Cancellation of the Limited Contract By Employer And Worker -in UAE

Termination of Employment Contract in UAE – Frequently asked Questions

First: cancellation of the limited contract by employer:

4. My contract is a limited contract and the employer dismissed me without a legal reason, am I entitled to compensation for the injustice dismissal? … Article (115) :

If the employer dismissed you and revoked the contract without the reasons provided in the article ( 120) , he shall compensate the worker by a pay of (3) months or the period remained from the contract , whichever is shorter … unless otherwise provided by the contract.

* Example: a worker with limited contract started from 10/1/ 2005 and expires on 9/1/ 2008 … and the employer dismissed him without a reason or justification in 3/2/2007 .. here, the worker is entitled for a compensation against the injustice dismissal , payment for ( 3) months.

* Example: a worker with a limited contract started from 10/ 1/ 2004 and expires on 9/ 1/ 2007 .. the employer dismissed him without a reason or justification in 3/12/ 2006 .. here, the employer shall compensate the worker for the injustice dismissal for the remaining period of the contract. Namely, he was dismissed in 3/12/2006 before his contract expires in 9/1/ 2007 .. so the remaining period as from date of dismissal to the date of expiry of the contract is = (37) days … and it is the period for which the worker is entitled for compensation by the employer .. ( this is the explanation for phrase of " the remaining period from the contract).

5. Is the compensation for injustice dismissal calculated on the basic salary or the total salary?

Compensation is calculated on the total salary received by the worker According to the article (115) in which it is mentioned the word (remuneration) … and the remuneration is provided for by the labor law, … article (1). (Remuneration):

" All payments made to the worker on a yearly, monthly, weekly, daily, hourly, piece work, or production or commission basis. Remuneration shall include raise of living and include as well any grant given to the worker as a reward for his honesty or efficiency if such amounts are provided for in the contract of employment or in the internal regulations of the establishment or have been granted by custom or common practice to such extent that the workers of the establishment regard them as part of their remuneration and not as donations”

Second: Revocation Of The Limited Contract Of Association

6. My contract is a limited contract and I submitted my resignation before my contract expires, shall I pay a compensation to the employer for revocation of the contract? … article (116):

Where the contract is broken by the worker before the limited time. Worker should by 45 day from his total salary or the residual period of the contract whichever is shorter

7. I worked with the employer for two years and my contract is limited by (3) years and I obtained a work opportunity at another place …. Is the employer entitled to deduct (45) from my dues for non- completion of the contract of employment?

According to What has been mentioned into these questions:

In all cases and according to the article (116): If the contract of the worker is with a limited period and he submitted his resignation before expiry of the contract without the reasons provided for in article (121)., the worker shall compensate the employer for What he has sustained from damage sue to revocation of the contract through compensating the employer by half of remuneration of the last three months or the remaining period from the contract , or whichever closer , unless otherwise provided for by the contract.

* Example: a worker with a limited period contract for (3) years .. he worker two years and ( 11) months … and he submitted his resignation , here, he shall compensate the employer by a half of remuneration of the last three months or the remaining period from the contract , or whichever closer from them , unless otherwise provided for in the contract.

8. My contract is a limited and it has not been expired yet , may I submit my resignation and serve for one month of notice ?

As for the limited contracts, there is no one month of notice … because the one month notice is for the unlimited contract -therefore , the worker shall compensate the employer by a half of remuneration of the last three months or the remaining period from the contract , or whichever closer from them , unless otherwise provided for in the contract.

* Example: a limited contract started from 4/3/2005 and expires on 3/ 3/ 2008 , and the worker submitted his resignation in 5/6/ 2006 - here, the worker shall compensate the employer by a half of remuneration of the last three months or the remaining period from the contract , or whichever closer from them , unless otherwise provided for in the contract.

9. I submitted my resignation before ( 6) months from expiry of my limited contract and the employer wants to deduct a remuneration of 45) days , is he entitled for so ?

As per the article (116) from the labor law … the employer is entitled to deduct from the total remuneration - due to your revocation of your contract of employment with no reason

10. a worker with limited contract which will be expired after one year, submitted his resignation due to his personal circumstances : ( family problems at his home country) or ( he obtained another job) shall he pay the compensation amount ?

Yes, the employer is entitled to demand the worker for the compensation amount, because these are personal matters

11. How the compensation is calculated, on the basic or total salary?

It is calculated on the last remuneration received by the worker.

Termination of Employment Contract in UAE – Frequently asked Questions

1. When the contract is terminated?

It is terminated in the following cases:

If both parties agree on its termination, provided that the worker's consent is given in writing, If the limited contract expires, unless tacitly or expressly extended. If the employer resigned the worker or the worker submitted his resignation in the unlimited contracts, provided that each of them shall notify the other according to the law.

2. Is the contract terminated by worker's or employer's death? - Article (114).

Employment contract shall not be terminated by employer's death, unless the subject of the contract is connected with his own person. But the contract is terminated by worker's death or his total disability, on a condition of providing an approved medical certificate for the same.

