone in the UAE is the Dubai International Financial Centre (known as the DIFC). Employees working in the DIFC are governed by DIFC Employment Law No. 3 of 2012. Additionally, there are other categories of employees, such as domestic workers, that are exempt from the Labor Law.
Finally, employment and immigration are inextricably linked in the UAE. In order to live and work in the UAE, all non-UAE nationals must obtain a work permit and a residency visa which allow them to live and work in the country. A residency visa is usually linked to the employment visa application and will allow the employee to reside and work in the UAE only for the duration of his/her employment. Therefore, employers are also considered “sponsors” of an employee for residency purposes.
Employers and employees face significant penalties for failing to comply with the UAE immigration procedures and requirements such as fines in the thousands of dollars and jail time. Just like foreign companies who have to get appropriate visas for employees to work in the United States, American companies need to make sure that they are complying with UAE immigration laws when seeing to transfer U.S. employees to the UAE even for a short period of time.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.