Waleed is the CEO of ADOCO, an Abu Dhabi-based Private Construction Company involved in several large development projects and employing over 600 construction workers. Waleed (on behalf of ADOCO) has just offered Mike, a USA National and certified accountant, a four-year limited employment contract at ADOCO. The employment terms include a salary of AED 80 000 per month with free accommodation and annual airline tickets. Waleed (on behalf of ADOCO) has also offered Mike’s wife, Sally, a UK National, a position at ADOCO as an administrative clerk with a three-year limited employment contract, a probation period of three (3) months, and a salary of AED 30 000 per months.
ADOCO is a private company, and therefore UAE Federal Labor Law No. 8 of 1980 applies.
Procedure that Waleed must follow before Mike and Sally can start employment in the UAE
Because Mike and Sally are both foreign nationals, before being employed by the UAE company, they should sign a written employment contract (a limited contract in their case). Then, ADOCO, the employer, should make an application to the Ministry of Labor with the aim of obtaining a labor permit for Mike and Sally, i.e., their employment visas. The application is made in written form and attaches the signed employment contract. When the Ministry issues the employment visa, Mike and Sally are permitted to enter the UAE and get down to work. Their visas will be valid for three years, after which they can renew them. Their labor permits can be used for obtaining UAE residence visas.
The features of a ‘limited contract’
A limited contract is signed for a specified term, which cannot exceed four years. It must include specified start and end dates of its validity. This contract can be renewed for a period of four years or less. Unless prolonged, a limited contract is automatically terminated.
Information specified (by law) in Mike and Sally’s employment contracts
Mike and Sally’s employment contracts should include the following information: start and end date of the contracts because they are limited contracts, the start dates of getting down to work, the type and place of work, their remuneration, and the date of signing the contracts. Some other details usually included in similar employment contracts involve working hours, holiday, maternity, Haj, and sick leaves, overtime payment rates, provisions regarding end of service gratuity, and terminating the contract prior to the determined validity end date as well as causes that might be considered as justified in similar situations. In the case of Sally, her employment contract should also contain the information about the probation period specifying that it will be at the start of employment and as a trial period for three months.
The difference between a basic wage and a total wage
UAE Federal Labor Law no. 8 of 1980 (hereafter the Law) specifies that there are two types of remuneration – basic and total. Remuneration may either cover accommodation and transportation expenses or not. If additional costs are included in a wage, it is referred to as a total wage. Otherwise, it is a basic wage. In the case of Mike, his basic remuneration is 80 000 AED. His total wage is his basic wage plus free accommodation and annual airline tickets.
The difference between a basic wage and a total wage when calculating the end of service gratuity
Drawing the difference between a basic and total wage is significant in calculating the end of service gratuity because only basic remuneration is taken into account when estimating it.
Payment in US dollars instead of UAE dirhams under UAE Federal Labor Law No. 8 of 1980
The Law specifies that remuneration should be paid in the national currency, i.e., UAE dirhams, unless the parties agree otherwise. It means that if Waleed, on behalf of ADOCO, agrees to pay Mike’s salary in US dollars, it is allowable under the provisions of the Law.
Maternity leave under UAE Federal Labor Law No. 8 of 1980
Sally is having a baby in the 2nd year of her employment contract. Waleed tells her that she can take 30-day maternity leave, 15 days of which will be paid full time and 15 days half day.
This provision does not comply with the Law. First of all, the Law specifies that employed women have the right to take 45 days maternity leave either before or right after delivering a baby. Moreover, if Sally delivers a baby when she has worked for more than one year, she is entitled to maternity leave with full pay. In addition to it, she can take additional 100 days of maternity leave without pay if she is ill and cannot resume her work.
Working days and hours under UAE Federal Labor Law No. 8 of 1980
Sally’s employment contract states as follows:
- That her working days and hours are:
- Sunday, Tuesday and Thursday: 8 am – 6 pm
- Monday and Wednesday: 5 am – 4 pm
- Friday: 9 am – 10 pm
- That she can take a 1-hour lunch break every day (Sunday to Thursday) from 1 pm to 2 pm.
- That she will be paid overtime at the rate of her regular hourly rate plus 25%.
Under the provisions of the Law, the employee has the right to work for no more than 8 hours a day, except those involved in hotel and restaurant business and security guard services, whose working day can be 9 hours long. Because Sally is not employed in any of the industries that are exceptions to the general rule, her working day should be 8 hours long. The maximum for one week is 48 hours.
Calculations show that Sally works 9 hours on Sunday, Tuesday, and Thursday, 10 hours on Monday and Wednesday, and 12 hours on Friday. Lunch break is not taken into consideration while counting working hours. That said, either counted on a daily or a weekly basis (59 hours per week), it does not comply with the provisions of the Law, so Sally should be paid overtime.
