Skip to content
DP

UAE Labor Law Guide

Contract Types

Following the 2021 UAE Labour Law reform (Federal Decree-Law No. 33/2021), all employment contracts in the UAE are now limited-term contracts. The old unlimited-term contract no longer exists for new hires and was converted for existing employees by February 2023.

Limited Term Contract (Current Standard)

  • Maximum duration: 3 years (renewable)
  • Automatically converts to new limited-term on renewal
  • 30-day minimum notice period for resignation or termination
  • End-of-service gratuity accrues continuously
  • The only type issued since February 2022

Special Contract Categories (2021 Reform)

  • Part-time: Work for multiple employers simultaneously; hours proportional
  • Temporary: Project or task specific; ends at project completion
  • Flexible: Variable hours based on operational needs
  • Remote/hybrid: Work-from-home or outside UAE permitted with employer agreement

What Changed in 2021

The new law eliminated the unlimited-term contract entirely. Employees on unlimited contracts before February 2022 had their contracts converted. Existing employees were not penalised — gratuity accrual and seniority carry forward into the new limited-term format.

Probation Period

Probation periods in UAE are strictly regulated. Both employees and employers have specific notice obligations during this time, and resigning without proper notice can trigger a labour ban.

Probation Rules

  • • Maximum probation period: 6 months
  • • Cannot be extended beyond 6 months in any form
  • • Gratuity does NOT accrue during probation
  • • Annual leave does not accrue during probation (for most employers)
  • • No sick pay entitlement during first 3 months
  • • If employed beyond probation, the period counts towards seniority

Termination During Probation

  • Employer terminates employee: 14 days written notice required. No gratuity owed if probation not completed.
  • Employee resigns: 14 days notice required. If leaving for another UAE job, 1-month notice required (new employer may face a ban otherwise).
  • Employee resigns and leaves UAE: 14 days notice required.

Labour Ban on Probation Resignation

If an employee resigns during probation to join another UAE employer and fails to give the required 1-month notice (or the new employer does not wait), both the employee and the new employer can face a 1-year labour ban. The ban can be lifted if the new employer pays AED 3,000 as a guarantee deposit to MOHRE.

Working Hours & Overtime

UAE law sets maximum working hours and regulates overtime pay. These are minimums — employers can offer better terms but cannot go below the legal standard.

Standard Hours

  • Maximum: 8 hours per day or 48 hours per week
  • Ramadan: Reduced by 2 hours per day for all employees
  • Breaks: No more than 5 consecutive hours without a break
  • Rest day: Minimum 1 day per week (Friday is customary)
  • Night shift: If more than 2 hours between 10pm–4am, it's a night shift with premium entitlement

Overtime Rules

  • Daytime OT (6am–10pm): 125% of regular hourly rate
  • Night OT (10pm–4am): 150% of regular hourly rate
  • Maximum OT: 2 additional hours per day permitted
  • Time off in lieu: Employer can substitute equivalent time off instead of payment (by agreement)
  • Senior managers/supervisors may be exempt from OT rules in some contracts

OT Calculation Example

If your basic salary is AED 10,000/month and you work 22 working days/month: daily rate = AED 455. Hourly rate = AED 57. One daytime OT hour = AED 71. One night OT hour = AED 86. Keep records of actual hours worked — MOHRE disputes require documentation.

Leave Entitlements

UAE law provides a comprehensive set of paid and unpaid leave types. The table below summarises the minimum legal entitlements — your contract may provide more generous terms.

Leave TypeEntitlementPayNotes
Annual Leave30 calendar daysFull basic + housing allowanceCan be carried over (up to 1 year in most contracts); cash-out permitted
Sick Leave90 days per yearFirst 15 days: full pay. Next 30 days: half pay. Final 45 days: unpaidMedical certificate from approved doctor required. Cannot be used in first 3 months.
Maternity Leave60 days45 days at full pay, 15 days at half payPlus nursing breaks of 1 hour/day for 18 months. Extended if medical complications.
Paternity Leave5 working daysFull payIntroduced in 2021 labour law reform. Does not apply to casual workers.
Bereavement Leave3–5 daysFull pay5 days for spouse or child; 3 days for parent, sibling, grandparent
Hajj Leave30 days (once in employment)UnpaidCannot be combined with annual leave. Subject to operational requirements.
Study LeaveVariesSubject to employer policyNot mandated by law but commonly included in UAE government and larger employer policies

Annual Leave Encashment

If you leave employment with unused annual leave, you are entitled to cash payment for those days. This is calculated on basic salary + housing allowance. Keep track of your leave balance — some employers try to withhold this on termination.

End-of-Service Gratuity (EOSG)

End-of-service gratuity is a mandatory payment made by employers when an employment relationship ends. It is calculated on your basic salary only (not total package) and is one of the most important financial benefits for employees in the UAE.

