What are the mandatory elements for an employment contract?

An employment contract has to specify the date on which work starts, the type of contract (limited or unlimited), designation, amount of remuneration, notice period, probation period and holiday entitlement.

What is the difference between a limited and an unlimited contract?

A limited employment contract is, by definition, set for a limited time and it is usually linked to the duration of the residency visa. This contract is given to employees when they are needed for a specific period. An unlimited contract is valid for an indefinite period of time, although it can be terminated at any point by either the employee or the employer for various reasons under the UAE Labour Law.

How is the End of Service (EoS) gratuity calculated for a limited term contract?

An employee is entitled to EoS after one year of employment with an organisation, however he/she is not entitled to a gratuity if he/she resigns on a limited contract. This benefit would only accrue after five years of employment with an organisation. If he/she has more than five years of service, he/she would be entitled to the same EoS gratuity as an employee on an unlimited contract, which is as follows: 21 days basic salary for each year of the first five years 30 days basic salary for each additional year. The total amount of gratuity should not exceed two years’ salary.

How is the EoS gratuity calculated for an unlimited term contract?

An employee who resigns during the course of an unlimited employment contract will be entitled to EoS as follows: Service from one year to three years – 7 days of basic salary for each year Service from three to five years – 14 days basic salary for each year Service for five years – 21 days basic salary for each year Additional years beyond five years of service – 30 days basic salary for each year An employee who is terminated during the course of an unlimited employment contract will be entitled to EoS as follows: 21 days basic salary for each year of the first five years 30 days basic salary for each additional year. An employee who has been terminated for gross misconduct under to the provisions of the UAE Labour Law is not entitled to an EoS gratuity. The EOS calculation for both limited and unlimited employment contracts can vary between some free zones.

What is a notice period?

The UAE Labour Law requires a minimum notice period of 30 days and maximum period of 90 days. This is agreed upon contract signature and is mandatory. However, it can be waived upon agreement between an employee and an employer.

Abu Dhabi HR Services

Human Resources (HR) is a critical component of any business, no matter how large or small. HR responsibilities include payroll, benefits, hiring, firing and keeping up to date with local laws and regulations. Establishing HR policies and procedures correctly enables an organisation to manage its employees properly and effectively.

Sovereign HR Solutions offers outsourced HR services that deliver the flexible, practical employment support that our clients require, especially when they are first entering the Abu Dhabi market and are looking to build an effective HR function with minimum investment. We provide a range of HR consultancy packages, business support functions and ad-hoc services that allow our clients to focus on growing their primary business.

Every corporate entity operating in the UAE is subject to the UAE Labour Law and must ensure compliance with Labour Law regulations. Sovereign is able to assist organisations to understand and address issues such as policies, procedures, contracts, compensation and benefits, working hours, conditions, record management, insurance, holidays and religious holidays, inductions and exits.

We can also advise on the differences between Mainland and Free Zone regulations, as well as the variations between the Free Zones themselves. Sovereign will also provide timely updates to clients in respect of any changes to legislation or regulations.

Employment contracts in Abu Dhabi

All employees working in Abu Dhabi require a relevant labour contract that is in accordance with UAE Labour Law and regulations. Sovereign HR Solutions can assist with drafting new offer letters and labour contracts, as well as reviewing existing contracts to ensure continued compliance.

End of Service (EoS) gratuity calculations

Calculating EoS gratuities correctly is essential, not just for legal reasons but to understand potential financial liabilities and their impact on a company’s balance sheet. EoS gratuities will vary greatly according to an employee’s contract and the length of time served, as well as the manner of their departure (see FAQs below). Sovereign HR Solutions will assist in calculating EoS gratuities and notice periods, as wells as ensuring that exit procedures are correct and compliant.

Visas

Foreign employees in the UAE are required to hold a relevant, valid employment visa. Sovereign HR Solutions is fully conversant with UAE immigration regulations and procedures and can advise and service clients locally and internationally in relation to UAE inbound arrangements, including compliance and eligibility, formalities and process. We will ensure that the client is kept well informed on the status of each application and anticipated issues or timelines.

HR support in Abu Dhabi

Outsourcing a part of the HR function allows businesses to focus on growing their company, leaving the external professional to handle day-to-day employee administration. Sovereign HR Solutions offers outsourcing services that are designed to manage the complete HR process for companies in Abu Dhabi, Dubai and throughout the UAE. Our support can be provided on an ad hoc basis, as and where required.