Contract Law DIFC Law No. 6 of 2004

We, Khalifa bin Zayed Al Nahyan, President of the United Arab Emirates, After perusal of the Constitution; Federal Law No. (1) of 1972 regarding the Competencies of the Ministries and the Powers of the Ministers and its amending laws; Federal Law No. (8) of 1980 regarding the Regulation of Labour Relations and its amending laws; Federal Law No. (18) of 1981 regarding the Organisation of Commercial Agencies and its amending laws; Federal Law No. (6) of 1985 regarding Islamic Banks, Financial Institutions and Investment Companies; Federal Law No. (10) of 1992 regarding Evidence in Civil and Commercial Transactions and its amending laws; Federal Law No. (11) of 1992 regarding the Civil Procedures Law and its amending laws; Federal Law No. (5) of 1993 regarding the Establishment of the Emirates Investment Authority; Federal Law No. (8) of 2004 regarding the Financial Free Zones; Federal Law No. (7) of 2007 regarding the Establishment of the Emirates Identity Authority; Federal Law No. (11) of 2007 regarding the Emirates Post Group; Federal Law No. (1) of 2011 regarding the Emirates Nuclear Energy Corporation; Federal Law No. (14) of 2014 regarding the Combating of Commercial Fraud; Federal Law No. (2) of 2015 regarding Commercial Companies and its amending laws; Federal Decree-Law No. (11) of 2016 regarding the Regulation of Human Resources in the Federal Government and its amending laws; Federal Decree-Law No. (20) of 2018 regarding Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations; Federal Decree-Law No. (14) of 2020 regarding the Central Bank and the Organisation of Financial Institutions and Activities; Federal Decree-Law No. (32) of 2021 regarding Commercial Companies; And based on what was presented by the Minister of Human Resources and Emiratisation and approved by the Council of Ministers, Have promulgated the following Decree-Law:

Chapter One: Definitions and General Provisions

Article (1) — Definitions

In the application of the provisions of this Decree-Law, the following words and phrases shall have the meanings assigned to each of them, unless the context otherwise requires:

1. The State: The United Arab Emirates.
2. The Ministry: The Ministry of Human Resources and Emiratisation.
3. The Minister: The Minister of Human Resources and Emiratisation.
4. The Department: The Labour Department at the Ministry.
5. The Employer: Any natural or legal person who employs one or more workers in return for a wage, whether or not he owns the establishment.
6. The Establishment: Any technical, industrial, commercial, agricultural or other economic unit, or any charitable or cooperative establishment, or any company, whatever its legal form, or any branch of these establishments.
7. The Worker: Any natural person who performs work in return for a wage for an employer and under his management or supervision, even if he is outside the employer's direct supervision.
8. Juvenile: Any person who has reached the age of 15 and has not reached the age of 18.
9. Wage: The basic wage, in addition to all allowances, grants, benefits in kind or cash, and any other benefits granted to the worker in return for his work, as stipulated in the employment contract or the establishment’s by-laws, if these allowances, grants, benefits and other benefits are specified in the employment contract or the establishment’s by-laws.
10. Basic Wage: The wage stipulated in the employment contract, which is paid to the worker in return for his work, excluding any other allowances or benefits.
11. Temporary Work: Work whose nature requires its completion in a specific period or for a specific task, and ends with the completion of the work or the expiry of its period.
12. Part-time Work: Work whose normal working hours are less than the normal working hours determined for full-time workers in the establishment.
13. Flexible Work: Work whose working hours or days change according to the employer's needs and the worker's requirements, provided that the total working hours do not exceed the normal working hours determined for full-time workers.
14. Remote Work: Work performed by the worker from outside the establishment’s premises, whether permanently or for a specific period, using information and communication technology.
15. Shared Job: A job whose tasks and responsibilities are divided between more than one worker to be performed, and the working hours are calculated for each worker separately.
16. Training and Qualification: All practical and theoretical means and programmes aimed at developing the worker's skills and knowledge, and qualifying him to perform his work efficiently.
17. Discrimination: Any distinction, exclusion or preference based on race, colour, gender, religion, national origin, social origin or disability, which has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation.
18. Harassment: Any verbal, physical, sexual or psychological behaviour that is offensive, humiliating or intimidating to the worker, or that creates a hostile work environment for him.
19. Forced Labour: Any work or service exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily.
20. Working Hours: The period during which the worker is at the disposal of the employer and performs his work, excluding rest periods.
21. Overtime: The additional hours worked by the worker beyond the normal working hours.
22. Annual Leave: The paid leave granted to the worker annually.
23. Sick Leave: The leave granted to the worker due to illness or injury.
24. Maternity Leave: The leave granted to the female worker due to childbirth.
25. Paternity Leave: The leave granted to the male worker due to the birth of his child.
26. Study Leave: The leave granted to the worker to pursue his studies.
27. Unpaid Leave: The leave granted to the worker without pay.
28. End of Service Gratuity: The amount of money paid to the worker upon the termination of his employment relationship.
29. Disciplinary Sanctions: The penalties imposed by the employer on the worker for violating the establishment’s by-laws or the provisions of this Decree-Law.
30. Labour Dispute: Any dispute arising between the employer and the worker or workers, or between more than one employer and their workers, regarding the application of the provisions of this Decree-Law or the employment contract.
31. Labour Court: The court competent to hear labour disputes.
32. Official Gazette: The Official Gazette of the United Arab Emirates.

