Labor Law of UAE

Administered by the Federal Ministry of Labor and Social Affairs, Labor Law in the UAE is loosely based on the International Labor Organization's model. UAE Law No. 8 of 1980, as amended by Law No. 12 of 1986 (the Labor Law), governs most aspects of employer/employee relations, such as hours of work, leave, termination rights, medical benefits and repatriation. The Labor Law is protective of employees in general and overrides conflicting contractual provisions agreed under another jurisdiction, unless they are beneficial to the employee.

The Ministry issues a model form of labor contract in Arabic which is widely used, but other forms of contract are enforceable, provided they comply with the Labor Law. End of contract gratuities are equivalent to 21 days pay for every year of the first five years of service and 30 days for every year thereafter. The total gratuity should not exceed two years' wages. Employees are entitled to pro-rated amounts for service periods less than a full year, provided they have completed one year in continuous service.

Trade unions do not exist. In the case of a dispute between employer and employee, or in interpretation of the Labor Law, the Ministry of Labor and Social Affairs will initially act as an adjudicator. If a party wishes to appeal any such decision, it can take its case to court. Strikes and lockouts are forbidden.

Working Hours and Holidays as per UAE Law

The normal maximum working hours are eight per day or 48 per week. However, these hours may be increased to nine daily for people working in the retail trade, hotels, restaurants and other such establishments. Similarly, daily working hours may be reduced for difficult or dangerous jobs. Many businesses work on a two-shift system (for example, 8am - 1pm and 4pm - 7pm).

In practice, commercial and professional firms work 40-45 hours a week and government ministries about 35. The weekend for office workers has traditionally been Thursday afternoon and Friday (for government office workers, Friday and Saturday). During the Muslim holy month of Ramadan, normal working hours are reduced by two hours per day.

There are 10 days of public holidays (paid) in any year. The employee's annual leave is two days for every month if his service is more than six months and less than a year. In every completed year of service after the first, an employee is entitled to 30 days annual paid leave. This is in addition to public holidays, maternity leave for women and sick leave.

Overtime is used extensively and additional pay is required for manual and lower ranking staff.

Official working hours for government offices in Dubai are from 7.30 am to 2.30 pm, Friday’s & Saturday’s are holidays.

Bank hours are 8 am to midday from Saturday until Thursday. Office hours vary, but are generally from 8 am to 1pm, reopening at either 3 pm or 4 pm and closing at 6 pm or 7 pm. These are also shop hours but souks (markets) and most food shops remain open until much later in the evening.

Embassies and Consulates generally open from 8.45 am to 12.30 pm on weekdays.

Most Shopping Malls in Dubai are open from 10 am. to 10 pm.

The official language is Arabic, but English is the common language. Urdu and Farsi are also widely spoken. Arabic and English are commonly used in business and commerce. We provide assistance in procedures related to the

• Economic Department - Registration of companies (LLC, Free Zone, International Companies, Trade License, Legal Contracts. We can arrange a reliable UAE local to sponsor your Trade license.
• Immigration Department - Documentation for all types of Entry Permits, Establishment Cards & Investors Visa.
• Labor Department - Documentation & Assistance in approvals of Employment Visas and Labor Identification Cards.
• Dubai Chamber of Commerce and Industry - Assistance in Attestations of Certificates.
• Dubai Municipality and other government departments.

Mainland - Dubai, the place to live & work...

Setting up in Dubai means bringing in staff and their families. In Dubai, they will find all the glamour and excitement of any major cosmopolitan city. You will have the opportunity to enjoy a liberal lifestyle almost unique in this part of the world. And for sports lovers, there is a lot of fun you would expect in a warm sunny country. There are schools for all nationalities, ultra modern medical facilities and accommodation to fit all budgets.

In the UAE, economic activity is regulated by individual emirates as well as the Federal Government. In Dubai, the authorities have deliberately sought to create an environment which is well ordered without being unduly restrictive. As a result, Dubai offers businessmen operating conditions that are among the most liberal and attractive in the region.

There are many options open to international companies seeking to establish a business relationship with Dubai. Apart from forming a trading relationship, many companies find that there are distinct advantages in having an on-the-spot presence in order to research market prospects, make contacts, liaise with customers, and see through the details of any transactions and orders secured.

Having such a presence can provide considerable business advantages in the Middle East. Businessmen in the region prefer to deal with someone they know and trust and personal relationships are much more important in doing business in the Arab world than they are in western Europe or America. Also, the buying patterns of some countries served by Dubai tend to be unpredictable, creating a need for first class market intelligence and information

The basic requirement for all business activity in Dubai is one of the following three categories of licenses:

1. Commercial licenses covering all kinds of trading activity.
2. Professional licenses covering professions, services, craftsmen and artisans.
3. Industrial licenses for establishing industrial or manufacturing activity.

In general, all commercial and industrial businesses in Dubai are registered with the Dubai Chamber of Commerce and Industry.

Licensing

These licenses are issued by the Dubai Economic Development Department (with the exception of licenses for hotels and other tourism-related businesses which are issued by the Department of Tourism and Commerce Marketing.) Also, licenses for some categories of business require approval from certain ministries and other authorities: for example, banks and financial institutions from the Central Bank of the UAE; insurance companies and related agencies from the Ministry of Economy and Commerce; manufacturing from the Ministry of Finance and Industry; and pharmaceutical and medical products from the Ministry of Health.

