Common Labor and Employment Law Advisory Mistakes to Avoid in Dubai

Ask a Dubai employer to produce the contract for a senior hire and you will often get two documents: a detailed offer letter setting out the package, the bonus, the notice period and a non-compete, and a short standard contract registered with the Ministry of Human Resources and Emiratisation that says something rather different. Both were signed. Nobody has read them together since.

Employment problems here are usually of that kind. They are not caused by employers ignoring the law; they are caused by paperwork assembled at different times, by different people, for different purposes, with nobody responsible for the whole of it. What follows is arranged by the moment at which each problem is created, because that is the moment it is cheap: a mismatch corrected at the offer stage costs an email, and the same mismatch found at a termination is already being argued about.

Related: Our employment law advisory team reviews contracts and handbooks for employers and employees.

At the point of hiring

Getting the employing entity wrong. The entity that sponsors the residence visa and work permit should be the entity the person actually works for. Groups routinely hire through whichever licence is convenient — a free zone company because the licence was already there, a mainland entity because a client insisted — and then place the person somewhere else. The mismatch surfaces at the worst moment: a dispute, an inspection, or a claim by someone whose permit does not match their job.

Calling an employee a consultant. A services agreement with an individual who works fixed hours, under supervision, with no other clients, is an employment relationship whatever the heading says. The arrangement also has an immigration dimension: performing work in the UAE requires the appropriate permit, and a freelance or visit status is not a substitute for one.

Assuming the offer letter is the contract. Where the registered contract and the side documents differ, the employer will be dealing with both. The registered contract is what the labour authority sees; the offer letter is what the employee relies on. Write the two so they say the same thing, and put anything genuinely additional — bonus mechanics, share awards, relocation — in a schedule that refers to the registered contract rather than contradicting it.

In the contract itself

Using a template written for the old law. Federal Decree-Law No. 33 of 2021 replaced Federal Law No. 8 of 1980. Contracts still in circulation that frame entitlements and procedures by reference to the previous regime are a live problem rather than a cosmetic one: neither party can tell from the document what actually governs the relationship, and the point is usually discovered when someone is already relying on it.

Applying the wrong law entirely. A DIFC employer applies DIFC Employment Law; an ADGM employer applies ADGM's. Both are common-law jurisdictions with their own courts, and both differ from the mainland regime on notice, leave, end-of-service arrangements and how claims are brought. A group handbook drafted for the mainland and issued unchanged to a DIFC subsidiary states obligations that entity does not have and omits ones it does.

Drafting a restrictive covenant nobody would enforce. A non-compete has to be limited in time, in geography and in the type of work, and has to protect a legitimate interest. A clause covering all competing activity worldwide for several years invites a court to strike it out and leaves the employer with nothing. A narrower clause, supported by properly drafted confidentiality and non-solicitation terms, is worth considerably more.

Related: See our firm overview for how we work with employers on these files.

While the person is employed

Paying outside the registered structure. Where the registered pay and the real pay are different figures — a package split informally, part of it handed over in cash, a registered basic wage sitting well below what the person actually receives — the employer is working from one set of numbers and the employee from another. Nobody minds while the relationship is working. It becomes an argument when the person leaves and the entitlements have to be calculated from a record that does not describe what was happening.

Keeping no record of performance. Termination for poor performance is defensible when there is a documented process: objectives, reviews, a warning, an opportunity to improve. It is very hard to defend on the strength of a manager's recollection. The file has to be built while things are going wrong, not after the decision is taken.

Ignoring Emiratisation. Targets for hiring UAE nationals apply to mainland companies above a headcount threshold and are administered by the Ministry, with financial consequences for shortfalls and a separate regime addressing artificial appointments made to meet the numbers on paper. This is a planning matter for the year, not something to address in the final quarter.

At the exit

Terminating without a stated ground or the required process. The law sets out both a route for ordinary termination on notice and a narrow set of grounds for summary dismissal, each with its own procedural requirements. Skipping the process because the conduct seems obvious converts a defensible dismissal into a claim for arbitrary dismissal and unpaid notice.

Using the visa as leverage. Delaying cancellation of a residence visa or filing an absconding report to pressure a departing employee is a serious step with consequences for the employer as well as the individual. Cancellation and the final settlement should be handled as an administrative sequence, not a negotiating position.

Settling without a proper release. A payment made without a settlement agreement in a form the authority and the courts will recognise buys nothing. Equally, an employee who signs a receipt for a final payment under pressure should understand what is being waived.

When it becomes a dispute

Mainland claims are filed with the Ministry, which attempts settlement before the matter goes to court; DIFC and ADGM claims are brought in their own courts under their own procedures. Employment claims are generally not suitable for arbitration on the mainland, and an arbitration clause dropped into a standard employment contract usually creates a preliminary argument rather than a shortcut.

The practical point is that these cases turn on documents: the registered contract, the payroll record, the warnings, the resignation or termination letter, and the cancellation paperwork. Whichever side you are on, the outcome is largely fixed by what was written down at the time.

Reading them together

For each entity in the group, a small number of documents have to agree with one another: the registered contract, the offer letter and anything scheduled behind it, the payroll record, the handbook, the restrictive covenants on the senior contracts and, for mainland entities, the Emiratisation position. Where they agree, most disputes are short. Where they do not, the difference between them is the dispute. Setting them side by side is an hour's work on a well-kept file, and the hour is better spent before somebody else does it for you.

Related Services: Explore our labour and employment advisory services for practical support with contracts, terminations and disputes.

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Readers should seek professional legal advice tailored to their specific circumstances before making any decisions or taking any action based on the content of this article.

Nour Attorneys Team

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