United Arab Emirates: As The Economy Improves, Are Employers Ready To Hire?

Last Updated: 6 October 2011
Article by Shoeb Saher

In the UAE, according to a recent survey conducted by a recruitment consultancy, many companies have started hiring again, or are preparing to resume recruitment.

During financial difficulties, many UAE companies sought to reduce their costs with redundancies and are now in a position where they are understaffed. To cope with increasing business growth companies are starting to resume recruitment once more.

Are employers prepared?

Some employers in the region arguably remain relatively unsophisticated with regards to strategic HR and lack foresight with regards to recruiting new staff. There is also an apparent lack of understanding of the UAE Labour Law and the general provisions of basic employment contracts.

Nominal time and resources spent on analyzing the terms under which a prospective employee will be hired can save considerable time and resources years later, if that employee decides to move on.

Each employment contract should be considered on a case by case basis and expert legal advice should always be sought. Below, we look at some of the main elements of employment contracts that should be taken into consideration by employers.

The nature of the contract

In the UAE employment contracts are broadly divided in two categories, limited term and unlimited term. It is essential to fully evaluate the role and objective of each position the employer wishes to hire for.

Limited Term Contracts

Generally, limited term contracts are intended to continue for the full term of the contract and terminating it prematurely may result in compensation being due to the other party by the party terminating it, unless otherwise provided for in the contract. Compensation under these circumstances can amount to up to three months of the employee's salary or the remaining period of the contract, whichever is less. Generally, the UAE courts tend to award the maximum compensation (three months remuneration) if the employer terminates the contract prematurely.

Unlimited term contracts

These contracts can be terminated at any time by either party with a valid cause for termination by giving proper notice as set out in the contract. "Valid cause or reason" is not defined under UAE Labour Law and therefore has to be considered on a case by case basis. Terminating the contract without a valid cause will also likely result in the terminating party being liable to pay compensation to the other party. Compensation would normally be up to three months of the employee's salary.

Basic and total remuneration

In the UAE remuneration consists of basic salary plus various "benefits" such as housing allowance, travel allowance etc. and this varies from company to company. It is important to detail the various elements of the total remuneration payable to the employee.

A well thought out salary structure is important for the calculation of end of service payments due to the employee when they leave the company. This payment is based on basic salary.


In our experience confidentiality clauses in employment contracts in the UAE are often loosely worded and many employers include it for the sake of it. A properly drafted confidentiality provision which effectively protects the employer's sensitive business information is more important than ever before and employees should be aware of their confidentiality obligations from the outset. Confidentiality clauses should be drafted with the future in mind and employers need to be clear on what they consider confidential and commercially sensitive information so that employees are equally aware. In addition, clear and carefully drafted HR policies governing the use and dissemination of confidential information will serve to protect both employee and employer in the long term.

Non-compete clause

In every organisation, there are employees with access to competitive intelligence and sensitive business information (i.e customers, strategy, financials, etc.). Employees with access to this information can be attractive to competitor businesses and it is important for employers to ensure they have suitable contractual protection against employees joining competitors in order to protect their business.

Certain employee contracts should contain a non-compete clauses from the outset as opposed to the somewhat common practice of having these signed on termination of the contract.

UAE Labour Law allows for the insertion of non-compete clauses, provided that they are reasonable and are in place to protect the legitimate interests of the employer. They are not to go beyond this scope. There are certain requirements under the Labour Law which should be taken into consideration when drafting such clauses and the more tightly drafted they are, the more likely they are to be enforced. Employers should also make sure when hiring new staff that their previous employment contract did not contain a non-compete clause as this could render them liable to pay compensation to the employee's past employer where the potential employer headhunted them from a competing business.

Termination and related damages

Termination provisions and notice period clauses must be suitably worded to protect the interests of both parties. UAE Labour Law provides that either party can terminate an unlimited employment contract for a valid cause by giving the other party 30 days prior written notice. This notice period can be increased by mutual agreement of the parties however it can not be decreased. The employee's position in the organisation should be taken into consideration when agreeing upon a suitable notice period. Employers may prefer longer notice periods in order to find a suitable replacement for senior employees. Conversely, if the employer wishes to terminate the contract immediately (for any reason other than provided in Article 120 of the UAE Labour Law) the employer will have to retain the employee for the duration of the notice period or have to pay in lieu of notice. Notice provisions must be taken into consideration in employment contracts within the scope of the UAE labour law and employers should consider these carefully for the various levels of employees they hire.

Enforcement and liquidated damages

Enforcing the employment contract (particularly confidentiality and non-compete clauses) can prove difficult for employers. The employer must prove actual loss if it wants to claim damages from the employee for breach of any provision of the employment contract.

Therefore, a provision for liquidated damages must be made for breach of employment contract (with regard to term, confidentiality and non-competition). In the UAE, the court recognises such clauses provided that the amount of liquidated damages is realistic. The benefit of this provision for employers, if properly worded, is that it shifts the burden of proof for damages from the employer to the employee.


Clear, well drafted employment contracts are essential to protect the interests of both employer and employee. Equally, it is very important to structure employment contracts in compliance with the provisions of the UAE Labour Law in order that they are enforceable should a dispute arise.


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.