Years of ServiceCalculation RateExampleNotes
Less than 1 yearZeroNo gratuity if you resign before completing 1 yearGratuity forfeited entirely on resignation before 1-year mark
1–5 years21 days basic salary per year3 years × 21 days basic = 63 days basic salaryCalculated on basic salary only — not total package
More than 5 years30 days basic salary per year (beyond 5 years)7 years = (5 × 21 days) + (2 × 30 days) = 165 days basic salaryThe higher rate applies only to years beyond the 5-year mark
Cap2 years total basic salary maximumIf gratuity exceeds 2 years basic, it is capped at 2 yearsCap applies regardless of length of service

Worked Example — 7 Years Service

Basic salary: AED 10,000/month. Daily basic: AED 333.

  • • First 5 years: 5 × 21 days × AED 333 = AED 34,965
  • • Years 6–7: 2 × 30 days × AED 333 = AED 19,980
  • Total EOSG: AED 54,945

Cap check: 2 years basic = 2 × AED 120,000 = AED 240,000. AED 54,945 is under the cap.

When Gratuity is NOT Paid

Gratuity is forfeited (not paid) if: (1) the employee is dismissed for gross misconduct under Article 44 of the Labour Law, or (2) the employee resigned within the first year of service. It is also reduced proportionally if you resign rather than being terminated — some lawyers advise that this provision is increasingly unenforced post-2022, but seek advice if this applies to you.

Salary Structure & WPS

Understanding the UAE salary structure is critical because gratuity and overtime are calculated on basic salary only, not on your total monthly package. Many employees do not realise how this affects their financial entitlements.

Typical Salary Components

  • Basic Salary: The core component. Gratuity, OT, and some leave calculations use this figure. Typically 40–60% of total package.
  • Housing Allowance: Standard addition; taxable for annual leave encashment but not gratuity. Often 25–30% of package.
  • Transport Allowance: Common addition; not used in gratuity calculation.
  • Other Allowances: Food, phone, car — contractual and discretionary. Not used in statutory calculations.

Wages Protection System (WPS)

  • • Mandatory for all employers in the UAE
  • • Salaries must be paid within 10 days of the due date
  • • Payments routed through approved banks/exchange houses
  • • MOHRE monitors WPS compliance automatically
  • • Employer penalty for late payment: recruitment freeze + fines
  • • Employee right: if unpaid for 1+ month, can file MOHRE complaint immediately

Negotiate Your Basic Salary

When negotiating a job offer, push for a higher basic salary component — this directly increases your gratuity and any overtime entitlements. A package of AED 20,000 with AED 15,000 basic is worth more at end-of-service than the same total with only AED 8,000 basic.

Notice Periods & Termination

Notice periods are a critical part of UAE employment contracts. Both parties (employer and employee) must give the legally required notice unless it is waived by mutual agreement or paid in lieu.

Legal Notice Requirements

  • • Minimum by law: 30 days for standard contracts
  • • During probation: 14 days (or 1 month if joining another UAE employer)
  • • Maximum notice period in contract: 90 days (3 months)
  • • Must be in writing (letter or email with confirmation)
  • • Employee can work throughout notice or be placed on garden leave
  • • Notice period can be waived by mutual written agreement

Payment in Lieu of Notice

  • • Either party can pay in lieu of serving notice
  • • Amount = basic salary for the notice period days
  • • Must be calculated on full package if contract specifies
  • • Garden leave counts as serving notice (paid but not working)
  • • Employee joining new job while on notice is a breach — employer can claim damages

Immediate Termination (Article 44)

An employer can dismiss an employee immediately (without notice and without gratuity) only for specific gross misconduct reasons listed in Article 44 of the Labour Law. These include: committing a crime at work, impersonation, physical assault of employer/colleagues, failing to observe safety rules causing major incident, disclosing company secrets, being found intoxicated during work hours, and others. This list is exhaustive — other terminations require notice and gratuity.

Non-Compete Clauses

The 2021 labour law reform gave teeth to non-compete clauses in the UAE for the first time. Previously these were largely unenforceable; now courts will uphold them if they meet specific conditions.

Requirements for an Enforceable Non-Compete

  • Duration: Maximum 2 years from end of employment
  • Geographic scope: Must specify the geographic area (cannot be unlimited worldwide)
  • Industry/role scope: Must specify the type of work or business activity restricted
  • Legitimate interest: Must protect a genuine business interest (not just prevent competition generally)
  • Courts may reduce an overreaching clause rather than void it entirely — negotiate scope carefully

Can You Challenge a Non-Compete?

Yes. If the clause is too broad (e.g., worldwide scope or covers all industries), it can be challenged at MOHRE or labour court. The employer also bears the burden of proving you actually harmed their business. Many employees successfully challenge these clauses. Get legal advice before assuming you are bound.

MOHRE Complaints Process

The Ministry of Human Resources and Emiratisation (MOHRE) handles employment disputes before they reach the court system. Filing a complaint is free, and most disputes are resolved at the mediation stage without going to court.

