Social Security in UAE

The Labor Law

Scientific Essay, 2011
9 Pages




Employment contracts


On what grounds can an employer terminate an employee’s employment?

When can a contract of employment be terminated?


Severance compensation


Employment of foreigners

Labour Disputes




Laborers are people who serve an organization with the utmost devotion of their efforts against perceived benefits that help them meet the ends. The standards of life of workers are normally maintained using support by the government through enforcement of the law of land that outlines the relationship between the employers and employees. These laws provide a level of social security to the employees and this report discusses some important features of the labor laws in UAE.

In every country economic conditions keep changing in opposite direction; at times there is economic booms and organizations tend to create jobs, and at times there are recessions and firms require less workers and normally start paying less. These changing circumstances affect the employees as they need to struggle hand to find and alternative employment in case they get laid off. This requires that the employer exhibit a more litigious attitude and must feel their obligations against their employees. UAE Labour Law governs the relationship between the employee and the employer through its Federal Law No. 8 of 1980 (“Labour Law”). The following sections outline some important features of the law that help offer social security to the employees:

Employment contracts

The employment contracts may be of limited or unlimited durations (Art. 38). However fixed term contract can only be of duration of at most four years after which they may be renewed. On the contrary a fixed term contract with no stipulated time of expiry in a written agreement continues even at the lapse of four years (Klebanoff, et al., 2008).


The Law governing labor affairs in UAE classify wages into total and basic where the basic wage does not contain any allowances (Art. 1). However, the total wages refers to the net remuneration paid to the worker and includes

allowances for travel, accommodation, medical insurance and any other benefits- that may account for around 40% of the total wage- agreed upon between the two parties to contract. Nonetheless, the payment of gratuity is based on the basic wage (Art, 134). All these allowances are at the discretion of the employer; thus the offer of the allowances differ form employer to employer. In Dubai, however, the employer is bound to provide a mandatory health insurance to employees. Besides, the law does not provide for the pension (Klebanoff, et al., 2008).

On what grounds can an employer terminate an employee's employment?

The Law provides that if a worker is laid off for an offense that is unconnected to the work will be supposed to be arbitrarily dismissed. Moreover, the Law does not recognize the lay off due to redundancy and hence is not accepted as a reason for the termination of employment on part of the employer. However, an organization is allowed to restructure the business. Furthermore, the Law itself gives a list of conditions when an organization has the right to dismiss its workers. These circumstances do not rest on the contract of employment. However, in all cases the employer is required to serve a notice to the employee. Recently the Law has also included a provision that in case at a similar job two employees are working and one of them is an expat and the other a national, the employer cannot terminate the employment of the national if the employment of the expat is not terminated in the same position (Hennessy, 2009).

When can a contract of employment be terminated?

The contract of employment can be terminated at the mutual agreement of both the parties, the time period of the agreement has lapsed and has not been expanded (Klebanoff, et al., 2008). The termination of employment, however, requires that the employee serves a probationary period, normally of six months, to allow a degree of flexibility in determination of the suitability of the employees for some given position in the organization. Thus during the probation period the employer may terminate the employment at his sole discretion without even serving a notice and with the payment of end of service benefits (Art. 37) (Hennessy, 2009).


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Social Security in UAE
The Labor Law
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ISBN (eBook)
ISBN (Book)
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social, security, labor
Quote paper
Assistant Professor Nadeem Uz Zaman (Author), 2011, Social Security in UAE, Munich, GRIN Verlag,


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