The United Arab Emirates continues to refine one of the region's most closely watched employment regimes. For employers and employees in the private sector, the rules governing contracts, working time, termination, end-of-service benefits and workplace compliance are no longer a background consideration; they are an operational and enforcement priority. Recent amendments have increased penalties, widened the powers of the Ministry of Human Resources and Emiratisation ("MOHRE") and extended the time available to bring employment claims.
Private sector employment in the UAE is governed primarily by Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationships ("Labour Law"), which came into force on 2 February 2022 and replaced Federal Law No. 8 of 1980. It is supplemented by Cabinet Resolution No. 1 of 2022 (the "Executive Regulations") and a series of ministerial resolutions, and has been amended, most notably by Federal Decree-Law No. 9 of 2024.
The Labour Law also recognizes a wider range of working arrangements than its predecessor, including full-time, part-time, temporary and flexible work, with the detail left to the Executive Regulations.
Article 9 regulates probation. In summary:
The statutory leave entitlements include:
Where termination is found to be unlawful, Article 47 allows the competent court to award compensation, which is capped at three months' remuneration, having regard to the type of work, the damage suffered and the length of service. This sits alongside notice pay and end-of-service gratuity. For employers, the practical lesson is that the process followed, and the evidence kept, will usually decide the outcome of a contested dismissal.
Article 54 (dispute resolution). MOHRE may issue binding decisions in disputes where the claim does not exceed AED 50,000, or where a party has failed to comply with an earlier amicable settlement, regardless of value. Its decisions carry the force of a writ of execution and are directly enforceable. MOHRE may also order an employer to continue paying wages for up to two months where a dispute has led to payments being suspended. Appeals now go to the Court of First Instance within 15 working days, and the time for bringing an employment claim has been extended from one year to two years from the end of the employment relationship.
Article 60 (penalties). Fines for listed violations have increased from a range of AED 50,000 to AED 200,000 to a range of AED 100,000 to AED 1,000,000. A new provision targets fictitious appointments made to circumvent the Labour Law, including fictitious Emiratisation, with fines in the same range multiplied by the number of workers involved. An employer who obtained government benefits through such arrangements must repay them and cannot recover that sum from the worker. Before a ruling, an employer may seek settlement by paying at least 50% of the minimum fine and returning any financial incentives obtained.
Emiratisation obligations continue to be a major compliance area. In light of the increased penalties under Article 60, employers should treat Emiratisation targets, and the genuineness of every Emirati placement, as a matter requiring regular internal audit.
For businesses operating in the UAE, employment compliance can no longer be handled as an administrative exercise. Contracts, probation terms, termination procedures, non-compete clauses, wage payment systems and Emiratisation commitments should be reviewed against the current provisions, and documented decisions kept, so that the business is prepared both for MOHRE scrutiny and for claims brought within the extended two-year period.
Note: This Legal Update / Newsletter is intended for general informational purposes only and should not be construed as legal advice. It is based on laws and legal interpretations in effect as of the date of publication. Laws and regulations may change over time, and their application can vary depending on individual circumstances. Readers are strongly encouraged to seek specific legal counsel before acting on any of the information provided herein.
Private sector employment in the UAE is governed primarily by Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationships ("Labour Law"), which came into force on 2 February 2022 and replaced Federal Law No. 8 of 1980. It is supplemented by Cabinet Resolution No. 1 of 2022 (the "Executive Regulations") and a series of ministerial resolutions, and has been amended, most notably by Federal Decree-Law No. 9 of 2024.
Scope of application
The Labour Law applies to employment relationships in the private sector across all seven emirates and in most free zones. Federal and local government employees, domestic workers and certain other categories fall under separate regimes, and the financial free zones, the Dubai International Financial Centre ("DIFC") and the Abu Dhabi Global Market ("ADGM"), maintain their own employment legislation. Establishing which regime applies is therefore the first step in any employment analysis.The Labour Law also recognizes a wider range of working arrangements than its predecessor, including full-time, part-time, temporary and flexible work, with the detail left to the Executive Regulations.
Employment contracts and probation
The Labour Law moved the private sector away from unlimited-term contracts. Employment is now documented in fixed-term contracts, which may not exceed three years and may be renewed by agreement, with renewals counting toward continuous service for end-of-service purposes. Article 8 sets out the mandatory particulars of the contract, which include the parties, the job and place of work, remuneration, and the duration of the engagement.Article 9 regulates probation. In summary:
- Probation may not exceed six months from the date the employee starts work, and an employer may impose it only once with the same employee;
- An employer terminating during probation must give at least 14 days' written notice;
- An employee who leaves the UAE during probation must give at least 14 days' notice; and
- An employee who moves to another UAE employer during probation must give at least one month's notice, and the new employer may be required to compensate the original employer for recruitment costs unless otherwise agreed.
