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UAE Labour Laws 2026: The Complete Employer Guide
In February 2022, the UAE rewrote the rulebook on employment. Federal Decree-Law No. 33 of 2021, the new UAE Labour Law, replaced a statute that had been in place since 1980. It introduced flexible work models and strengthened employee protections. Since then, the Ministry of Human Resources and Emiratisation (MOHRE) has issued a stream of Ministerial Decrees refining everything from remote-work contracts to end-of-service calculation rules. Heading into 2026, the regulatory environment is more detailed and more enforced.
In this guide, we will cover every major obligation under UAE labour law, from working hours and annual leave to gratuity, the Wage Protection System, termination rules, and more, so you can run your business compliantly, protect your team, and avoid the fines that catch employers off guard.
What is UAE labour law? The foundation every employer needs to know
The primary legislation governing private-sector employment across the UAE mainland and most free zones is Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations. It is enforced by MOHRE, and its provisions apply to nearly every employer operating in the private sector.
Before 2022, the UAE's labour framework was built on Federal Law No. 8 of 1980. That law served the country well, but it was designed for a different economy. The new law reflects the realities of a modern, diversified workforce, including gig workers, part-time employees, and remote teams. It also expanded employee rights around dismissal, maternity protections, and gratuity entitlements.
Note: If your company is registered in a free zone with its own labour authority, such as DIFC (Dubai International Financial Centre) or ADGM (Abu Dhabi Global Market), your primary obligations may sit under that zone's employment laws, not MOHRE's. Always confirm your regulatory authority with a legal advisor if you're unsure.
Latest UAE labour law updates - 2026
Flexible and part-time work contracts: MOHRE now recognises five official contract types: full-time, part-time, temporary, flexible, and remote. Employers must register the correct contract type on the MOHRE system. Using the wrong type can void termination clauses.
Unlimited contracts phased out: All employment contracts must be fixed-term, with a maximum duration of three years. Contracts can be renewed. Any legacy unlimited-term contract that has not been converted is now legally treated as a fixed-term contract aligned with the original terms.
Job security for whistleblowers: Employees who file legitimate complaints with MOHRE cannot be dismissed as a direct result. Retaliatory termination is treated as arbitrary dismissal and triggers compensation obligations.
WPS coverage tightened: MOHRE enforcement activity around the Wage Protection System has increased significantly. Companies with five or more employees are required to pay wages through WPS-registered bank transfers. Non-compliant companies face new work permit bans starting at the first offence.
Annual leave accrual clarified: Cabinet Resolution No. 6 of 2022 confirmed that annual leave accrues from day one of employment and can be carried forward or encashed with employer agreement.
Emiratisation (Nafis) quotas increased: Private sector companies with 50 or more employees face annual Emiratisation targets. Non-compliant companies pay a monthly contribution of AED 6,000 per unfilled Emirati slot.
Official PDF download: The full English text of Federal Decree-Law No. 33 of 2021 is available at: https://uaelegislation.gov.ae/en/legislations/1541/download
Who does UAE labour law apply to?
Covered employees
UAE labour law applies to anyone employed in the private sector under a formal employment contract, regardless of nationality. This includes:
- Full-time employees on fixed-term contracts
- Part-time employees (covered proportionally)
- Temporary and project-based workers
- Remote workers and flexible-schedule employees
- Employees of free zone companies (unless the free zone has its own jurisdiction)
Who is not covered
The following categories fall outside the scope of Federal Decree-Law No. 33 of 2021:
- UAE federal government employees
- Abu Dhabi government employees (governed by Abu Dhabi Law No. 14 of 2005)
- Domestic workers (maids, drivers, cooks - governed by Federal Law No. 10 of 2017)
- Employees of companies registered in the Dubai International Financial Centre (DIFC) - governed by the DIFC Employment Law
- Employees of ADGM-registered companies - governed by the Abu Dhabi Global Market Employment Regulations
Employment contracts under UAE Labour Law: What you must get right
Under the new law, all employment relationships must be documented through a written contract registered with MOHRE. Verbal agreements are not legally sufficient.