3. If the worker's disability is partial, is the employment contract terminated?

If the disability is partial, he can perform other works according to his health condition -an employer shall , according to a request from the worker , shall shift the worker to another position suitable to the worker .. and to pay him the salary given at such position.

* Example: a worker is injured.. His injury is partial as per a medical report.. The worker then requested from the employer to shift him from his current position (builder) to another one suitable with his health condition (guard) - there, the employer shall pay the worker a monthly salary of (guard ) , not a salary of his last position ( builder).

The Ministry of Labour take steps to prevent abuse of sponsorship system in UAE



Saqr Gobash Saeed Gobash, Minister of Labour-



Expats allowed to find jobs after contract ends
The Ministry of Labour will take steps to prevent abuse of the sponsorship system.In a statement to the Federal National Council yesterday, Saqr Gobash Saeed Gobash, Minister of Labour, defended the sponsorship system saying that it was legal and common in many countries, but under different names.

Admitting the existence of abuses of the system and illegal practices, Gobash pledged actions will be taken to stop these abuses and illegal practices.He was responding to a question raised by Yousuf Obaid Ali Al Nuaimi, a representative from Ras Al Khaimah, who called for free labour movement and cancellation of costly sponsorship system.Gobash said the labour ministry will soon issue a decision allowing workers, whose contracts ended, to join new jobs if the market is in real need of them.

Gobash said that the move approved by the Cabinet will address certain negative impacts of the sponsorship system for foreign workers.One day earlier, Al Nuaimi told Gulf News the sponsorship system for foreign workers must be scrapped within three to five years to stop misuse of the system and allow free movement of workers.

He added the existing labour sponsorship system, according to a study, costs the country about Dh50 billion a year to host more than four million foreign workers. The representative rejected the labour minister's statement, which he said fell short of answering many queries he raised.He demanded that the minister show up in person at a later session to address these issues.

The representative suggested that before abolishing the costly system, rules must be enforced to protect rights of workers and employers."Eventually, all foreign workers must be under the jurisdiction of one authority — the Ministry of Labour. Workers must be allowed to change jobs smoothly once a contract ends and no employer should be allowed to withhold workers' passports," Al Nuaimi said.

He added employers' rights must also be guaranteed, citing the right of every business to protect information it regarded as commercially sensitive.

According to an estimate, the average annual cost of hosting a worker is about Dh55,000.

Gobash, however, said the ministry will respect the contracts signed between workers and employers. ‘The ministry [of Labour] will not intervene between workers and employers during the period of these contracts, unless a party failed to abide by its obligations. After the job contract ends, each party to it will be free to determine the new relationship they wish to enter either with the same party or a third party. There will be no restrictions as long as no violation of the law is made."

Cost of workers in UAE

The minister also stressed commitment to guarantee any rights of the employers and restore the government's full control of the labour market.

The cost of a skilled worker is Dh144,000 and the cost of an unskilled worker is Dh33,000, according to Dr Mouawiya Al Awad, Director of the Institute for Social and Economic Research at Zayed University.The overall average annual administrative and recruitment costs per worker are estimated at Dh2,674. For skilled workers the cost is Dh3,404 while it is Dh2,296 for unskilled workers

Canadians entering UAE to apply for entry permits starting 2011 January 2

Abu Dhabi: Starting January 2, Canadians will have to obtain a pre-arranged visa to enter the UAE, official sources said yesterday, amid souring ties between the two countries.Visas will be required for tourism and business purposes but Canadians living in GCC countries can enter the UAE on their residence visa, an Interior Ministry official told Gulf News.The new requirement announced by the UAE's embassy in Ottawa comes amid an increasingly bitter spat centred on landing rights for UAE airlines.

The dispute has already cost Canada access to a military air base that is a crucial link in the supply line for its mission in Afghanistan.

Previously Canadians, like travellers from 34 countries including the United States and much of Europe, were able to obtain a visa on arrival to the UAE under a visa waiver system. More than 25,000 Canadians are living in the UAE, an official estimated.

The visa waiver policy will no longer apply to Canada because relations had dipped to a point where they were "neither healthy nor hopeful", the Associated Press quoted an official source in Abu Dhabi as saying. "The visa waivers are granted to countries with a special relationship ... built on economic and other areas of close and growing cooperation," the source said.

"The current status of relations with the government in Canada compared with other countries on the visa waiver programme is at a much lower level. ... It isn't fair to include it with countries with which we have a healthy and productive relationship."

Another official told Gulf News that the decision is in response to the Canadian government's insistence on visas for Emiratis wanting to travel to Canada. The UAE embassy in Ottawa was instructed to announce the decision to Canadian officials; he said.The official added that this decision has no negative impact on the bilateral relations between the two countries. The UAE has ratcheted up the pressure on Ottawa after failing to secure additional landing rights for Emirates and Etihad airlines.