Working hours, overtime and leave
Under Article 17, normal working hours are eight hours per day or 48 hours per week, subject to variation by the Cabinet for particular sectors or categories of worker. Article 19 caps overtime at two hours per day and 144 hours in any three-week period. Overtime is paid at no less than the basic wage plus 25%, rising to the basic wage plus 50% for work between 10 pm and 4 am, other than for shift workers.The statutory leave entitlements include:
- Annual leave (Article 29): 30 calendar days per year of service, or two days per month for service of between six months and one year;
- Maternity leave (Article 30): 60 days, with the first 45 days at full wage and the next 15 days at half wage, with additional unpaid leave available in certain cases;
- Sick leave (Article 31): up to 90 days per year after probation, comprising 15 days at full pay, 30 days at half pay and the balance unpaid, subject to notification within three working days and a medical report; and
- Parental, bereavement and study leave, as provided in the Labour Law and the Executive Regulations.
Termination, notice and compensation
After probation, either party must give notice of between 30 and 90 days, as set out in the contract. Articles 44 and 45 set out the limited and exhaustive circumstances in which the employer may dismiss, or the employee may resign, without notice. For employers, these include serious misconduct and breaches that require a documented process, such as written warnings, before a summary dismissal can be justified.Where termination is found to be unlawful, Article 47 allows the competent court to award compensation, which is capped at three months' remuneration, having regard to the type of work, the damage suffered and the length of service. This sits alongside notice pay and end-of-service gratuity. For employers, the practical lesson is that the process followed, and the evidence kept, will usually decide the outcome of a contested dismissal.
End-of-service gratuity
Article 51 entitles an employee with at least one year of continuous service to an end-of-service gratuity. It is calculated on the last basic wage, excluding allowances, at 21 days per year for the first five years of service and 30 days per year thereafter, excluding periods of unpaid absence. The total gratuity may not exceed two years' wages. The Labour Law also contemplates alternative end-of-service savings schemes approved by the Cabinet, which employers should monitor.Non-compete restrictions and employment records
Article 10 permits non-compete clauses, but only within defined limits. The restriction may last for a maximum of two years from the end of the contract and should be tied to the nature of the work and its scope. It will not be enforceable against an employee whose contract the employer terminated in breach of the Labour Law. Employers should draft such clauses carefully and keep them proportionate. Separately, Article 13 requires employers to keep employee files for at least two years after the employee has left.Equality, harassment and workplace protections
The Labour Law prohibits discrimination on the basis of race, colour, sex, religion, national or ethnic origin, or disability, with Emiratisation measures expressly excluded from that prohibition. It also prohibits sexual, verbal, physical and psychological harassment and bullying, and gives employees who suffer harassment the right to leave the employment without notice. Pregnant employees and employees on maternity leave receive specific protection against discrimination and the threat of dismissal.The 2024 amendments: Penalties and dispute resolution
Federal Decree-Law No. 9 of 2024, issued on 29 July 2024 and effective from 30 August 2024, made significant changes to Articles 54 and 60 of the Labour Law.Article 54 (dispute resolution). MOHRE may issue binding decisions in disputes where the claim does not exceed AED 50,000, or where a party has failed to comply with an earlier amicable settlement, regardless of value. Its decisions carry the force of a writ of execution and are directly enforceable. MOHRE may also order an employer to continue paying wages for up to two months where a dispute has led to payments being suspended. Appeals now go to the Court of First Instance within 15 working days, and the time for bringing an employment claim has been extended from one year to two years from the end of the employment relationship.
Article 60 (penalties). Fines for listed violations have increased from a range of AED 50,000 to AED 200,000 to a range of AED 100,000 to AED 1,000,000. A new provision targets fictitious appointments made to circumvent the Labour Law, including fictitious Emiratisation, with fines in the same range multiplied by the number of workers involved. An employer who obtained government benefits through such arrangements must repay them and cannot recover that sum from the worker. Before a ruling, an employer may seek settlement by paying at least 50% of the minimum fine and returning any financial incentives obtained.
Wage protection and emiratisation compliance
The Wage Protection System ("WPS") requires private sector employers to pay wages through approved channels and on time, and non-compliance triggers escalating administrative measures. Ministerial Resolution No. 340 of 2026, reported to be effective from 1 June 2026, is understood to replace the earlier WPS resolution and tighten the timelines for payment. Employers should confirm the current requirements with MOHRE.Emiratisation obligations continue to be a major compliance area. In light of the increased penalties under Article 60, employers should treat Emiratisation targets, and the genuineness of every Emirati placement, as a matter requiring regular internal audit.
Conclusion
The UAE Labour Law offers a structured and increasingly enforcement-oriented framework for private sector employment. Through Federal Decree-Law No. 33 of 2021, its Executive Regulations and the 2024 amendments, the legislature has combined clearer employee protections with significantly higher exposure for non-compliant employers.For businesses operating in the UAE, employment compliance can no longer be handled as an administrative exercise. Contracts, probation terms, termination procedures, non-compete clauses, wage payment systems and Emiratisation commitments should be reviewed against the current provisions, and documented decisions kept, so that the business is prepared both for MOHRE scrutiny and for claims brought within the extended two-year period.
Note: This Legal Update / Newsletter is intended for general informational purposes only and should not be construed as legal advice. It is based on laws and legal interpretations in effect as of the date of publication. Laws and regulations may change over time, and their application can vary depending on individual circumstances. Readers are strongly encouraged to seek specific legal counsel before acting on any of the information provided herein.