Understanding UAE Labour Law: Employer Obligations and Employee Rights

The UAE’s business landscape attracts talent from all over the world, making it essential for employers to understand the country’s labour laws. The UAE Labour Law (Federal Decree-Law No. 33 of 2021) and its Executive Regulations set out clear rules governing employment relationships across both mainland and free zone entities (except DIFC and ADGM, which have their own frameworks).

This article outlines key employer obligations and employee rights every business owner should know to remain compliant and foster a fair, productive workplace.

Employment Contracts: Limited vs. Unlimited Terms

Since 2022, all employment contracts in the UAE must be limited-term contracts (up to 3 years, renewable). The previous system of “unlimited contracts” has been phased out.

Each employment contract must include:

• Job title and description.

• Salary and benefits.

• Working hours and rest days.

• Annual leave entitlement.

• Notice period for termination.

Employers must also issue contracts in Arabic and English, and file them with the Ministry of Human Resources and Emiratisation (MOHRE) for mainland entities.

Working Hours, Overtime, and Leave Entitlements

Under UAE Labour Law, the standard working week is 8 hours per day or 48 hours per week. During Ramadan, working hours are reduced by 2 hours per day for all employees, regardless of religion.

Overtime:
Employees are entitled to overtime pay at 125% of their hourly rate (150% for work between 10 PM and 4 AM, except for shift workers).

Leave Entitlements:

• Annual Leave: Minimum of 30 calendar days after one year of service.

• Public Holidays: As announced by the UAE government (approx. 13 days per year).

• Sick Leave: Up to 90 days per year (full pay for the first 15 days, half pay for the next 30).

• Maternity Leave: 60 days (45 paid, 15 unpaid).

• Paternity Leave: 5 working days.

End-of-Service Gratuity (EOSB)

When an employee completes at least one year of continuous service, they are entitled to an end-of-service gratuity, calculated based on their last basic salary:

• 21 days’ pay for each of the first five years of service.

• 30 days’ pay for each year beyond that.

Gratuity is not paid on allowances or commissions and must be settled within 14 days of termination.

Businesses that delay or underpay EOSB can face fines from MOHRE.

Termination and Notice Periods

Either party can terminate a contract by giving the agreed notice period (30–90 days). Dismissal without notice is only permitted under specific conditions, such as gross misconduct or repeated rule violations.

When terminating employment, employers must:

• Provide written notice.

• Settle all dues (salary, gratuity, unused leave).

• Issue a service certificate upon request.

Compliance in Free Zones

While mainland businesses follow MOHRE’s framework, free zones (e.g. DMCC, RAKEZ, IFZA) may have additional rules on contracts, work permits, and dispute resolution. Employers should always review the specific Free Zone Authority’s labour regulations alongside UAE federal law.

Promoting a Positive Workplace Culture

Beyond compliance, successful companies in the UAE build trust by promoting diversity, inclusion, and employee wellbeing. Clear communication, fair pay, and respect for cultural differences help attract and retain skilled professionals — a key advantage in such a competitive market.