Directors Contract Of Employment Template for the United Arab Emirates

When appointing an executive director to your UAE company, you need a specialized employment contract that addresses both employment law requirements and corporate governance obligations. A Directors Contract of Employment serves this dual purpose, ensuring compliance with UAE Federal Law No. 32 of 2021 (Commercial Companies Law) and UAE Federal Decree Law No. 33 of 2021 (Labor Law) while protecting your company's interests through comprehensive terms and conditions.

When do you need this document?

You require a Directors Contract of Employment when appointing any executive director to your UAE mainland company or free zone entity who will have operational responsibilities beyond standard board duties. This includes chief executives, managing directors, executive directors with departmental oversight, and directors who receive regular salaries rather than just board fees. The contract is particularly crucial when appointing directors to regulated industries such as banking, insurance, or securities, where additional compliance requirements under UAE Central Bank Law may apply. You also need this document when transitioning non-executive directors to executive roles or when establishing clear employment terms for directors in family businesses or joint ventures.

Key legal considerations

Your contract must address several critical legal elements to ensure enforceability under UAE law. The appointment terms should clearly define the director's role, reporting structure, and specific duties beyond standard fiduciary obligations. Remuneration clauses must comply with UAE Labor Law requirements, including provisions for basic salary, allowances, annual leave entitlements, and end-of-service gratuity calculations. Include comprehensive restrictive covenants covering confidentiality, non-competition, and non-solicitation that align with UAE legal precedents regarding reasonableness and enforceability. The contract should also address potential conflicts of interest, regulatory compliance obligations, and indemnification provisions that protect both the company and director. Termination clauses must specify notice periods, circumstances for summary dismissal, and post-termination obligations while ensuring compliance with UAE employment protection laws.

Legal requirements in United Arab Emirates

UAE law imposes specific requirements that your Directors Contract of Employment must address. Under UAE Federal Law No. 32 of 2021, director appointments require board approval and must be documented in company resolutions filed with relevant authorities. The contract must specify whether the director holds UAE nationality or requires work permits, as this affects employment terms and regulatory approvals. Include mandatory clauses covering probation periods (maximum six months under UAE Labor Law), annual leave entitlements (minimum 30 days), sick leave provisions, and end-of-service benefit calculations based on UAE Labor Law formulas. For companies in regulated sectors, incorporate specific requirements from UAE Corporate Governance Resolution No. 3 of 2020, including independence criteria, board composition rules, and disclosure obligations. The contract should also reference UAE Federal Law No. 19 of 2016 regarding anti-commercial fraud provisions that directors must observe in their executive capacity.