UN Council setback

The UAE last month also moved to bar Canada from using the Mirage air base that was expected to play an important role in the drawdown of Canadian troops and equipment from Afghanistan.A UAE official told Gulf News earlier the UAE lobbied against Canada's bid for a non-permanent United Nations Security Council seat. Canada pulled out of the race after falling behind rivals in an early round of voting in what was seen as a significant setback for the G-7 economic power.— With additional inputs from Abdullah Rasheed, Abu Dhabi Editor and AP

Aviation dispute

•October 10: The UAE is disappointed that despite intensive negotiations over the last five years the UAE and Canada have been unable to arrive at an agreement on expanding the number of flights between the two countries.

•October 11: Canadians barred from military base, a crucial link in the supply line for its mission in Afghanistan.

•October 14: Official source announces UAE lobbied against Canada's bid to win a seat on the United Nations Security Council because of its anti-Arab policies.

•November 9: UAE cancels visa waiver policy for Canadians, in a tit for tat move.

Wages Protection System -WPS - In UAE

Wages Protection System (WPS) is an electronic salary transfer system that allows institutions to pay workers’ wages via banks, bureaux de change, and financial institutions approved and authorized to provide the service.

The system, developed by the Central Bank of the UAE, allows the Ministry of Labour to create a database that records wage payments in the private sector to guarantee the timely and full payment of agreed-upon wages.

The WPS covers all institutions registered with the Ministry across all sectors and industries and will benefit different categories of labour.

The WPS reflects the UAE's leading position in the region, and will increasingly project the country as a model worth emulating in the following areas:

• Reiterating commitment to protect workers’ wages;

• Providing innovative solutions that help employers safeguard their own interests and reduce the time and effort needed to pay workers' wages;

• Taking serious steps to improve job security in order to strengthen work relationships in the UAE and safeguard the rights of all parties concerned;

• Entrenching transparency and competitiveness;

• Ensuring that the UAE Ministry of Labour is regularly and constantly updated on wages data in the private sector in order to guarantee that employers fulfill their salary obligations;

• Taking protective and proactive measures to reduce labour disputes pertaining to wages.

WPS targets the following parties from the Ministry partners:

• Workers: each and every individual who works in the private sector in return for agreed-upon wages and who has a labour card issued by the Ministry;

• Employers: whoever owns a company or institution registered with the Ministry and hires one or more workers in return for agreed-upon wages;

• Banks: the financial institution which the employer has a bank account with,, that is used to transfer the wages amount through WPS to the appointed agent to distribute to the labours.

• Agent: any bank, bureau de change, or financial institution approved and authorized by the Central Bank of the UAE to offer wages payment services via WPS. The Central Bank of the UAE will issue a regularly updated list showing names of approved and authorized agents.

Joining WPS requires:

1. The company needs to be registered with the Ministry;

2. The company should have a bank account with one of the banks operating in the UAE;

3. The company should enter into contract with any bank, bureau de change or financial institution approved and authorized by the Central Bank of the UAE to provide the service. The two parties shall agree on any service fees and charges.

4. Workers’ wages will be transferred via WPS by the deadlines specified in the Ministerial Resolution No. 788 of 2009.

Deadlines for institutions to start transferring workers' wages via WPS

Number of workers* Period granted Deadline

100 and above  - 3 months (starting September 1) 30 November 2009

15 to 99 workers - 6 months (starting September 1) 28 February 2010

Less than 15 - 9 months (starting September 1) 31 May 2010

*The periods granted to comply with the new system and start transferring workers' wages via WPS will not apply to institutions which were already denied new work permits when the Ministerial Resolution 788 for 2009 was issued for failing to pay workers' wages on time, nor to institutions which failed to pay workers' wages for one month or more after the Ministerial Resolution was issued.

5. The institution will have to transfer workers' wages via WPS within two weeks of their due date, or on the dates specified in the work contract if wages are paid more frequently than monthly.

6. The employer will be responsible for all expenses incurred upon joining WPS, including bank fees, service provider charges, and all other costs. Employers are not allowed to share any costs with workers' by any means, including deducting from their wages, directly or indirectly.

The mechanism to apply for WPS is as below:

The WPS applying mechanism is as below:

• The company shall open an account with one of the banks operating in the country, in case it doesn’t have one upon joining the WPS system;

• The company shall enter into contract with a WPS agent that is approved and authorized by the Central Bank of the UAE to provide this service, be it a bank, bureau de change , or a financial institution;

• The employer shall issue instructions to its bank to transfer wages to workers. Instructions shall be accompanied by a detailed wages list and a copy of the list shall be sent to the agent.

• The WPS will send workers' details and wages as well as the salary transfer instructions electronically to the Central Bank of the UAE, who will then forward those details to the Ministry of Labour database in order to make sure that the details received correspond with those registered with the Ministry;

• The WPS will send the approved information to the appointed agent in order to start paying the wages.

Consequences of failing to join WPS

• Institutions failing to transfer workers' wages by the deadlines specified above will be denied the right to have new work permits. This ban will only be lifted in the month following the transfer of workers' wages in full.

 Institutions that delay wages’ payment more than one month of the due date will be denied the right to have new work permits, along with all institutions owned by the owner of the violating institution, and to refer all those responsible for the violation to the court, in accordance with Ministerial Resolution No. 788 of 2009.