Article (2) — Objectives

This Decree-Law aims to achieve the following:

1. Regulating labour relations and protecting the rights of both parties.
2. Providing a flexible and sustainable labour market.
3. Attracting and retaining national and international talents.
4. Enhancing the competitiveness of the labour market.
5. Ensuring the stability and prosperity of the labour market.

Article (3) — Scope of Application

1. The provisions of this Decree-Law shall apply to all establishments, employers and workers in the State, whether they are citizens or expatriates, with the exception of: a. Workers in the federal government and local governments. b. Workers in the armed forces, police and security forces. c. Domestic workers. d. Workers in agricultural establishments that employ less than five workers. e. Workers in the financial free zones, to the extent that they have special legislation regulating labour relations.
2. The Cabinet may, upon the proposal of the Minister, exclude any other categories from the application of the provisions of this Decree-Law.

Article (4) — Public Policy

The provisions of this Decree-Law are considered part of the public policy of the State, and any agreement or condition that violates its provisions shall be null and void.

Article (5) — Equality and Non-Discrimination

1. Without prejudice to the provisions of this Decree-Law, any discrimination based on race, colour, gender, religion, national origin, social origin or disability, which has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation, shall be prohibited.
2. The employer shall take all necessary measures to ensure equality of opportunity and treatment for all workers, and to prevent any discrimination or harassment in the workplace.
3. The employer shall not discriminate between male and female workers in the same job or in jobs of equal value, and shall grant them equal wages, benefits and opportunities.

Article (6) — Forced Labour

Forced labour shall be prohibited, and no person shall be compelled to perform any work or service against his will.

Article (7) — Juvenile Employment

1. Without prejudice to the provisions of this Decree-Law, it shall be prohibited to employ juveniles who have not reached the age of 15.
2. It shall be prohibited to employ juveniles in hazardous, arduous or harmful works, or in works that may harm their health, safety or morals, as determined by a decision of the Minister.
3. The Minister shall issue a decision specifying the conditions and procedures for employing juveniles, and the works in which they may be employed.

Article (8) — Emiratisation

The State shall seek to develop and qualify national cadres and provide them with employment opportunities, and the Cabinet shall, upon the proposal of the Minister, issue the necessary decisions to regulate Emiratisation in the private sector.

Article (9) — Labour Inspection

1. The Ministry shall supervise the implementation of the provisions of this Decree-Law and the decisions issued in implementation thereof.
2. The Ministry shall have the right to inspect establishments and workplaces, and to take all necessary measures to ensure compliance with the provisions of this Decree-Law.
3. The Ministry shall have the right to impose administrative penalties on establishments that violate the provisions of this Decree-Law, in accordance with the decisions issued by the Cabinet in this regard.

Article (10) — Labour Statistics

The Ministry shall collect and analyse labour statistics, and shall publish them periodically, in coordination with the competent authorities in the State.

Article (11) — Labour Education

The Ministry shall promote labour education and awareness among workers and employers, and shall provide them with information and guidance on their rights and duties.

