UAE Labor Law 2025 — Complete Employer & Employee Guide | Zimyo
UAE Federal Decree-Law No. 33 of 2021 overhauled employment law across the mainland. This guide covers every key obligation for employers and rights for employees — from contract types to end-of-service gratuity.
Employment Contracts
All employment contracts in the UAE must be written, signed, and registered with the Ministry of Human Resources and Emiratisation (MoHRE). Since February 2022, only fixed-term contracts are permitted — unlimited contracts are no longer issued for new hires, though existing unlimited contracts were converted automatically.
Permitted Contract Types
- Full-time fixed-term (standard — max 3 years, renewable)
- Part-time fixed-term (minimum 4 hours/day with defined schedule)
- Temporary project-based (tied to project completion date)
- Flexible (hours vary week to week under mutual written agreement)
- Freelance / self-employment (requires a valid freelance permit)
Mandatory contract clauses: Employer name & address, employee name & details, job title, start date, contract duration, salary (basic + allowances separately stated), working hours, work location, and annual leave entitlement. Arabic is the official language — dual-language contracts require the Arabic version to prevail in any dispute.
Probation Period
The probation period may not exceed 6 months. During probation, either party may terminate with 14 days' written notice (employee) or 1 month's notice (employer, if the employee is leaving for another UAE employer). No end-of-service gratuity is payable if an employee resigns or is terminated during probation.
Leave Entitlements
| Leave Type | Entitlement | Notes |
|---|---|---|
| Annual Leave | 30 calendar days/year | 21 days during first year of service |
| Sick Leave | 90 days/year | First 15 days: full pay; next 30: half pay; remaining: unpaid |
| Maternity Leave | 60 calendar days | First 45 days: full pay; next 15: half pay |
| Paternity Leave | 5 working days | Within 6 months of the child's birth |
| Parental Leave | 5 working days | For children under 5 with special needs |
| Bereavement Leave | 3–5 days | 5 days for spouse; 3 days for first-degree relatives |
| Hajj Leave | 30 days (once per career) | Unpaid; for Muslim employees performing Hajj |
| Study Leave | 10 days/year | For employees enrolled in accredited UAE institutions |
Annual leave accumulation: Employees may carry over unused leave with employer approval, but at least 2 consecutive weeks must be taken each year. Unused leave must be encashed at termination — failure to pay leave encashment is a MoHRE violation.
Working Hours & Overtime
The standard working week is 48 hours across 6 days (8 hours/day), or up to 9 hours/day in certain sectors. During Ramadan, working hours are reduced by 2 hours per day for all employees regardless of religion.
Overtime Rules
- Maximum overtime: 2 additional hours per day (exceptions for urgent/emergency work with approval)
- Daytime overtime rate: 125% of the employee's basic hourly wage
- Overtime between 10 PM and 4 AM: 150% of basic hourly wage
- Friday (weekly rest day) work: compensatory rest day or 150% pay
- Public holiday work: compensatory day within 90 days or 150% of daily wage
Compensation & WPS
Salaries must be paid through the Wage Protection System (WPS) — an electronic salary transfer system monitored by MoHRE. Non-compliance results in graded fines, work permit bans, and potential business closure for repeat offenders.
All companies must register with an approved bank or exchange house to process WPS-compliant payroll transfers.
Upload the SIF to your WPS agent before each payroll run. It lists each employee, their salary, and bank details.
First-time delay triggers a warning. Second delay: new permit issuance suspended. Third: full permit freeze.
Keep signed payroll records for at least 2 years from the date of payment for MoHRE inspection readiness.