As for the lunch breaks, permitting to take them at the same time every day as well does not comply with the Law because an employee cannot be required to work for more than 5 hours without a break of a minimum of 1 hour. So, on Monday and Wednesday, it should be shifted to 10 am – 11 am, and on Friday – 2 pm to 3 pm with an opportunity to take another short break after another 5 hours of work because her working days on Fridays is 12 hours.
Finally, Sally should be paid overtime at the rate of her regular hourly rate plus 25% except for Fridays because Friday is the normal weekly holiday. In this case, her overtime payment rate should be her regular hourly rate plus 50% because she is not on daily, but on monthly.
Giving children a part-time job under UAE Federal Labor Law No. 8 of 1980
Mike asks Waleed to give his two teenage children, Sarah and David, part-time jobs at the company. Sarah is 13 years old, and David is 16 years old. Waleed agrees to give both children a part-time job on the following employment terms:
- Sarah can work Sunday to Thursday from 2 pm to 4 pm and must make tea for the staff and wash the cups.
- David can work Sunday, Tuesday, and Thursday from 2 pm to 4 pm as a filing clerk and Monday and Wednesday from 3 pm to 10 pm as a construction worker.
The Law specifies that only those minors, whose age is between 15 and 17 years, may be employed. It means that ADOCO cannot employ Sarah because she is still 14 years old. As for David, who is 16 years old, he can be employed. However, the company employer should first see the copy of his birth certificate, make sure that he is physically fit to work by obtaining a certificate from a doctor, and have the written consent of his guardian – Mike, in this case. Even when ADOCO obtains all necessary documents, it is vital to assure that the working day is no longer than six hours, it is not at night (according to the Law, from the night is 8 pm to 6 am), and is not hazardous. In the case of David, the company-employer should alter the conditions because, first, part of the working day is at night (from 8 pm to 10 pm), and being a construction worker is definitely a hazardous occupation.
Neither of these employment terms stated by Waleed comply with the Law because Sarah is not 15 years old yet, and David cannot work at night or occupy hazardous positions. The only option for David is to work as a filing clerk on Sunday, Tuesday, and Thursday from 2 pm to 4 pm.
Holiday during the first three months of employment under UAE Federal Labor Law No. 8 of 1980
During the first three months of her employment, Sally decides that she would like to take a 10-day holiday in Spain.
In accordance with the provisions of the Law, Sally cannot take holiday leave during the first three months of her employment. It is considered that she has already passed a probation period. The Law specifies that she will obtain such possibility after working for at least six months, and the probation period is only included once it is finished, otherwise not. Only then is she entitled to 2 days per month if she worked from six months to one year. After one year of service, Sally can take 30 days of holiday leave per annum, but only when the employer permits her to.
Employee injury compensation under UAE Federal Labor Law No. 8 of 1980
Mike visits one of the construction sites and notices that a suspended walkway, which is 10 meters from the ground, does not have a side barrier. One of the workers, Sanpat, falls from the walkway and is badly injured. Mike takes Sanpat to the hospital. Sanpat spends six weeks in hospital and must pay AED 3000 in medical costs. Sanpat is then unable to work for nine months. He stays in bed at the labor camp and must travel to the hospital every two weeks by taxi to visit the doctor. Sanpat finally returns to work after nine months.
Procedure to follow after Sanpat’s fall
The employer-company ADOCO must follow a strict procedure specified by the law. First of all, it should inform the police and the Ministry of Labor. The role of the police is to conduct an investigation and prepare a report determining whether a worker was injured, how bad the injuries are, and whether the employer is liable for the injury, i.e., whether the accident was caused by the employer’s negligence (ignoring the provision of installing side barriers).
Liability of the employer-company ADOCO
The employer-company ADOCO will be liable in this situation because the law specifies that if the height of an object is more than 10 meters, then employers must guarantee that suspended walkways are of sufficient width and have a side barrier. Even though a walkway was 10 meters from the ground, it did not have a side barrier. It means that ADOCO violated the Law and is liable in this situation.
Consequences for the employer-company ADOCO (in terms of the UAE Federal Labor Law No. 8 of 1980)
Because Sanpat was badly injured due to the employer company’s negligence and violating the provisions of the Law, ADOCO will be held liable for this accident. The Law specifies the following consequences: first, the company-employer must cover the medical costs – AED 3000 that Sanpat paid in the hospital. If staying at a labor camp for the next nine months is also included in costs for Sanpat’s medical treatment, then ADOCO must cover them as well. Moreover, the company employer is obliged to pay for the travel expenses for Sanpat’s treatment, i.e., every journey by taxi he takes to see his doctor. Finally, ADOCO is required to pay Sanpat’s full wages for the first six months of his treatment and half wages for the rest three months because the law specifies that if the company is liable for the employees’ injury, it must pay full remuneration for up to 6 months and a half remuneration after six months of the medical treatment.