Difference between Offer Letter and Labour Contract

Difference between Offer letter and Labour Contract

So you have landed a job! That’s great news. Companies usually express their desire to employ you with an ‘Offer of Employment‘ letter on the letter head. This is an indicative letter that you have passed the interview and have been selected to work in the company. However, there are few more procedures that you will have to follow to actually start working for a company.

These other procedures are:

-Labour Approval/Labour Card/ Labour Contract
-Employment Visa – Entry Permit
-Medical Test
-Emirates ID
-Employment Visa Stamping

At the time of obtaining offer letter from company, you are not yet legally authorised to work for the company.

First step the company needs to take is to apply for labour approval with Ministry of Labour which will grant you the permission to work in UAE. At this stage, if your quota is approved, you will be presented with the Labour Contract which will be official agreement between you and your company. This is generated by Ministry of Labour and mentions all the clauses applicable to your employment like your salary with break up, type of contract, Designation and any other terms and conditions. Your Offer Letter, after this point has no validity in the eyes of the Labour Law. Labour Law of UAE is the ultimate document that will act as guiding document for any employment related queries and terms.

Article 7 of UAE Labour Law mentions: “Terms inconsistent with the Provisions of this Law including those whose effective date may precede the enforcement of this law shall, unless they are proved more beneficial to the worker, be deemed null and void.”

What this means is that Labour Law is the document that will be followed in all cases even if the offer letter has other clauses, terms that are not in conjunction with the Labour Law. The Law further states that, if the offer letter terms are of higher benefit to the worker than that mentioned in the Labour Law, Offer Letter terms may be applicable.

Many of us are still confused as to what to consider, whether Offer Letter or Labour Contract? I would say, you must have the copy of your labour contract as well as a copy of UAE Labour Law handy and familiarise yourself with the Terms.

Note: Government Organisations do not issue Labour Contracts as they do not come under the purview of MOL. However, they do issue Employment Contract, clauses in which are applicable. Further, they may also have internal policies or may follow provisions in the UAE Labour Law.
Free Zones too, do not provide Labour Contract through MOL. They usually have Contracts generated by the respective Free Zone authority. They may also follow provisions of UAE Labour Law with regard to gratuity and so on. You need to make sure that these clauses are clearly mentioned in the Employment Contract generated by the Free Zone authority.