End-of-Service Gratuity
End-of-service gratuity (EOSG) is a mandatory severance benefit. It is calculated on the employee's last basic salary only (allowances excluded) at the following rates:
| Service Duration | Rate | Example (AED 10,000/mo basic) |
|---|---|---|
| Less than 1 year | No gratuity | — |
| 1–5 years | 21 days' basic pay per year | 3 yrs × 21 days = AED 21,000 |
| Beyond 5 years | 30 days' basic pay per year | 7 yrs: (5×21) + (2×30) = AED 31,500 |
| Termination without cause | Full gratuity regardless of tenure | Full entitlement |
| Termination for gross misconduct (Art. 44) | Employer may forfeit gratuity | Court-reviewable |
Gratuity cap: Total EOSG may not exceed 2 years' total salary. Gratuity is payable within 14 days of the termination date — delays attract 9% annual interest under MoHRE regulations.
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Employers must maintain a safe workplace under UAE Federal Law No. 8 of 1980 and MoHRE ministerial decrees. Key obligations include:
- Provide personal protective equipment (PPE) free of charge to all relevant employees
- Enforce the outdoor work ban: no outdoor labor from 12:30 PM to 3:00 PM, June 15 – September 15
- Maintain on-site first-aid kits and at least one trained first-aid person per 50 workers
- Report all workplace injuries to MoHRE within 48 hours of occurrence
- Maintain mandatory medical insurance — compulsory in Dubai, Abu Dhabi, and Sharjah
Termination & Notice Periods
| Employee Tenure | Minimum Notice Period |
|---|---|
| Less than 5 years | 30 calendar days |
| 5–10 years | 60 calendar days |
| More than 10 years | 90 calendar days |
Lawful Grounds for Termination
- Business restructuring or role redundancy (full notice + gratuity required)
- Employee incapacity due to illness after 90 sick days are exhausted
- Fixed-term contract expiry with no renewal offer
- Gross misconduct under Article 44 (immediate dismissal, no notice or gratuity)
Arbitrary dismissal: Termination for reasons unrelated to job performance or genuine business need (e.g., pregnancy, nationality, complaining to MoHRE) constitutes arbitrary dismissal. Employees may claim compensation of up to 3 months' full salary in addition to notice pay and gratuity.
Dispute Resolution
UAE labor disputes follow a mandatory conciliation-first process — direct court filing is not permitted without attempting MoHRE mediation first.
Either party files a complaint via the MoHRE app or labour office. A mediation session is scheduled within 14 working days.
A MoHRE inspector facilitates settlement. If both parties agree, a binding settlement agreement is signed on the spot.
If mediation fails within 14 days, MoHRE refers the case to the Labour Court with a referral letter.
First-instance judgments typically take 6–12 weeks. Appeals go to the Court of Appeal, then Court of Cassation.
Work Permits & Visas
To legally employ a foreign national in the UAE mainland, employers must obtain the following in sequence:
- Employment Visa (Entry Permit) — issued by the General Directorate of Residency and Foreigners Affairs (GDRFA) after MoHRE approval
- Work Permit (Labour Card) — issued by MoHRE; the employee may not start work before this is issued
- Residence Visa — valid 2–3 years, employer-sponsored on mainland; requires medical fitness test and Emirates ID
- Emirates ID — mandatory for all UAE residents; processed via the Identity and Citizenship Authority (ICA)
Skill levels: MoHRE classifies workers into 5 skill levels. Skill Level 1 requires a minimum monthly salary of AED 10,000 and a relevant degree. Visa quota allocations depend on company establishment card status and office space per employee ratios.
Emiratisation (Nafis Program)
Emiratisation requires private sector companies to employ UAE nationals at prescribed proportions. The Nafis program provides wage subsidies, training grants, and onboarding support to employers meeting their targets.
2025 Emiratisation Targets
| Company Size | 2025 Target (Skilled Roles) | Penalty for Non-Compliance |
|---|---|---|
| 50–99 employees | 2% Emirati workforce | AED 6,000/month per unfilled position |
| 100–499 employees | 4% (rising 1% annually to 10% by 2026) | AED 6,000/month per unfilled position |
| 500+ employees | 10% by end of 2026 | AED 6,000/month + permit freeze risk |
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