Draft Employment Agreement

Draft Employment Agreement in the UAE

A draft employment agreement sets out the terms governing the relationship between an employer and an employee. It should define the employee’s role, remuneration, working arrangements, benefits, confidentiality obligations, and other employment conditions while remaining consistent with mandatory UAE labour legislation.

Employment agreements in the UAE should not be drafted as ordinary commercial contracts. The employment relationship is subject to specific statutory requirements that cannot simply be excluded by agreement.

A carefully prepared employment agreement helps the parties understand their respective obligations from the beginning of the relationship and reduces uncertainty concerning salary, duties, probation, leave, notice, restrictive covenants, and termination.

Abdulrahman Alshaali Advocates & Legal Consultants assists employers and employees with preparing and reviewing employment agreements under UAE law.

Employment Agreements Under UAE Labour Law

Federal Decree-Law No. 33 of 2021 Regarding the Regulation of Employment Relationships provides the principal federal framework governing private-sector employment relationships within its scope.

Cabinet Resolution No. 1 of 2022 provides the Executive Regulations implementing the law.

These rules address matters including employment contracts, probation, working hours, leave, wages, termination, non-compete clauses, and end-of-service entitlements.

An employment agreement should therefore reflect the statutory framework rather than attempting to create terms that conflict with mandatory employee protections.

The applicable legal position may also differ where the employment relationship falls within a separate free-zone or specialised regulatory framework.

For example, employment relationships in the Dubai International Financial Centre and Abu Dhabi Global Market are governed by their own employment regimes.

The drafting process should begin by identifying the correct employment framework.

Identifying the Employer and Employee Correctly

The agreement should identify both parties accurately.

For the employer, the contract should use the correct legal entity name rather than only a brand or trading name.

For the employee, the agreement should use the individual’s correct legal identity details.

This is particularly important where several companies operate within the same corporate group.

For example, an employee may interview with representatives of a parent company but ultimately be employed by a subsidiary.

The contract should make clear which legal entity is responsible for wages, benefits, and employment obligations.

The employer should also ensure that the employment documentation corresponds with the applicable work permit and residency arrangements.

Inconsistencies between the signed agreement, government records, and the actual employing entity can create practical and legal difficulties.

Defining the Employee’s Role and Responsibilities

The agreement should describe the employee’s position and principal duties.

A job title alone may be too general.

For example, the title “business development manager” does not explain the employee’s territory, reporting line, authority, customer responsibilities, or management duties.

The agreement may therefore identify:

The wording should provide enough clarity without making the role so rigid that ordinary operational changes become impossible.

Where the employer requires reasonable flexibility in duties, that flexibility should still be consistent with the nature of the role and applicable labour requirements.

The employee should understand the position they are accepting and the principal responsibilities attached to it.

Employment Contract Duration

UAE employment law requires employment contracts to comply with the statutory framework concerning contract duration.

The employment agreement should state the agreed term clearly and be consistent with the applicable labour legislation and official employment documentation.

The parties should distinguish the contractual term from the employee’s notice rights and any renewal arrangements.

For example, an agreement may provide for a specified employment period while also addressing how the contract may be renewed or terminated in accordance with applicable law.

The employer should avoid copying outdated unlimited-term contract wording from older employment templates without reviewing the current legal framework.

The signed employment agreement, offer documentation, and official labour records should also be coordinated so that the employee’s principal terms are consistent.

Salary and Remuneration Structure

The agreement should clearly identify the employee’s remuneration.

This may include:

The distinction between basic salary and other remuneration can be legally significant.

Certain statutory entitlements may be calculated by reference to basic salary rather than the employee’s total monthly package.

The agreement should therefore identify the components accurately rather than stating only one consolidated amount where that would create uncertainty.

For example, an employee may receive a monthly package comprising basic salary, housing allowance, and transport allowance.

The contract should establish the agreed breakdown.

Where variable remuneration applies, the agreement should explain the calculation method and the circumstances in which it becomes payable.

A discretionary bonus should not be described in the same way as a guaranteed contractual payment unless that is the employer’s intention.

