Expatriate workers arriving in the UAE are often surprised to learn that, despite their hard won negotiations in getting the perfect expatriate package and employment contract agreed with their new employer, they will be required to sign a short standard form employment contract (in English and Arabic) governed by the UAE Labour Law with the Arabic language prevailing. This contract often bears very little resemblance to the package that has been agreed and naturally leads the employee to ask “why are two different forms of contract required?”
Why are two different forms of contract required?
You may recall that we discussed in one of our earlier blogs (Employee implications of setting up a branch office of a foreign company in the UAE) that, even in circumstances where an employee has signed an employment contract overseas and made that contract subject to foreign law (and that employee has subsequently relocated to work in the UAE), he/she will still be required to execute a standard form Arabic/English employment contract, (the UAE Employment Contract) and no work permit or residence visa can be obtained without the UAE Employment Contract (regardless of what rights and benefits may be included in the first contract (the Foreign Law Contract)).
What is contained in the UAE Employment Contract?
The UAE Employment Contract is a short form contract covering the basic employment terms such as the designation of the employee, the commencement date of employment and the term of the contract (fixed term or unlimited term contract).
Which contract takes precedence in the event of a dispute?
Given the existence of the two different employment contracts there is always a concern as to which one would prevail in the event of a dispute. Often there is a concern that the UAE Courts will only have regard to the UAE Employment Contract (with the Arabic text prevailing) rather than the more lengthy contract although it now appears to be settled law that, in the event of a dispute as to the prevailing employment contract, the Court will enforce provisions that are more favourable to the employee. Clearly, though, any provisions which are contrary to UAE law will not be enforceable.
Practical steps that should be taken by the employer
As a practical step, if two contracts are to be put in place, care should be taken to ensure that the contracts are aligned and do not contain contradictory terms. In particular, if an employer has agreed to pay a contribution towards an employee’s pension under the employee’s Foreign Law Contract, and is concerned that the employee is also likely to receive the benefit of an end of service gratuity payment under his/her UAE Employment Contract, it will need to address any such “double benefit” under the Foreign Law Contract (or an amendment to it). An employer cannot contract out of its obligation to make an end of service gratuity payment at the end of an employee’s employment in the UAE, if an employee qualifies for such payment under the UAE Labour Law.