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Employment Agreements

Reliable & Fast Support for Employee Onboarding

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                  When hiring employees within UAE, a standard employment agreement specific to the free zone is typically generated. However, these standardized agreements almost always fail to accommodate specific needs and terms agreed upon by the employer and employee.

For instance, while you and your employee may mutually agree on an extended termination notice period of six months, standard free zone agreements usually restrict termination notices to a maximum of three months.

To include respective changes into standard forms, it is necessary to execute addendum agreement, which would customize respective terms and give more flexibility in defining employer - employee relationship.

Key Considerations

01.

In several free zones employment contracts do not reflect currency of the salary while local rules imply that United Arab Emirates Dirhams are presumed currency of employment.

02.

When applying for an employment visa and contract for a new hire, the employment start date on the standard agreement may not align with the date when the employee is legally entitled to work in the UAE.

It is important to know that lawful employment begins on the date the employment visa is issued, not on the date the agreement is signed or when the request for an employment visa is initiated. Misunderstanding these distinctions can lead to compliance issues.

03.

To open a bank account or rent accommodation, employees are often required to provide a Salary Certificate. However, in several free zones, these certificates may not specify whether the stated amount is a monthly or yearly salary, resulting in banks and other parties requesting further clarifications.

04.

If an employee holding a position of a manager applies for a Golden Visa, immigration may request a wage protection statement from a free zone that does not have a wage protection system. In such cases, your only option might be to issue a salary slip for the employee and work with immigration to substitute the requirement.

                  To ensure that your employment agreements and supporting documents meet all legal requirements, a thorough understanding of UAE Labor Law and local free zone practices is essential.

Consequences of Non-Compliance

Fines

Significant fines ranging from AED 5,000 to hundreds of thousands of dirhams, as stipulated under the UAE Federal Labor Law. The exact amount depends on the nature and severity of the violation.

Court Disputes

Usually arise from unresolved salary payments, end-of-service benefits, or improper terminations - can be very time-consuming, costly, and damaging to the company's reputation.

Unfavorable Audit Findings

Labor disputes and non-compliance with UAE Labor Laws can trigger unfavorable audit findings during financial or regulatory reviews - such findings may highlight unresolved employee matters, leading to further penalties and reputational risks.

Inability to Liquidate the Company

During both court disputes and audits, all outstanding matters with employees must be settled. Failure to resolve these issues can result in delays or even inability to liquidate the company, as labor-related obligations take priority during liquidation.

Avoid these risks by seeking professional guidance to navigate the complexities of UAE employment laws and ensure your agreements are comprehensive, compliant, and tailored to your business needs.