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
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
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
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 Type | Entitlement | Pay | Notes |
|---|---|---|---|
| Annual Leave | 30 calendar days | Full basic + housing allowance | Can be carried over (up to 1 year in most contracts); cash-out permitted |
| Sick Leave | 90 days per year | First 15 days: full pay. Next 30 days: half pay. Final 45 days: unpaid | Medical certificate from approved doctor required. Cannot be used in first 3 months. |
| Maternity Leave | 60 days | 45 days at full pay, 15 days at half pay | Plus nursing breaks of 1 hour/day for 18 months. Extended if medical complications. |
| Paternity Leave | 5 working days | Full pay | Introduced in 2021 labour law reform. Does not apply to casual workers. |
| Bereavement Leave | 3–5 days | Full pay | 5 days for spouse or child; 3 days for parent, sibling, grandparent |
| Hajj Leave | 30 days (once in employment) | Unpaid | Cannot be combined with annual leave. Subject to operational requirements. |
| Study Leave | Varies | Subject to employer policy | Not mandated by law but commonly included in UAE government and larger employer policies |
Annual Leave Encashment
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 Service | Calculation Rate | Example | Notes |
|---|---|---|---|
| Less than 1 year | Zero | No gratuity if you resign before completing 1 year | Gratuity forfeited entirely on resignation before 1-year mark |
| 1–5 years | 21 days basic salary per year | 3 years × 21 days basic = 63 days basic salary | Calculated on basic salary only — not total package |
| More than 5 years | 30 days basic salary per year (beyond 5 years) | 7 years = (5 × 21 days) + (2 × 30 days) = 165 days basic salary | The higher rate applies only to years beyond the 5-year mark |
| Cap | 2 years total basic salary maximum | If gratuity exceeds 2 years basic, it is capped at 2 years | Cap 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
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
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)
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?
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.
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.
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.
Mediation Attempt
MOHRE invites both parties to a mediation session. Most simple disputes (unpaid salary, gratuity, leave) are resolved here. Agreement is binding.
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).
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
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
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
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)