The law recognises five types of work arrangements. This is a major shift from the old binary of "full-time" or nothing.
Contract type | How it works | Best for |
Full-Time | One employer, standard hours, full entitlements | Most traditional roles |
Part-Time | Fixed hours below standard; entitlements pro-rated | Specialists, students, returnees |
Temporary | Fixed-term project or seasonal work; defined end date | Project-based hiring |
Flexible | Variable hours based on workload; hourly or task-based pay | Retail, hospitality, gig work |
Remote / Telework | Tasks performed from outside the employer's premises | Tech, creative, professional services |
Mandatory contract clauses
Every employment contract, regardless of type, must contain the following details at minimum:
Employer and employee full legal names and details
Job title, duties, and place of work
Commencement date and, for fixed-term contracts, the end date
Agreed basic salary, allowances, and payment frequency
Working hours per day and per week
Annual leave entitlement
Notice period for termination
Reference to applicable MOHRE regulations
Probation reminder: You can set a probation period of up to six months. During probation, either party may terminate with a minimum of 14 days' written notice. After probation ends, full notice-period rules apply.
The most important UAE labour law regulations
UAE Labour Law gratuity (End-of-Service Benefit)
Gratuity, officially called the End-of-Service Benefit (EOSB), is a lump-sum payment every eligible employee is entitled to upon leaving employment. It is governed by Article 51 of Federal Decree-Law No. 33 of 2021.
Gratuity eligibility in the UAE
Employees who have completed at least one year of continuous service
Applies regardless of nationality
Applies whether the employee resigns, is terminated, or the contract expires
Not eligible: Employees dismissed for gross misconduct under Article 44, they forfeit gratuity
How gratuity is calculated
Gratuity = (Basic Daily Wage) x (Number of Days Owed Per Year) x (Years of Service)
The gratuity entitlement is based on the basic salary only and not total package including allowances.
Years of service | Gratuity entitlement | Calculation basis |
1 to 5 years | 21 calendar days' basic wage per year | Per completed year |
More than 5 years | 30 calendar days' basic wage per year | Per completed year beyond 5 |
Less than 1 year | No entitlement | N/A |
Maximum cap | 2 years' total basic salary | Applies across all service |
Gratuity calculation example
Mariam has worked for 7 years at a basic salary of AED 8,000/month.
Her daily basic wage would be: AED 8,000 ÷ 30 = AED 266.67
Gratuity for the years 1 to 5: 5 × 21 days × AED 266.67 = AED 28,000.35
Gratuity for the years 6 to 7: 2 × 30 days × AED 266.67 = AED 16,000.20
Total gratuity: AED 44,000.55
The cap check: 2 years' basic salary = AED 8,000 × 24 = AED 192,000. Mariam's total is well within the cap.
UAE Labour Law working hours (Article 17)
Normal working hours are 8 hours per day or 48 hours per week. During the holy month of Ramadan, working hours are reduced to 6 hours per day for all employees.
Category | Standard hours | Ramadan hours |
Standard employees | 8 hours/day, 48 hours/week | 6 hours/day |
Hazardous work (per MOHRE list) | 6 hours/day maximum | Further reduced by law |
Part-time employees | Proportional to agreed contract | Same Ramadan reduction proportionally |
Overtime rules in the UAE
Overtime beyond 8 hours: at least 125% of base hourly wage
Overtime between 9 PM and 4 AM: at least 150% of base hourly wage
Friday (official rest day): 150% or a day off in lieu
Public holidays worked: 150% or a day off in lieu plus the basic wage
Overtime cannot exceed 2 hours per day. Total working time including overtime must not exceed 10 hours per day, except where MOHRE grants a sector-specific exemption.
Basic salary percentage in UAE Labour Law
UAE labour law does not mandate a fixed percentage split between basic salary and allowances. However, the basic salary is the figure used to calculate:
End-of-service gratuity
Notice period compensation
Overtime rates
Annual leave encashment
In practice, many UAE companies structure packages with basic salary at 40 to 60% of total compensation, with the remainder in housing allowance, transport allowance, and other benefits. There is no legal minimum percentage, but artificially suppressing the basic salary to reduce gratuity liability is a known risk MOHRE can challenge. Any such arrangement that does not reflect the market reality of the role may be contested.
