UAE employment law changed substantially in February 2022. The rules on contracts, termination, flexible work, and anti-discrimination all shifted. This guide covers the legal framework, contract requirements, employer obligations, and the structural distinctions that determine which rules apply to your workforce.
The legal framework governing UAE employment
UAE private sector employment is governed primarily by Federal Decree-Law No. 33 of 2021 and its implementing Cabinet Resolution No. 1 of 2022. MOHRE administers and enforces the law across mainland employers and most free zones.
Two financial free zones operate under entirely separate frameworks. The Dubai International Financial Centre (DIFC) follows DIFC Employment Law No. 2 of 2019, and the Abu Dhabi Global Market (ADGM) operates under ADGM Employment Regulations 2019. Both are based on English common law principles. If your entity is registered in either zone, federal labour law doesn’t apply to your employment relationships, and the differences in contract terms, gratuity, and dispute resolution are substantial enough to matter in practice.
Most other free zones (JAFZA, DMCC, Dubai Silicon Oasis, and others) follow federal labour law for employment purposes, while handling their own work permit and visa administration.
What changed under the 2021 law
The 2021 law introduced several shifts that affect how employers structure and manage employment relationships:
| Area | Previous position | Current position |
|---|---|---|
| Contract types | Unlimited and fixed-term permitted | Fixed-term only (max 3 years) |
| Work arrangements | Traditional full-time only | Part-time, temporary, flexible, remote, job-share recognised |
| Gratuity on resignation | Tiered reduction (1/3, 2/3, full) based on tenure | Full gratuity for all employees after 1 year |
| Anti-discrimination | Limited provisions | Explicit prohibition with enforcement mechanism |
| Minimum notice | Varied by contract type | 30 days minimum for all contracts |
Employers who had unlimited contracts under the old law were required to convert them to fixed-term agreements by February 2023.
Employment contracts in the UAE
All UAE employment contracts must be fixed-term since February 2022. The maximum duration is three years. Contracts are renewable by mutual agreement, and if an employee continues working after the contract expires without formal renewal, the contract extends automatically on the same terms.
All contracts must be in Arabic. Bilingual versions are permitted, but the Arabic text controls in any dispute. Contracts must be registered with MOHRE through its electronic portal before the employee starts work. Failure to register is a compliance violation and can result in fines and restrictions on future work permit applications.
Mandatory contract clauses
A UAE employment contract must include the following to be valid:
- Employer and employee names and identification details
- Job title and description
- Contract start date and duration
- Workplace location
- Working hours
- Basic wage and allowances
- Leave entitlements
- Notice period
- Probation period, if applicable
MOHRE won’t register a contract that omits these elements. Vague terms aren’t accepted — compensation must be stated in exact AED figures.
Flexible work arrangements
The 2021 law formally recognises work models beyond standard full-time employment. Part-time, temporary, flexible hours, remote work, and job-sharing are all valid arrangements under the law, provided they are documented in the contract and registered with MOHRE. For part-time employees, statutory entitlements (leave, gratuity) are calculated proportionally based on actual hours worked relative to a full-time equivalent.
Non-compete clauses
Non-compete clauses are enforceable under Article 10 of the Decree-Law, subject to three conditions: the restriction must be limited to a specific geographic scope, a defined time period (maximum two years), and activities that genuinely compete with the employer’s business. Employers must have a legitimate commercial interest to protect. Overly broad non-competes that fail these tests won’t be enforced.
Probation
The maximum probation period is six months. It can’t be extended, and an employee can’t be placed on probation more than once with the same employer. During probation, either party can terminate with 14 days’ written notice. If the employee intends to leave the UAE, the notice period is 30 days.
If an employee resigns during probation to join another UAE employer, the new employer must reimburse the original employer’s recruitment costs unless otherwise agreed. Gratuity doesn’t accrue during probation. Entitlement begins only once probation ends.
Working hours
Standard working hours are 8 hours per day and 48 hours per week. During Ramadan, hours are reduced by two hours per day for all employees regardless of religion, with no reduction in salary. Hospitality and retail employers can calculate hours over a three-week rolling period (144 hours total) to accommodate shift patterns.
Overtime is compensated at 125% of the base hourly rate for standard overtime, and 150% for work performed between 10 PM and 4 AM. Overtime can’t exceed two hours per day except where necessary to prevent significant loss or accident. Senior management roles may be contractually exempt from overtime provisions.
Outdoor work is prohibited between 12:30 PM and 3:00 PM from 15 June to 15 September. Violations carry fines of AED 5,000 per worker per incident, up to AED 50,000 per establishment.
Anti-discrimination and equal pay
UAE labour law explicitly prohibits discrimination in hiring, promotion, training, or termination on the basis of race or colour, sex or gender, religion, national or social origin, and disability. The law also mandates equal pay for men and women performing work of equal value.
