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UAE labour rules: Can companies withdraw an offer letter?

The terms of an offer letter upon execution cannot be changed unilaterally by the offeror without the consent of the offeree

Question: I have a question about employment offer letters. Is it legally possible for an organisation to extend an offer letter to a candidate but withdraw it later for whatever reason? Is the offer letter lawfully binding, where it's not just on the potential candidate to accept/reject it, but the company also has the liberty to withdraw during the hiring process?

Answer: It is presumed that your queries are in relation to the federal laws and regulations of the UAE in respect of employment relations i.e., the Federal Law No 8 of 1980 on the Regulation of Employment Relations, as amended from time to time (the Employment Law) and the subsequent Ministerial Resolutions adopted in pursuance thereof.

The issuance of employment offer letters before execution of employment contracts were made compulsory following the provisions of Article (1) and Article (2) of the Ministerial Decree (764) Of 2015 On the Implementation of the Ministry of Labour's Approved Standard Employment Contracts (the "MD 764/2015").

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Pursuant to your queries, it may be noted that an employment offer letter has the effect of a binding contract, once the same gets executed by the offeror and the offeree. The terms of an offer letter upon execution cannot be changed unilaterally by the offeror (i.e., employer) without the consent of the offeree (i.e., the employee) and further provided that such change (i) is not prejudicial to the offeree; and (ii) is approved by the UAE’s Ministry of Human Resources and Emiratisation. This follows Article 4 of the MD 764/2015 which reads as follows:

“Article 4 -

The employer must retrieve from the Ministry system a standard contract that captures the same terms provided for in the employment offer signed by the worker. The said contract shall be submitted to the Ministry signed by the worker. No change may be made to the contract signed by the worker hereunder without the worker's consent and provided such change may not prejudice the worker's rights and only after the Ministry's approval of such change.”

In view of the foregoing, it may be noted that an offeror may withdraw its offer letter (i) before the same is executed by the offeree; and (ii) by mutual consent of the offeror and the offeree.

However, an offeree may challenge the offeror’s unilateral withdrawal. But it must be noted that the outcome of such claims is largely based on merits, and is determined on a case to case basis.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.