UAE Labour Law annual leave (Article 29)
Every employee is entitled to paid annual leave. Leave accrues from day one of employment.
Service duration | Annual leave entitlement |
During probation (first 6 months) | 2 days per month (not taken until probation ends) |
After 1 year of continuous service | 30 calendar days per year |
Less than 1 year | Pro-rated: 2.5 days per month worked |
Employers set the timing of annual leave considering business needs, but must give the employee reasonable notice. Employees can carry forward unused leave with employer agreement, or receive cash compensation for unused days upon termination. Employers cannot compel an employee to forfeit untaken leave.
Maternity leave - What the law states (Article 30)
A female employee is entitled to 60 calendar days of maternity leave, as follows:
Period | Pay level | Details |
First 45 days | Full pay | Regardless of service length |
Next 15 days | Half pay | Consecutive or non-consecutive |
Additional sick leave (up to 45 more days) | No pay | If medical complication arises from pregnancy/delivery |
Nursing breaks | Paid (included in working hours) | Two 30-minute breaks per day for 6 months post-delivery |
Scenario: Sarah delivers her baby on March 1. Her first 45 days of full-paid leave run until April 14. Her next 15 days at half pay run until April 29. If a post-birth complication arises and she has a medical certificate, she may take up to 45 more unpaid sick days beyond that.
Paternity leave: Male employees are entitled to 5 working days of paid paternity leave within 6 months of the child's birth. This applies to both natural childbirth and legal adoption.
UAE Labour Law resignation and notice periods (Articles 42 and 43)
Either party, employer or employee, can terminate a fixed-term contract before its expiry by giving written notice.
Service duration | Minimum notice period |
Less than 6 months | 1 month (30 days) |
6 months to 3 years | 1 month (30 days) |
3 to 5 years | 2 months (60 days) |
More than 5 years | 3 months (90 days) |
Both employer and employee must honour the notice period. If either party wishes to waive notice, they must pay a notice period compensation: the employee's full wage for the outstanding notice days.
Example: Megan has worked for 4 years and resigns. The minimum notice period is 2 months. If her employer wants her to leave immediately, the employer must pay 2 months' full wages as compensation in lieu of notice.
Article 43 UAE Labour Law - Arbitrary termination
Article 43 protects employees from termination without valid cause. If an employer terminates an employee and cannot prove a legitimate reason - performance issues, restructuring, or misconduct - that termination is classified as arbitrary dismissal.
Compensation for arbitrary dismissal: up to 3 months' total wage (not just basic salary). The amount is determined by a labour court considering factors like length of service and circumstances.
This is separate from the notice period payment and gratuity. All three can apply at once if the termination is deemed arbitrary.
Article 44 UAE Labour Law - Dismissal Without Notice
Under the UAE Labour Law, an employer may dismiss an employee immediately, without notice and without gratuity, only if the employee commits one of the following acts:
Assumes a false identity or submits forged documents
Causes intentional financial harm to the employer
Discloses confidential business information to competitors
Is found drunk or under the influence of narcotics during working hours
Commits an assault on the employer, a manager, or a colleague during work
Fails to comply with workplace safety rules, causing serious injury or loss
Is absent without valid reason for more than 20 non-consecutive days in a year, or more than 7 consecutive days
Is convicted by a court of a crime involving honour or honesty
Important: The employer must conduct an internal investigation and document the violation before exercising Article 44 dismissal. Verbal dismissal without documentation exposes the employer to an arbitrary dismissal claim regardless of the actual misconduct.