Commission and Performance-Based Pay

Sales and business-development roles often involve commission or performance-linked remuneration.

These arrangements should be drafted carefully because disputes may arise over when commission is earned.

The agreement may need to address:

For example, an employee may secure a significant customer contract shortly before leaving the company.

The parties may disagree about whether commission is payable when the customer pays after the employee’s final working day.

The agreement should provide a clear basis for resolving that issue.

Any commission arrangement must also remain consistent with mandatory wage and employment-law requirements.

Probation Period

UAE labour law regulates probation periods.

The employment agreement should state whether the employee is subject to probation and the duration of that period within the legal maximum.

The applicable notice requirements during probation should also be considered.

The parties should not assume that probation allows either side to terminate the relationship without complying with the statutory framework.

The law establishes different notice requirements depending on the circumstances, including where the employee intends to leave the UAE or move to another employer during probation.

The contract should therefore avoid outdated wording suggesting that employment may be ended during probation immediately and without legal consequences in every situation.

Employers should also coordinate probation provisions with their onboarding and performance-review procedures.

Working Hours and Work Arrangements

The employment agreement may address ordinary working arrangements while remaining consistent with statutory limits and applicable regulations.

Relevant matters may include:

The law provides rules concerning normal working hours and circumstances in which working arrangements may differ.

Certain categories of employees or work may also be subject to particular rules or exemptions.

The contract should not simply impose unlimited working hours because an employee is paid a monthly salary.

Where overtime requirements may arise, the employer should consider the applicable statutory framework.

For flexible or remote arrangements, the agreement may also address availability, equipment, security, and reporting expectations.

Annual Leave

Employees are entitled to annual leave in accordance with the Employment Law and its Executive Regulations.

The agreement may explain the employer’s leave procedures but should not reduce statutory entitlements.

Relevant provisions may address:

For example, an employer may require employees to submit leave requests in advance.

That administrative procedure does not remove the employee’s statutory entitlement.

The agreement should distinguish legal entitlement from internal scheduling procedures.

Where the employer offers leave above the statutory minimum, the additional contractual entitlement should be stated clearly.

Sick Leave and Other Statutory Leave

The UAE employment framework provides statutory rights concerning sick leave and other categories of leave.

Depending on the employee’s circumstances, these may include maternity leave, parental leave, bereavement leave, and study leave.

An employment agreement does not need to reproduce every provision of the legislation.

However, any contractual wording should remain consistent with statutory rights.

For example, a general clause stating that all absences are unpaid unless approved by management could conflict with legally protected leave entitlements.

Employers may refer to applicable legislation and internal policies while preserving mandatory rights.

Where the company offers enhanced benefits, those additional entitlements should be distinguished from statutory minimums.

Employee Benefits and Allowances

Employers may offer benefits beyond basic salary.

These can include:

The agreement should establish whether a benefit is contractual or discretionary.

For example, if the employer promises one annual return flight to a specified destination, the entitlement should be defined sufficiently clearly.

If a benefit is provided according to a company policy that may change, the contract should explain that relationship appropriately.

The employer should avoid describing a fixed contractual entitlement as entirely discretionary if it intends the employee to rely on it as part of the remuneration package.

Confidentiality Obligations

Employees may receive access to sensitive business information during employment.

This may include:

The agreement may impose confidentiality obligations concerning such information.

These obligations should identify the protected interest and should not be confused with non-compete restrictions.

An employee may remain subject to confidentiality obligations even where a non-compete clause does not apply.

Where the role involves particularly sensitive information, a separate Draft Confidentiality Agreement or draft nda agreement may also be appropriate.

The confidentiality provisions should also take account of any statutory obligations concerning protected business information.

Intellectual Property Created by Employees

Some employees create intellectual property as part of their work.

Examples may include:

The employment agreement should consider how rights in work created during employment are treated under applicable intellectual property legislation.

The appropriate approach depends on the type of work and the statutory framework governing the relevant intellectual property.

For example, the legal treatment of a software work may differ from that of a patented invention.