Employees who experience discrimination can file a complaint with MOHRE. Proven violations carry fines of up to AED 1,000,000 depending on the nature and severity of the conduct. Arbitrary dismissal connected to a protected characteristic entitles the employee to compensation of up to three months’ wages in addition to other entitlements.
Disciplinary procedures
Employers can establish internal disciplinary policies, but the permitted penalties are defined by law. Disciplinary actions must fall within one of the following:
- Written warning
- Wage deduction of up to 5 days’ pay per incident
- Suspension without pay for up to 14 days
- Denial of a periodic bonus or promotion
- Termination with gratuity
- Termination without gratuity (gross misconduct only, under Article 44)
Employers can’t impose penalties outside this list or outside their registered internal policies. Before any penalty is applied, the employee must be informed of the allegation in writing and given an opportunity to respond. This step isn’t optional — skipping it exposes the employer to reversal of the disciplinary action and potential claims.
Emiratisation
Emiratisation is the UAE government’s programme requiring private sector companies to hire UAE nationals. Companies with 50 or more employees must increase their UAE national skilled headcount by 2% annually. Since 2024, companies with 20 to 49 employees in 14 designated sectors must hire at least one UAE national per year.
Non-compliance carries monthly fines of AED 9,000 per unfilled position (AED 108,000 annually), plus restrictions on work permit applications and potential exclusion from government contracts.
Fictitious Emiratisation — registering UAE nationals who do not actually work — carries fines of up to AED 500,000, potential licence suspension, and referral to the Public Prosecution.
DIFC and ADGM entities aren’t subject to MOHRE Emiratisation quotas. The Nafis programme provides salary top-ups, training subsidies, and pension contributions to incentivise genuine UAE national hiring in the private sector.
Mohre registration and employer obligations
Before hiring any employee, mainland employers must hold an active establishment card from MOHRE, apply for a work permit quota, register each employment contract through the MOHRE digital portal, and obtain a labour card for each employee. Work permits and labour cards renew annually.
The Wage Protection System (WPS) is mandatory for all mainland employers. Wages must be paid in AED through approved electronic channels registered with WPS. MOHRE monitors payment data in real time. Late or missing payments trigger automatic alerts, and repeated non-compliance leads to suspension of work permit applications and escalating fines.
Employers must retain employee records for at least two years after employment ends. Required records include signed employment contracts and any amendments, identification and visa documents, salary records and WPS confirmations, leave records, and disciplinary correspondence.
Penalties for non-compliance
| Violation | Penalty range |
|---|---|
| Employing workers without permits | AED 50,000–200,000 per worker |
| WPS non-compliance | AED 5,000–50,000 per employee |
| Contract registration failures | AED 5,000–50,000 |
| Discrimination or harassment | AED 5,000–1,000,000 |
| Outdoor work ban violations | AED 5,000 per worker, up to AED 50,000 per establishment |
| Fictitious Emiratisation | AED 100,000 per fictitious worker |
Hiring in the UAE without a local entity
Foreign companies without a UAE mainland entity can’t register with MOHRE, sponsor work permits, or run WPS-compliant payroll directly. An Employer of Record (EOR) provides the legal infrastructure to hire compliantly without setting up your own entity.
The EOR holds the establishment card, registers employment contracts with MOHRE, sponsors visas, runs WPS payroll, and manages the full employment relationship on your behalf. You direct the employee’s work. This is the standard route for international companies entering the UAE market or hiring a small team without committing to entity setup.
RemotePass provides EOR services in the UAE with visa sponsorship, WPS-compliant payroll, and Emiratisation support on a single platform. Book a RemotePass demo to see how it works.
FAQs about UAE employment law
Do UAE federal labour laws apply to employees in DIFC or ADGM?
No. DIFC and ADGM operate under their own employment legislation and have separate courts for dispute resolution. Most other free zones follow federal labour law for employment purposes while handling their own permit and visa administration.
Can an employee resign immediately without notice?
Yes, but only in circumstances defined under Article 45 of the law: the employer breaches contractual obligations, fails to pay wages, commits assault or harassment, or creates working conditions that pose a serious threat to health or safety.
Are non-compete clauses enforceable?
Yes, within limits. The clause must be restricted to a specific geographic area, a defined period of no more than two years, and activities that genuinely compete with the employer’s business. Overly broad restrictions won’t be enforced.
What happens if an employer terminates during probation?
14 days’ written notice is required (30 days if the employee will leave the UAE). No gratuity is owed since the employee hasn’t completed one year of service.
Can employers run disciplinary procedures against employees?
Yes, but only using the penalty types listed in the law and documented in the company’s registered internal policy. The employee must be notified of the allegation in writing and given a chance to respond before any penalty is applied.
What is the penalty for not registering an employment contract with MOHRE?
Fines range from AED 5,000 to AED 50,000. Unregistered contracts also create complications for work permit applications and leave the employer without an enforceable agreement if a dispute arises.