Chapter Two: Employment Contracts and Records

Article (12) — Types of Employment Contracts

1. Employment contracts shall be for a definite period, and may be renewed for similar or different periods.
2. The Minister shall issue a decision specifying the types of employment contracts, their forms and conditions, including: a. Full-time work. b. Part-time work. c. Temporary work. d. Flexible work. e. Remote work. f. Shared job.

Article (13) — Form of Employment Contract

1. The employment contract shall be in writing, in duplicate, one copy for each party, and shall be in Arabic, and a translation into another language may be added.
2. The employment contract shall specify the type of work, the date of commencement of work, the duration of the contract, the wage, the working hours, the weekly rest, the annual leave, the end of service gratuity, and any other conditions agreed upon by the parties, provided that they do not violate the provisions of this Decree-Law.
3. The Minister shall issue a decision specifying the model employment contracts.

Article (14) — Probation Period

1. The employer may employ the worker on probation for a period not exceeding six months from the date of commencement of work.
2. The employer may terminate the employment contract during the probation period without notice, provided that he notifies the worker in writing at least 14 days before the date of termination.
3. The worker may terminate the employment contract during the probation period by notifying the employer in writing at least 14 days before the date of termination.
4. The worker shall not be entitled to end of service gratuity for the probation period.

Article (15) — Obligations of the Employer

The employer shall:

1. Provide a safe and healthy work environment for the workers.
2. Pay the wages of the workers on time, in accordance with the provisions of this Decree-Law and the employment contract.
3. Provide the workers with the necessary tools and equipment to perform their work.
4. Provide the workers with training and qualification programmes, as required by the nature of the work.
5. Respect the privacy of the workers and not infringe upon their personal freedom.
6. Not discriminate between workers on the basis of race, colour, gender, religion, national origin, social origin or disability.
7. Not harass the workers or subject them to any form of abuse.
8. Not compel the workers to perform any work or service against their will.
9. Keep a record for each worker, containing his personal data, date of commencement of work, type of work, wage, working hours, weekly rest, annual leave, sick leave, maternity leave, paternity leave, study leave, unpaid leave, disciplinary sanctions, and date of termination of employment.
10. Issue a work certificate to the worker upon the termination of his employment, stating the date of commencement of work, the date of termination, the type of work, and the last wage received.
11. Bear the costs of the worker's recruitment and return to his home country, unless otherwise agreed.
12. Comply with any other obligations stipulated in this Decree-Law or the decisions issued in implementation thereof.

Article (16) — Obligations of the Worker

The worker shall:

1. Perform the work assigned to him diligently and faithfully, and in accordance with the instructions of the employer.
2. Preserve the secrets of the establishment and not disclose them to any third party.
3. Preserve the tools and equipment provided to him by the employer, and return them upon the termination of his employment.
4. Comply with the establishment’s by-laws and the provisions of this Decree-Law.
5. Not engage in any activity that competes with the employer's business.
6. Not accept any gifts, commissions or benefits from any third party in return for performing his work.
7. Not use the establishment’s property for personal purposes.
8. Not be absent from work without a legitimate excuse.
9. Notify the employer of any change in his personal data.
10. Comply with any other obligations stipulated in this Decree-Law or the decisions issued in implementation thereof.

Chapter Three: Wages and Working Hours

Article (17) — Wage Payment

1. Wages shall be paid in the national currency of the State, unless otherwise agreed.
2. Wages shall be paid at least once a month, unless otherwise agreed in the employment contract.
3. Wages shall be paid through the Wage Protection System, or any other system approved by the Ministry.
4. The employer shall not deduct any amount from the worker's wage, except in cases stipulated in this Decree-Law or by a court order.

Article (18) — Minimum Wage

The Cabinet shall, upon the proposal of the Minister, issue a decision specifying the minimum wage for workers in the State.

Article (19) — Normal Working Hours

1. The normal working hours shall not exceed eight hours a day, or 48 hours a week.
2. The working hours may be increased to nine hours a day for workers in commercial, hotel, restaurant and other similar establishments, as determined by a decision of the Minister.
3. The working hours may be reduced for workers in hazardous, arduous or harmful works, as determined by a decision of the Minister.
4. The working hours during the month of Ramadan shall be reduced by two hours a day for Muslim workers.