The agreement should not rely on one generic sentence to deal with every category of intellectual property.

Where intellectual property is commercially important to the employer, specialised drafting may be required.

Non-Compete Restrictions

Article 10 of Federal Decree-Law No. 33 of 2021 permits a post-employment non-compete restriction where the employee’s work gives access to the employer’s clients or business secrets.

The restriction must be limited according to:

The restriction must also be limited to what is necessary to protect the employer’s legitimate business interests.

The maximum period is two years from the expiry of the employment contract.

A broad clause preventing an employee from undertaking any work in the same industry without meaningful limits may therefore create enforceability concerns.

Where a restriction is important, a Non-Compete Agreement Draft should be prepared in accordance with the employee’s actual role and the legal requirements rather than copied from a generic template.

Conflicts of Interest and Outside Activities

An employer may wish to regulate outside activities that could interfere with the employee’s duties or create conflicts.

The agreement may require employees to disclose specified interests or obtain approval before undertaking particular external work.

For example, a senior employee responsible for selecting suppliers may have a financial interest in a company seeking contracts from the employer.

That situation may require disclosure and internal review.

The agreement should distinguish genuine conflicts from unrelated personal activities.

Restrictions should be proportionate to the employee’s responsibilities and consistent with applicable law.

Where an employee intends to hold another job or commercial activity, separate work-permit or regulatory requirements may also need consideration.

Company Property and Systems

Employees may receive equipment and access to business systems.

This can include:

The employment agreement or associated policies should address appropriate use and return of company property.

For example, an employee leaving the business may need to return devices and records and cease using internal system credentials.

The employer should also have procedures for protecting company information during departure.

These obligations should respect applicable privacy and data-protection requirements.

The contract should not rely solely on general wording if particular equipment or commercially sensitive systems require specific controls.

Notice and Termination

The Employment Law establishes rules governing termination and notice.

The employment agreement should state the applicable contractual notice period within the statutory framework.

The law generally requires notice of between 30 and 90 days where termination takes place through ordinary notice under the relevant provisions.

The agreement should therefore avoid notice periods outside the legally permitted framework.

The parties should also distinguish ordinary termination on notice from circumstances in which termination may occur without notice under the statutory conditions.

A contract should not state that the employer may terminate an employee immediately for any reason merely because such wording appears in an internal template.

Any immediate termination must be assessed against the grounds and procedures recognised by law.

Termination Without Notice

UAE employment law identifies specific circumstances in which an employer may dismiss an employee without notice.

These circumstances are governed by statutory requirements and should not be expanded simply through contractual wording.

Similarly, the law provides circumstances in which an employee may leave without notice while retaining specified rights.

The agreement may refer to the applicable legal framework rather than attempting to create an independent list inconsistent with the statute.

Employers considering termination without notice should assess the relevant facts and procedural requirements carefully.

The existence of a contractual clause does not automatically establish that a statutory ground for immediate termination exists.

Documentation and evidence can become particularly important where termination is disputed.

End-of-Service Entitlements

Employees may become entitled to end-of-service benefits according to the Employment Law and the employee’s circumstances.

The agreement should not attempt to reduce statutory entitlements.

The calculation can depend on matters such as the employee’s service period, basic salary, and the applicable legal framework.

Employers should distinguish statutory end-of-service benefits from any additional contractual termination payment.

Where the employee participates in an alternative end-of-service savings scheme that is legally applicable, the documentation should reflect the relevant arrangement.

The employment agreement should also coordinate with company payroll records so that the basic salary and other remuneration components are recorded accurately.

Return of Property and Final Handover

The agreement may establish practical obligations when employment ends.

These can include:

For example, a departing manager may hold important customer correspondence and project records.

The employer may require an organised handover before the final working day.

Such provisions can support business continuity but should not be used to withhold statutory entitlements unlawfully.

The company should have clear exit procedures in addition to contractual wording.

A Practical Example: Commission Terms That Are Not Defined Clearly

Consider a UAE company employing a sales manager on a fixed salary plus commission.

The employment agreement states only that the employee will receive “commission on successful sales.”