Full summary of termination benefits in the UAE
Termination type | Notice pay | Gratuity | Unused leave pay | Arbitrary dismissal compensation |
Resignation (with notice) | No (already served) | Yes (if 1+ year) | Yes | No |
Resignation (without notice) | Employee owes employer | Yes (if 1+ year) | Yes | No |
Employer terminates (with notice) | Already served | Yes | Yes | No (if valid reason) |
Arbitrary dismissal | Yes (payment in lieu) | Yes | Yes | Yes (up to 3 months) |
Dismissal under Article 44 | No | No | Possible (courts decide) | No |
How to get your business UAE labour law-ready: Step-by-step
Phase 1: Registration and setup
Register on MOHRE e-services: Go to mohre.gov.ae → Employer Services → Register your company. You will need your trade licence, Emirates ID of the authorised signatory, and company establishment card.
Open a WPS-linked bank account: Any major UAE commercial bank (Emirates NBD, FAB, ADCB, Mashreq, etc.) can enable WPS on your corporate account. Request 'WPS activation' at account opening or with your relationship manager.
Register all employees on MOHRE: Upload employment contracts for each employee through the MOHRE portal or through your registered typing centre. Employees must have valid residency visas and Emirates IDs.
Set up your payroll structure: Define basic salary, allowances, and any other compensation components clearly. Ensure your payroll system can generate a Salary Information File (SIF) for WPS submission.
Phase 2: Employee onboarding compliance
New hires: Issue a written offer letter followed by a formal MOHRE-registered contract within 60 days of joining. Define probation period (maximum 6 months, may be extended by 3 months with mutual agreement).
Existing employees: If any current contracts are unlimited-term or outdated, initiate conversion. MOHRE's online contract amendment tool allows this without requiring a new visa or work permit.
Leave entitlement setup: Enter each employee's start date and leave balance into your HR or payroll system. This creates an auditable leave liability record.
Phase 3: Monthly and periodic obligations
Monthly WPS payroll run: Process payroll, generate SIF file, and transfer wages to all employees. Confirm bank confirmation of transfer before the 15-day deadline.
Quarterly Emiratisation report: If you have 50+ employees, log in to the NAFIS platform (nafis.gov.ae) and update your Emirati headcount each quarter.
Annual leave planning: Communicate annual leave schedules at the start of each year. Maintain records of approved and taken leave.
Contract renewals: Monitor contract expiry dates. Contracts must be renewed or formally terminated before expiry. An expired, unrenewed contract with a working employee creates ambiguity about entitlements.
Phase 4: Termination settlement process
Issue written termination or resignation acceptance notice
Calculate all outstanding entitlements: gratuity + unused leave + notice pay (if applicable)
Prepare final settlement statement signed by both parties
Transfer all amounts within 14 days of last working day via bank transfer (not cash)
Cancel the employee's work permit and visa through GDRFA within 30 days
Archive all documentation (contract, termination letter, settlement statement) for a minimum of 2 years
Penalties for non-compliance with the UAE Labour Laws
Violation | First offence penalty | Maximum penalty/ Additional consequence |
Late WPS wage payment | Work permit freeze (all employees) | Cannot renew or issue new work permits until resolved |
Failure to register employee on MOHRE | AED 5,000 per employee | AED 50,000 maximum per complaint cycle |
No written contract | AED 5,000 per employee | Contract terms default to most employee-favourable interpretation |
Arbitrary dismissal (court award) | Up to 3 months' total wage | Plus gratuity, notice pay, and legal costs |
Failure to pay gratuity on time | 14-day buffer; after that, MOHRE claim filed | Court can award interest and costs |
Emiratisation non-compliance (50+ employees) | AED 6,000/month per unfilled Emirati slot | Cumulative — grows every month |
Operating without valid work permits | AED 50,000 per illegal worker | Plus potential business closure |
Violation of working hour limits | AED 1,000 per employee | AED 10,000 maximum |
Things to keep in mind: Quick-reference compliance checklist
All contracts must be fixed-term. Register them with MOHRE within 60 days of the hire date.
Gratuity is calculated on basic salary only. Keep basic salary clearly defined in your payroll records and contracts.
WPS is non-negotiable at 5+ employees.
Notice periods depend on tenure, not seniority. 1 month for under 5 years, 3 months for 5+ years. Both parties are bound.
Article 44 dismissals need documentation. Conduct an investigation, record the outcome, and issue a written notice.
Settle termination payments within 14 days. Delays trigger MOHRE complaints and fines.