Multi Labor contracts in the UAE – Matters to consider

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The labor relationship between an expatriate and a UAE employer may begin when the former is still in his/her home country, and this typically happens when the expatriate applies for a job in the UAE from abroad and receives an offer from the employer (Offer Letter).

Thereafter, and based on the Offer Letter that had been accepted by the expatriate, the latter moves to the UAE and commences his/her employment, where the employer at this stage might suggest signing a labor contract (Labor Contract) with the employee detailing the elements of the labor relationship.

This Labor Contract, which can be described as customizable, should not be mistaken with the official labor contract that is drafted on the template of the Ministry of Human Resources and Emiratization (The Official Labor Contract), which is mandatory to have.

In this article we will shed some light on the legal implications affecting the employer and the employee in the presence of the different labor documents described above.

I. Legal Rules

Before we tackle our subject, we should understand the following related basic rules.

1. What is a contract?

Article (125) of the Federal Law No. (5) of 1985 on the Civil Transactions Law of the United Arab Emirates, a contract is defined as: “A coming together of an offer made by one of the contracting parties with the acceptance of the other, together with the agreement of then both in such a manner as to determine the effect thereof on the subject matter of the contract and from which results an obligation upon each of them with regard to that which each is bound to do for the other”.

Therefore, based on the contract’s definition, the Offer Letter, the Labor Contract, and the Official Labor Contract, are considered as binding contracts if and when they fulfill the criteria set forth in article (125).

2. Priority of Contracts

Another important legal principle is that a recent contract, with a certain subject, which is signed between certain parties, supersedes an older contract signed between the same parties with the same subject.

3. Arabic prevails over other languages

Article (2) of the Federal Law No. (5) of 1985 on Labor Relations (Labor Law) stipulates that: The Arabic Language is the one to be used in all records, contracts, files, statements and other documents as may be provided for in this Law or in any orders or regulations issued in implementation of the provisions hereof. The Use of Arabic shall also be compulsory in instructions and circulares issued by the employer to his employees. If a foreign language besides the Arabic language is used, the Arabic language shall prevail over other texts.

4. The employee’s best interest

Article (7) of the Labor Law: “Any conditions contrary to the provisions of this Law, albeit precedent to the date of effectiveness, shall be null and void unless they are more advantageous to the worker”.

5. Registration

Finally, the most important rule is that any labor relationship should be registered with both the immigration and labor authorities, or less the employer will be faced with hefty fines.

II. Analysis

After reviewing the above-mentioned legal rules, we can extract the following points that can be used as a guideline to understand the main rights and obligations of the contracting parties in a labor relationship in terms of the different contracts they sign during the employment’s lifespan and their priority over each other:

1. Offer letter – A binding document

Despite the fact that many people take the Offer Letter for granted, it is important to know that if it is dully signed by the employee and the employer (even if corresponded through electronic means) is a legal binding document, and that all the terms and conditions contained therein should be respected. Moreover, the Offer Letter is a prerequisite to process the employee’s work permit in the UAE, and any rights granted to the employee in the Offer Letter are protected until and if it is replaced with a Labor Contract that supersedes all or some of the dispositions that are contained in it.

2. Labor Contract

When an Employee enters the UAE on a visit visa which has been granted based on the Offer Letter, it is possible that both parties sign a comprehensive labor contract, where in this case, both parties can agree on new terms and conditions. Nevertheless, the employer cannot decrease or waive any of the employee’s rights that had been granted in the Offer letter, unless the latter signs the Labor Contract (or any other document to the same effect) whereby he/she explicitly approves the same. In all cases, its worthwhile to note that the language of Labor Contract must be understandable by the employee.

3. Registration and Official Labor Contract

All employers must register the Offer Letters or Labor Contracts (as the case may be) with the Ministry of Human Resources and Emiratization. As a result, the latter will issue the Official Labor Contract, where a copy of the same must be handed out by the employer to the employee. Anyhow, any employee can address the Ministry of Human Resources and Emiratization to get a copy of his/her Official Labor Contract if its not provided by the Employer.
The Official Labor Contract usually covers the main elements of the labor relationship, such as, the commencement date, the nature of the contract (Limited/Unlimited), the job title, the basic/gross salary, annual leaves…etc. Also, it is possible to customize the Official Labor Contract by adding special conditions, such as, the commission, profit sharing…etc.

It is important to know that it is found in many cases that the Offer Letter / The Labor Contract contain additional dispositions comparing to the Official Labor Contract, and in this case, the mentioned supplementary dispositions will apply subject to the following two conditions:
The dispositions do not violate the Labor Law, public order, and/or any other relevant rules and regulations.
The said dispositions must not impair or decrease the rights of the employee as per the law and Official Labor Contract.

Subsequent to signing the Official Labor Contract, it is possible that the Employer signs with the Employee a new Labor Contract amending some of, or all the elements of the labor relationship. Nonetheless, the mentioned Labor Contract must be registered with the Ministry of Human Resources and Emiratization if the amended elements touch down on one or more of the dispositions contained in the Official Labor Contract. For example, if the parties sign a new Labor Contract that decreases the salary, the amended Labor Contract in this case should be registered since that all Official Labor Contracts mention the salary’s value.

III. Conclusion

To conclude, all documents signed between the employer and employee are significant in terms of generating obligations and rights between the parties, and as such, no document of this nature should be lightly treated, where an experienced jurist should be able to examine the documents against each other to extract and interpret the legal implications.

Moreover, when a labor matter is brought to the attention of the labor court, the latter has the full discretion to extract the parties’ rights and obligations from all the documents and facts surrounding the case.

For instance, the Offer letter, the Labor Contract, and the Official Labor Contract might be dated differently. However, the court might ignore all the mentioned documents and concludes work’s commencement date from the facts, which is in this case the date when the employee has effectively started attending the workplace or submitting deliverables and assignments if the work is done remotely.

The Salary is another example, assuming that different labor documents contain different salary amounts, the court in this case will most probably rely on the last amount that has been paid to the employee through Wages Protection System (WPS), or otherwise, to determine the salary’s amount, and as a result to decide on the corresponding labor entitlements.

Finally, despite of the court’s discretion, it is important for the contracting parties to carefully document all the elements of their labor relationship in a chronological order as to ensure the elimination of any ambiguity should a dispute arises, knowing that in the absence of clear determining facts, the court will most probably will be left with no choice but to rely on the documents before hand to render its verdict.

For any clarifications or inquiries, please do not hesitate to reach out to our expert team at HL&A –