The employee closes a substantial contract shortly before resigning.

The customer pays the company two months later.

The employer refuses to pay commission because the employee was no longer employed when payment was received.

The employee argues that the commission was earned when the contract was signed.

The agreement does not identify which event triggers the entitlement.

A more carefully prepared employment agreement could have stated whether commission becomes payable when the contract is executed, when the customer pays, or when another specified condition is satisfied.

It could also have addressed the treatment of pending transactions when employment ends.

The example demonstrates why variable remuneration should be drafted with the same care as fixed salary.

Documents Required to Draft an Employment Agreement

The relevant information depends on the employee’s role and remuneration package.

Documents and details may include:

For senior employees, additional documents may be required concerning management authority, signing powers, or incentive arrangements.

The final employment agreement should be coordinated with mandatory government employment documentation and applicable internal policies.

Employment Agreement Drafting Assistance from Abdulrahman Alshaali Advocates & Legal Consultants

Employment agreements should reflect the employee’s actual role while complying with the mandatory requirements of UAE employment law.

Abdulrahman Alshaali Advocates & Legal Consultants assists employers and employees with preparing and reviewing employment agreements.

Our services may include developing remuneration provisions, confidentiality clauses, restrictive covenants, termination provisions, and supplementary employment arrangements.

Where an employer requires a more general initial employment document, our draft employment contract services may also be relevant.

Clients seeking assistance with broader contractual matters can explore our contract drafting services.

We assist clients in developing employment documentation appropriate to the relationship and the applicable UAE labour framework.

Explore Our Contract Drafting Services

Our contract drafting services cover employment, commercial, corporate, property, financing, services, confidentiality, personal, and dispute-related agreements.

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Corporate and Investment Agreements

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Commercial and Financial Agreements

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Personal and Dispute-Related Agreements

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Each agreement should be prepared according to the parties’ circumstances and the applicable UAE legal framework.

Request Assistance with Your Draft Employment Agreement

Whether you are hiring a new employee, reviewing a senior executive agreement, restructuring remuneration, or adding confidentiality and post-employment protections, the employment documentation should reflect both the commercial arrangement and mandatory UAE labour requirements.

Abdulrahman Alshaali Advocates & Legal Consultants assists employers and employees with preparing and reviewing employment agreements under UAE law.

Contact our team to discuss your employment documentation and contractual requirements.

Frequently Asked Questions

Can an Employment Agreement Provide More Benefits Than UAE Labour Law Requires?

Yes. An employer may provide contractual benefits above statutory minimum entitlements.

These may include additional annual leave, enhanced insurance, additional bonuses, or other benefits.

Once a benefit is made contractually binding, the wording should clearly establish its scope and any conditions attached to it.

Can an Employment Agreement Be Amended After the Employee Starts Work?

Employment terms may be amended where the parties validly agree and the amendment complies with applicable labour law.

Changes affecting important terms such as remuneration or role should be documented clearly.

The employer should also consider whether government employment records or permits require corresponding updates.

Can an Employment Agreement Include a Bonus That Is Fully Discretionary?

An employer may establish a discretionary bonus arrangement where legally appropriate.

The agreement should distinguish a genuinely discretionary benefit from a guaranteed contractual payment.

If the bonus depends on targets or other conditions, those conditions should be described clearly enough to avoid confusion about entitlement.

Does an Employment Agreement Need to Be in Arabic?

Employment documentation used for official UAE labour processes may be subject to prescribed forms and language requirements.

Employers may also use bilingual or supplementary agreements where appropriate.

Where more than one language version exists, the parties should consider how inconsistencies will be handled and ensure that the documentation used for official purposes complies with applicable requirements.

Sources

Federal Decree-Law No. 33 of 2021 Regarding the Regulation of Employment Relationships.

UAE Legislation Platform – Official Legislation

Cabinet Resolution No. 1 of 2022 Concerning the Executive Regulation of Federal Decree-Law No. 33 of 2021 Regarding the Regulation of Employment Relationships.

UAE Legislation Platform – Official Executive Regulation

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