Dubai is the most populous city in the United Arab Emirates (UAE), and its economy is described as a “centrally planned free market capitalism.” The economy of the emirate of Dubai, one of the 7 emirates that comprise the country, has diversified successfully from its dependence on oil and gas. Dubai has emerged as a hub of tourism, banking, prime real estate development, and manufacturing for the Western investors in the Middle East. Free zones, excellent infrastructure, and incentives for diversification make the city an ideal destination for foreign investments.
Currency: UAE Dirham
Principal Language: Arabic
Government: Government of the Emirate of Dubai
In Dubai, the employment contract requirements are no different than other places in the UAE. These contracts need to be in Arabic and can be for a definite (fixed) or an indefinite period. Duration of a definite-term contract may not be more than 4 years, but it may be renewed for a shorter or equal term with mutual agreement.
Probation period cannot be longer than 6 months, during which an employer is at liberty to terminate the employee without giving notice or paying severance. The probationary period for an employee cannot be extended, and it is included in calculations of an employee’s years of service.
Employees’ work schedule cannot be more than 8 hours per day or 48 hours per week in a 6-day workweek. The workday maybe even 9 hours in some commercial workplaces. Daily work hours are shortened by 2 hours daily during Ramadan. Employees are not allowed to work longer than 5 consecutive hours without breaks, and these breaks are not included in their working hours.
Friday is the regular rest day for all employees in Dubai, barring day laborers. Private sector organizations are allowed to fix their own 5-day workweek, but the usual workweek in Dubai is from Sunday to Thursday with Friday and Saturday as weekly off days.
The essential changes to work hour rules in the Dubai International Financial Centre (DIFC), a federal financial free zone, are:
- Weekly work schedule can be more than 48 hours when employees give the consent to work more hours in writing
- Permission for reduced hours during Ramadan apply only to fasting employees
An employee working more than the regular working hours is entitled to an additional overtime payment of 25%. Overtime during night shift is paid at 50% additional remuneration. Law restricts overtime work to 2 hours a day unless there are certain exceptional circumstances. These requirements do not apply to persons in supervisory or managerial positions.
Employees in Dubai are entitled to fully paid leave on the following public holidays:
- Jan. 1: New Year's Day
- Birthday of Prophet Mohammed
- Al Isra and Al Mi'raj (Ascension of the Prophet)
- Eid al–Fitr (2 days)
- Eid al-Adha (3 days)
- New Year's Day (Islamic calendar)
- Dec. 2: UAE National Day
Employees receive a comp off plus 50% premium over their regular wages if they are made to work on a public holiday, and 150% payment if the comp off is not granted.
Completing 1 year of service entitles employees to paid annual leave of 30 days. In case an employee has completed more than 6 months of continuous service, but short of 1 year, he or she is entitled to 2 days of leave for every month of completed service. Unused leaves cannot be carried over; instead, the employees are entitled to payment for their unused leave.
In the DIFC, employees are entitled to 20 days of paid annual vacation after completing 3 months at work. Employees are allowed to carry over all of the 20 days if unused.
Employees are entitled to 90 days of sick leave in Dubai, though only 45 days can be paid. Out of the 45 days of paid sick leave, an employee receives 100% reimbursement for the first 15 days and 50% for the remainder. Entitlement of paid sick leave is not valid during the probationary period. Sick leave is canceled for an eligible employee if the illness or injury was caused due to misconduct, such as consumption of narcotics or alcohol.
Providing adequate medical care coverage (as determined by the government) is mandatory for employers in UAE. Therefore this applies to Dubai too. However, it is not mandatory for Dubai employers to provide health insurance to the dependents of employees. In the DIFC, employees are entitled to 60 days of sick leave every year. If an employee takes sick leave for more than 60 days, he or she can be dismissed immediately with a written notice.
Women employees get 45 days of maternity leave which includes time off before and after childbirth. Maternity leave is with full pay for employees who have completed 1 year of service for an employer, and at half pay if their length of service is short of a year. The employee also gets an additional unpaid leave of 100 days if she is suffering from an illness due to pregnancy.
In the DIFC, employees get 65 days of maternity leave after childbirth or child adoption, provided she has completed 12 months in the service with an employer. The payment for the leave is in full for the first 33 days and a half for the remainder.
All Muslim employees are entitled to 30 days of leave for the Hajj pilgrimage to Mecca. Employees can take this leave only once during their employment.
Federal Employees’ Pensions
Employees in Dubai are eligible for Federal Employees’ Pension under the Federal Law. Citizens of the Gulf Cooperation Council (GCC) and Emirati employers also come under the purview of the law. All UAE nationals are eligible for retirement after reaching the age of 49 or working for at least 20 years.
Dubai’s employers need to fund 100% health coverage for their employees. It is prohibited to pass the expenses to employees. While it is mandatory for employers to provide adequate health cover for their employees, it is mandatory for sponsors to provide sufficient cover to those who they sponsor (such as a husband or father sponsoring his wife or children respectively).
The premium under the Essential Benefits Plan (EBP) is 500 to 700 Dirhams per year. The total coverage that EBP provides is 150,000 Dirhams annually. This insurance is available to employees earning 4,000 Dirhams or less.
The regulations also contain excluded healthcare services except in cases of medical emergencies, excluded (non-basic) healthcare services and healthcare services outside the scope of health insurance. Employees who need a higher cover need to choose other plans meant for them. Very soon, a new system of showing an individual’s insurance on his or her national identity card (Emirates ID) will replace the old system of issuing health insurance cards.
Employees are entitled to full salary, on suffering from an occupational injury or illness, till the treatment is necessary, up to a period of 6 months. The employer needs to pay 50% salary of the employee for another 6 months if the treatment continues for that length of time, unless the employee dies or is declared disabled.
In case an employee suffers from a partial disability, the employer needs to support his or her capability and assign a role in which the employee can fit.
Disability and Survivor Benefit
On the death of an employee, his or her family is entitled to receive an amount equal to 24 months of the employee’s wages, subject to a minimum of 18,000 Dirhams a month and a maximum of 35,000 Dirhams a month. An employee is entitled to the same amount of compensation if occupational disease or injury results in permanent disability. Proportionate compensation is payable in case of partial disability.
Workers’ compensation, including disability and survivor benefit, is not payable if the employee gets injured due to the influence of alcohol or narcotic drugs, injured himself or violated workplace safety instructions intentionally, got injured due to misconduct or refused to take medical help.
How GPS can Help
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When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Learn more about our end-to-end international expansion services.