Article (20) — Overtime

1. The employer may require the worker to work overtime, provided that the total working hours do not exceed 10 hours a day, or 60 hours a week.
2. The worker shall be entitled to an additional wage for overtime, which shall not be less than 25% of his basic wage for the normal working hours, and 50% for overtime worked between 9 pm and 4 am.
3. If the worker is required to work on his weekly rest day, he shall be entitled to a compensatory rest day, or an additional wage equal to 50% of his basic wage for the normal working hours, in addition to his normal wage.

Article (21) — Weekly Rest

1. Every worker shall be entitled to at least one weekly rest day, which shall not be less than 24 consecutive hours.
2. The weekly rest day shall be Friday, unless otherwise determined by the employer, provided that it is a consecutive day.

Article (22) — Official Holidays

1. The worker shall be entitled to paid official holidays, as determined by a decision of the Cabinet.
2. If the worker is required to work on an official holiday, he shall be entitled to a compensatory rest day, or an additional wage equal to 50% of his basic wage for the normal working hours, in addition to his normal wage.

Chapter Four: Leaves

Article (23) — Annual Leave

1. Every worker shall be entitled to an annual leave of not less than 30 days for each full year of service.
2. The worker shall be entitled to an annual leave of not less than two days for each month of service, if his service period is more than six months and less than one year.
3. The worker shall not be entitled to annual leave for the first six months of service.
4. The employer may determine the date of the annual leave, and may divide it into two or more periods, with the consent of the worker.
5. The worker shall be entitled to his basic wage during the annual leave, in addition to the housing allowance, if any.
6. The worker shall not work for another employer during his annual leave.
7. The worker shall be entitled to a cash allowance for the balance of his annual leave upon the termination of his employment, calculated on the basis of his basic wage.

Article (24) — Sick Leave

1. The worker shall be entitled to sick leave of not more than 90 days a year, whether continuous or intermittent, calculated as follows: a. The first 15 days: full pay. b. The next 30 days: half pay. c. The remaining 45 days: without pay.
2. The worker shall not be entitled to sick leave during the probation period.
3. The worker shall notify the employer of his illness within a period not exceeding three days from the date of his absence from work.
4. The worker shall submit a medical report from a licensed medical authority to prove his illness.
5. The employer may refer the worker to a medical committee to verify his illness.
6. The employer shall not terminate the employment of the worker due to his illness, unless his sick leave exceeds 90 days a year.

Article (25) — Maternity Leave

1. The female worker shall be entitled to maternity leave of 60 days, calculated as follows: a. The first 45 days: full pay. b. The next 15 days: half pay.
2. The female worker shall be entitled to an additional 30 days of unpaid leave after the maternity leave, if she suffers from an illness due to pregnancy or childbirth, which prevents her from working, provided that she submits a medical report from a licensed medical authority to prove her illness.
3. The female worker shall be entitled to two additional hours a day for nursing her child for a period not exceeding six months from the date of childbirth, without any deduction from her wage.
4. The female worker shall not be terminated from her employment due to her pregnancy or maternity leave.

Article (26) — Paternity Leave

The male worker shall be entitled to paternity leave of five working days, to be taken within six months from the date of his child's birth, with full pay.

Article (27) — Study Leave

The worker shall be entitled to study leave of 10 working days a year, with full pay, for the purpose of pursuing his studies in an approved educational institution in the State, provided that he has completed two years of service with the employer.

Article (28) — Unpaid Leave

The employer may grant the worker unpaid leave, with the consent of the worker, and the period of unpaid leave shall not be included in the calculation of the worker's service period for the purpose of end of service gratuity.

Chapter Five: Termination of Employment and End of Service Gratuity

Article (29) — Termination of Employment Contract

1. The employment contract shall be terminated in any of the following cases: a. The expiry of the contract period, unless it is renewed. b. The agreement of both parties to terminate the contract, provided that the worker's consent is in writing. c. The death of the worker. d. The worker's total permanent disability, as proven by a medical report from a licensed medical authority. e. The worker's resignation, provided that he notifies the employer in writing at least one month before the date of resignation. f. The employer's termination of the contract for a legitimate reason, provided that he notifies the worker in writing at least one month before the date of termination. g. The worker's termination of the contract for a legitimate reason, provided that he notifies the employer in writing at least one month before the date of termination. h. The worker's dismissal for a grave cause, in accordance with the provisions of Article (44) of this Decree-Law. i. The closure of the establishment, or the bankruptcy of the employer. j. Any other case stipulated in this Decree-Law or the decisions issued in implementation thereof.
2. The party wishing to terminate the employment contract shall give the other party a notice period of not less than 30 days, unless otherwise agreed in the contract, provided that the notice period does not exceed three months.
3. The worker shall be entitled to his full wage during the notice period.