1

File a Complaint

File via the MOHRE app (Ministry of HR UAE), the website (mohre.gov.ae), call 800-60, or in person at a Tasheel service centre. Complaint is free of charge.

2

Initial Review (1–2 days)

MOHRE reviews the complaint to determine jurisdiction and whether it falls under the Labour Law. Free zone employees may need to file with their respective free zone authority instead.

3

Mediation Attempt

MOHRE invites both parties to a mediation session. Most simple disputes (unpaid salary, gratuity, leave) are resolved here. Agreement is binding.

4

Referral to Labour Court

If mediation fails, MOHRE refers the case to the Dubai Courts Labour Division. Cases under AED 100,000 are typically processed quickly (weeks not months).

5

Court Judgment

Labour court issues a binding judgment. Successful claimants can receive unpaid salary, gratuity, notice pay, annual leave balance, damages for unfair dismissal, and court costs.

Free Legal Aid Available

The Dubai Courts offers free legal aid for employment disputes. Additionally, MOHRE's protection department assists workers in vulnerable situations. You do not need a lawyer to file a MOHRE complaint — the process is designed to be accessible to all employees.

Labour Ban Rules

A labour ban (work permit ban) prevents an employee from obtaining a new UAE work permit for 1 year. The 2021 law significantly reduced the circumstances in which a ban is triggered, but they still apply in certain cases.

When a 1-Year Ban May Apply

  • • Resignation during probation without completing notice period
  • • Resignation during probation to join another UAE employer (if 1-month notice not given)
  • • Dismissal for gross misconduct (Article 44)
  • • Abandonment of employment (absent 7+ consecutive days without notice)

When No Ban Applies

  • • Resignation after completing probation (with proper notice)
  • • Contract expires and is not renewed
  • • Employer terminates employee (redundancy, restructuring)
  • • Golden visa holders (completely exempt)
  • • Employees changing jobs within same company group

Lifting a Labour Ban

A 1-year ban can be lifted early if the new employer submits a request to MOHRE and pays a AED 3,000 ban lifting guarantee. The previous employer can also write a letter waiving the ban. Check your ban status via the MOHRE app or ICP website before accepting a new job.

Freelancing While Employed

Many employees in Dubai want to take on freelance work alongside their full-time job. This is permitted under UAE law but has important requirements and restrictions.

Requirements to Freelance While Employed

  • Employer's written NOC: Your current employer must provide a No Objection Certificate permitting the freelance work
  • Freelance permit: You need a separate freelance permit from a free zone (e.g., Meydan, TECOM, IFZA) or Dubai DED for mainland activities
  • No competing activity: Freelance work must not compete directly with your employer or breach your non-compete clause
  • Tax registration: If earning above AED 1M/year across all sources, Corporate Tax registration required from 2023

Most Affordable Freelance Permits

Meydan Free Zone (from AED 5,750/year) and Ras Al Khaimah zones offer very affordable freelance permits. The permit gives you the legal ability to invoice clients as a business entity while remaining in your full-time employment.

Key 2021 Labour Law Changes (Federal Decree-Law No. 33/2021)

The 2021 UAE Labour Law overhaul was the most significant reform in decades. It took effect on February 2, 2022 and fundamentally changed many aspects of employment in the UAE. Here are the most important changes for employees.

All Contracts Now Limited Term

From Feb 2, 2022, only limited-term contracts (max 3 years) are issued. All unlimited-term contracts were converted to limited-term by Feb 1, 2023.

Flexible and Part-Time Work Introduced

New work permit categories for part-time, temporary, and flexible arrangements. Employees can hold multiple jobs with permits from multiple employers.

Non-Compete Clauses Enforceable

Now legally defined: maximum 2 years, must specify geographic scope and industry. Courts will enforce if reasonable.

Paternity Leave (5 Days)

Male employees now entitled to 5 paid working days within 6 months of a child's birth.

14-Day Parental Leave (unpaid)

New unpaid parental leave for both parents to care for a sick or disabled child.

Golden Visa Holders Exempt from Labour Ban

Golden visa holders are exempt from the standard labour ban rules on resignation.

Anti-Discrimination Provisions Strengthened

Strengthened protection against discrimination based on race, color, gender, religion, nationality, and disability.

Domestic Workers Now Covered

Domestic workers (housemaids, drivers, nannies) gained rights under Federal Law No. 9/2017 including leave, working hours, and gratuity.

New: End-of-Service Savings Scheme (DEWS)

The Dubai International Financial Centre (DIFC) introduced an optional End-of-Service Savings Scheme (DEWS / Equidam) allowing employers to invest gratuity contributions monthly rather than paying a lump sum at the end of service. This is currently mandatory for DIFC employers and may extend to the wider UAE — check if your employer has opted in and what it means for your savings.

Related Guides