More detailed procedures apply to businesses engaged in oil or gas production and related industries.

Ownership Requirements

Fifty-one per cent participation by UAE nationals is the general requirement for all UAE established companies except:

1. Where the law requires 100% local ownership;
2. In the Jebel Ali and Airport Free Zones;
3. In activities open to 100% AGCC ownership;
4. Where wholly owned AGCC companies enter into partnership with UAE nationals;
5. In respect of foreign companies registering branches or a representative office in Dubai;
6. In professional or artisan companies where 100% foreign ownership is permitted.

Legal Structures for Business

Federal Law No. 8 of 1984, as amended by Federal Law No. 13 of 1988 - the Commercial Companies Law - and its by-laws govern the operations of foreign business. In broad terms the provisions of these regulations are as follows:

The Federal Law stipulates a total local equity of not less than 51% in any commercial company and defines seven categories of business organization which can be established in the UAE. It sets out the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures. It further lays down provisions governing conversion, merger and dissolution of companies. The seven categories of business organization defined by the Law are:

1. General partnership company
2. Partnership-en-commendam
3. Joint venture company
4. Public shareholding company
5. Private shareholding company
6. Limited liability company
7. Share partnership company

Partnerships

General partnership companies are limited to UAE nationals only. The Dubai government does not presently encourage the establishment of partnership-en-commendam's and share partnership companies.

Venture

A joint venture is a contractual agreement between a foreign party and a local party licensed to engage in the desired activity. The local equity participation in the joint venture must be at least 51%, but the profit and loss distribution can be prescribed. There is no need to license the joint venture or publish the agreement. The foreign partner deals with third parties under the name of the local partner who (unless the agreement is publicized) bears all liability.

In practice, joint ventures are seen as offering a suitable structure for companies working together on specific projects.

Public and Private Shareholding Companies

The Law stipulates that companies engaging in banking, insurance, or financial activities should be run as public shareholding companies. Foreign banks, insurance and financial companies, however, can establish a presence in Dubai by opening a branch or representative office.

Shareholding companies are suitable primarily for large projects or operations, since the minimum capital required is Dh. 10 million (US$ 2.725 million) for a public company, and Dh. 2 million (US$ 0.545 million) for a private shareholding company. The chairman and majority of directors must be UAE nationals and there is less flexibility of profit distribution than is permissible in the case of limited liability companies.

Limited Liability Companies

A limited liability company can be formed by a minimum of two and a maximum of 50 persons whose liability is limited to their shares in the company's capital. Such companies are recognized as offering a suitable structure for organizations interested in developing a long term relationship in the local market.

In Dubai, the minimum capital is currently Dh. 300,000 (US$ 82,000), contributed in cash or in kind. While foreign equity in the company may not exceed 49%, profit and loss distribution can be prescribed. Responsibility for the management of a limited liability company can be vested in the favor of national partners or a third party.

The following steps are required in establishing a limited liability company in Dubai.

1. Select a commercial name for the company and have it approved by the Licensing Department of the Economic Development Department;
2. Draw up the company's Memorandum of Association and have it notarized by a Notary Public in the Dubai Courts;
3. Seek approval from the Economic Development Department and apply for entry in the Commercial Register;
4. Once approval is granted, the company will be entered in the Commercial Register and have its Memorandum of Association published in the Ministry of Economy and Commerce's Bulletin. The license will then be issued by the Economic Development Department;
5. The company should then be registered with the Dubai Chamber of Commerce and Industry.

Branches and Representative Offices of Foreign Companies

The Commercial Companies Law covers the formation and regulation of branches and representative offices of foreign companies in the UAE and stipulates that they may be 100% foreign owned, provided a local agent is appointed.

Only UAE nationals or companies 100% owned by UAE nationals may be appointed as local agents (which should not be confused with the term commercial agent). Local agents - also often referred to as sponsors - are not involved in the operations of the company but assist in obtaining visas, labor cards, etc and are paid a lump sum and/or a percentage of profits or turnover.

To establish a branch or representative office in Dubai, a foreign company should proceed as follows:

1. Apply for a license from the Ministry of Economy and Commerce; submitting an agency agreement with a UAE national or 100% UAE owned company. Before issuing the license, the Ministry will:

   1. forward the application to the Economic Development Department to obtain the approval of the Dubai government;
   2. forward the application specifying the activity that the office or branch will be authorized to undertake in the UAE, to the Federal Foreign Companies Committee for approval;
2. Once this has been done, the Ministry of Economy and Commerce will issue the required Ministerial license specifying the activity to be practiced by the foreign company;
3. The branch or office should be entered in the Economic Development Department's Commercial Register, and the required license will be issued;
4. The branch or office should also be entered in the Foreign Companies Register of the Ministry of Economy and Commerce;
5. Finally, the branch or office should be registered with the Dubai Chamber of Commerce and Industry.

Professional Firms

In setting up a professional firm, 100% foreign ownership, sole proprietorships or civil companies are permitted. Such firms may engage inprofessional orartisanactivitiesbut thenumber of staff members that may be employed is limited. A UAE national must be appointed as local service agent, but he has no direct involvement in the business and is paid a lump sum and/or percentage of profits or turnover. The role of the local service agent is to assist in obtaining licenses, visas, labor cards, etc.