Dubai: Notice period, gratuity, probation period – you’ve probably heard these words or have seen them in your labour contract. However, you may not know what they mean and how these terms may affect various aspects of your work life.
So, to understand these key terms, here are 10 important labour law-related words and their meaning everyone working in the UAE must know.
1. Probation period
A probation period is a period of a maximum of six months, which new employees have to undergo. According to the UAE’s Labour Law - Federal Decree-Law No. (33) of 2021 regarding the regulation of employment relationships - this a period required by the employer to monitor the performance of the worker and also enables the worker to familiarise themselves with their job functions, which are outlined in the employment contract. After the probation period is completed, the employment contract is either continued or terminated, based on the provisions set out within the Labour Law. If the employer does not wish to continue with the employment contract, or if the employee wishes to end the service and not continue working, the Labour Law provides guidelines on the length of notice period each party is required to provide the other. To read a detailed guide on what an employee's rights are during the probation period, read here.
2. Notice Period:
If you plan on leaving your job for a better opportunity, you are required to serve a notice period to your employer. A notice period is calculated from the time the employee informs his or her employer of their decision to end the contract to the last working day.
However, you need to submit a notice period within a specific time frame. Article 43 of the UAE’s Labour Law stipulates that a notice period of 30 to 90 days needs to be served, regardless of which of the two parties (employer or employee) decides to terminate the work contract.
According to the Labour Law, “the notice period is specified in the Employment Contract, which must be observed by the parties to the contract in case either of them intends to terminate the contract”.
3. Gratuity
Gratuity is also referred to as end-of-service benefits or severance pay. According to Article 51 of UAE labour law which highlights the end of service benefits for foreign employees working in the private sector, a full-time expatriate worker is entitled to severance pay if they complete on year of continuous service. The calculation of the gratuity is a detailed process and depends on the length of your service. To understand how gratuity is calculated for an employee, based on the length of their service, read here.
4. Basic wage
According to the UAE's labour law, your basic wage or basic salary is the salary stipulated in your employment contract, which is paid in consideration of your work under the employment contract. While more often than not this is paid on a monthly basis, the new labour law also includes provisions for the salary to be paid on a weekly daily, hourly or piecemeal basis. It is important to note that your end-of-service benefits, mentioned above, are calculated based on your basic salary. However, many employment contracts may provide additional allowances for housing, transport or other incentives. Your total salary includes the basic wage as well as these allowances, which - according to the Labour Law - are provided to meet the cost of living, a percentage of sales, or a percentage of the profits paid for what the worker markets, produces or collects.
5. Non-compete clause
A non-compete clause is a provision in the UAE Labour Law which protects the rights and interests of employers, ensuring that a worker does not move from a company to a competing business, by taking business secrets or confidential information on customers or the business.
However, the clause can be implemented only within certain guidelines which are outlined in the Labour Law as well as subsequent ministerial decrees. For example, a non-compete clause can only be executed in certain cases where the employee has access to sensitive business information, which can cause serious damage to a company if shared with competitors. To understand the conditions and exemption of the non-compete clause, read our detailed guide here.
6. Arbitrary dismissal
Arbitrary or unfair dismissal is when a worker's employment contract is terminated by the employer illegally. Under Article 47 of the UAE Labour Law, if an employer terminates a worker because they filed a complaint to the Ministry of Human Resources sand Emiratisation (MOHRE) or filed a lawsuit against the employer, whose validity is proven, then such termination is illegal.
As per the law, if a worker can prove, through a complaint filed with MOHRE that the employer arbitrarily dismissed the worker, and the complaint is proven to be a valid one by the Ministry, the worker will be entitled to the compensation.
7. WPS
The Wage Protection System (WPS) was first introduced in 2009 and is a system through which salaries are paid fully and on time. All employers registered with MOHRE must subscribe to the system and pay the wages to their employees through it, as per the due dates. The system is linked to employees' bank accounts, which ensures that the wages are transferred directly to the employee. To understand how WPS is implemented, read our detailed article here.
8. Leave encashment
Leave encashment is a system which allows employees to convert unused leaves and encash them, based on their wages, as per the guidelines of the Labour Law. However, it is important to note that to be able to encash unused leaves, you need to meet certain conditions that have been outlined in the law. Article 29 (8) of the new UAE Labour Law states that employees with accrued annual leaves can request to be "paid in lieu of leave according to the Establishment bylaws and as specified by the Executive Regulations of this Decree-Law." To find out more if you are eligible for leave encashment, read our detailed guide here.
9. Absconding report
If an employee is absent from work for more than seven days and has not informed their employer about their whereabouts, the employer is legally entitled to register an Unexpected Work Abandonment (UWA) report, which is also commonly referred to as an absconding report. If the UWA report is found to be true by the Ministry, it can lead to a labour ban for the worker. However, there are certain provisions that need to be met for the employer to file such a report. Also, a worker is also provided with the legal requirements he or she needs to meet if he or she wishes to cancel such a report that may have been filed. You can read more about what the Ministerial Resolution states on the UWA or Absconding report in our detailed guide here.
10. Labour Ban
A Labour ban is imposed when an employee violates the provisions of the UAE Labour Law or related ministerial resolutions and decrees or when he or she violates the terms and conditions stipulated in his employment contract. According to the official UAE government website u.ae, ban applications require an investigation from a legal researcher in MOHRE who would invite both parties, the employer and employee, take their statements, judge the seriousness of the request and decide whether to accept it or not.
The labour ban cancels the work permit of the employee and if the employee was on his or her company's visa, this would also then lead to the cancellation of the residence visa. However, according to u.ae, if the banned person is on the sponsorship of his or her parents or family, they may maintain their residency visa but cannot work or be issued another work permit for the duration of the ban. If the banned person is outside the country, no new work permit will be issued to him or her until the lapse of the ban period.
