UAE Employment Contracts Explained (2025 Guide)

Before hiring anyone in the UAE—whether a local or expatriate employee—every business must issue a written employment contract that complies with Federal Decree-Law No. 33 of 2021 (UAE Labour Law). 

Employment contracts define the legal relationship between the employer and employee, detailing responsibilities, pay, benefits, and termination conditions. The type of contract determines key employment terms such as notice periods, leave entitlements, and gratuity calculation. 

This guide explains the types of UAE employment contracts, the mandatory clauses, and how to ensure compliance with labour regulations. 

Types of Employment Contracts in the UAE 

Under the current UAE Labour Law, only one type of contract is officially recognised by the Ministry of Human Resources and Emiratisation (MOHRE): 

Limited-Term Contract 

• Maximum duration: 3 years (renewable). 

• Must clearly specify the start and end date. 

• Can be renewed multiple times upon mutual agreement. 

• If both parties continue working after expiry, the contract is automatically renewed on the same terms. 

Note: This replaced the previous unlimited contracts, which were fully phased out in 2023. 

Key Clauses Required in Every UAE Employment Contract 

To be legally valid, a UAE employment contract must include: 

Clause	Description
Employee Details	Full name, nationality, Emirates ID number, passport details.
Employer Details	Company name, trade licence number, and address.
Job Title & Description	Role, duties, and reporting line.
Contract Duration	Up to 3 years, renewable.
Remuneration	Basic salary, allowances, and total package clearly stated.
Working Hours	Standard 8 hours per day / 48 hours per week (max).
Leave Entitlements	Annual, sick, maternity/paternity, and public holidays.
Probation Period	Maximum 6 months, extendable once if agreed.
Notice Period	Between 30 and 90 days for termination or resignation.
End of Service Benefits	Gratuity calculation based on basic salary.

Employment Contracts in Free Zones 

Free Zones operate under the same Federal Labour Law, but they may have their own internal employment contract templates and approval systems. 

Examples include: 

• DMCC (Dubai Multi Commodities Centre) 

• RAKEZ (Ras Al Khaimah Economic Zone) 

• IFZA (International Free Zone Authority) 

• DIFC and ADGM (apply separate employment regulations, not MOHRE law). 

Always use the approved Free Zone contract template to avoid registration delays or rejection. 

Language and Format Requirements 

• All contracts must be in Arabic, but an English version can be attached for clarity. 

• If there’s a conflict, the Arabic version prevails. 

• The contract must be digitally registered on MOHRE or the Free Zone portal. 

• Both parties must sign electronically before visa processing. 

Probation Period Rules 

• Employers may include a probation period of up to 6 months, which must be stated in the contract. 

• During probation, either party may terminate with 14 days’ written notice. 

• If an employee resigns to join another UAE employer, the new employer must reimburse visa costs to the previous company. 

• If the employee leaves the UAE entirely, a 30-day notice is required. 

• No extension beyond 6 months is permitted unless the employee is transferred or rehired under a new role. 

Contract Renewal and Amendments 

• Renewals must be submitted through MOHRE or your Free Zone authority before the existing contract expires. 

• Any changes (salary, role, benefits, etc.) must be documented via an addendum or a new contract version. 

• Failure to update the official contract can cause visa or payroll compliance issues. 

Termination Clauses and Notice Period 

Notice Period 

Must be between 30 and 90 days depending on seniority and agreement. Employers cannot enforce notice periods shorter than 30 days. 

Termination for Misconduct (Article 44) 

Immediate dismissal is permitted for severe misconduct, fraud, or confidentiality breaches. However, written evidence must be kept to support any dismissal decision. 

Resignation by Employee 

Employees must provide written notice as per contract terms. Failure to do so can lead to salary deductions or visa delays. 

Common Mistakes Employers Make 

❌ Using outdated “unlimited” contract templates.
❌ Failing to register contracts officially through MOHRE or Free Zone portals.
❌ Omitting key clauses like notice period or gratuity calculation.
❌ Not renewing contracts before expiry.
❌ Not updating salary or role changes in the official record. 

Each of these can result in compliance penalties or disputes during FTA or MOHRE audits.