Article (30) — End of Service Gratuity

1. The worker who has completed one year or more of continuous service shall be entitled to an end of service gratuity upon the termination of his employment, calculated as follows: a. A wage of 21 days for each of the first five years of service. b. A wage of 30 days for each year of service after the first five years.
2. The end of service gratuity shall be calculated on the basis of the worker's basic wage.
3. The total end of service gratuity shall not exceed two years' wage.
4. The worker shall not be entitled to end of service gratuity if he is dismissed for a grave cause, in accordance with the provisions of Article (44) of this Decree-Law.
5. The end of service gratuity shall be paid to the worker within 14 days from the date of termination of his employment.

Article (31) — Transfer of Ownership of Establishment

1. The transfer of ownership of the establishment shall not affect the rights of the workers, and the new employer shall be jointly liable with the previous employer for the payment of the workers' dues.
2. The new employer may terminate the employment contracts of the workers, provided that he gives them a notice period of not less than 30 days, and pays them their end of service gratuity.

Chapter Six: Disciplinary Sanctions and Labour Disputes

Article (32) — Disciplinary Sanctions

1. The employer may impose disciplinary sanctions on the worker for violating the establishment’s by-laws or the provisions of this Decree-Law, in accordance with the following: a. Written warning. b. Deduction from wage for a period not exceeding five days a month. c. Suspension from work without pay for a period not exceeding 10 days a month. d. Postponement of annual increment for a period not exceeding six months. e. Deprivation of annual increment. f. Demotion. g. Dismissal without end of service gratuity, in accordance with the provisions of Article (44) of this Decree-Law.
2. The employer shall not impose any disciplinary sanction on the worker unless he has investigated the matter and given the worker the opportunity to defend himself.
3. The employer shall record the disciplinary sanctions in the worker's file.
4. The Minister shall issue a decision specifying the disciplinary sanctions and the procedures for imposing them.

Article (33) — Labour Disputes

1. If a labour dispute arises between the employer and the worker or workers, or between more than one employer and their workers, regarding the application of the provisions of this Decree-Law or the employment contract, the parties shall endeavour to settle the dispute amicably.
2. If the parties fail to settle the dispute amicably, either party may refer the dispute to the Department, which shall endeavour to settle it amicably within a period not exceeding 14 days from the date of referral.
3. If the Department fails to settle the dispute amicably, it shall refer the dispute to the Labour Court within a period not exceeding seven days from the date of failure to settle it amicably.
4. The Labour Court shall hear the dispute urgently and shall issue its judgment within a period not exceeding 30 days from the date of referral.
5. The judgment of the Labour Court shall be final and enforceable.

Chapter Seven: Penalties and Final Provisions

Article (34) — Penalties

1. Without prejudice to any severer penalty stipulated in any other law, any person who violates the provisions of this Decree-Law or the decisions issued in implementation thereof shall be punished with a fine of not less than AED 5,000 and not more than AED 1,000,000.
2. The fine shall be multiplied by the number of workers in respect of whom the violation occurred, provided that the total fine does not exceed AED 10,000,000.
3. The court may order the closure of the establishment for a period not exceeding six months, in case of repeated violations.
4. The court may order the deportation of the expatriate worker who violates the provisions of this Decree-Law.

Article (35) — Repeal

Federal Law No. (8) of 1980 regarding the Regulation of Labour Relations and its amending laws shall be repealed, and any provision that contradicts the provisions of this Decree-Law shall also be repealed.

Article (36) — Issuing Executive Regulations

The Cabinet shall, upon the proposal of the Minister, issue the executive regulations of this Decree-Law within six months from the date of its publication.

Article (37) — Publication and Commencement

This Decree-Law shall be published in the Official Gazette and shall come into effect as of 02/02/2022.

Issued by us in the Presidency Palace in Abu Dhabi on: 15/12/2021 AD