UAE Labour Law Compliance: Complete Employer Guide
The United Arab Emirates overhauled its labour law framework with the enactment of Federal Decree-Law No. 33 of 2021, which replaced the long-standing Law No. 8 of 1980. The new law introduced significant changes to employment contracts, working hours, leave entitlements, end-of-service gratuity and termination procedures. The Ministry of Human Resources and Emiratisation (MOHRE) enforces the law alongside the Wage Protection System (WPS) and the UAE Labour Court. Non-compliance carries substantial financial penalties and operational restrictions. This guide outlines everything employers need to know about UAE labour law compliance.
Published: 25 July 2026 | Last updated: 25 July 2026 | Author: Mustafa Hasan, Lead Auditor | Reviewed by: Bitrixme Compliance Team
Key Takeaways
- Federal Decree-Law No. 33 of 2021 governs all private sector employment relationships in the UAE, with fixed-term contracts as the default.
- MOHRE oversees labour compliance through the WPS, contract registration, workplace inspections and the complaints and disputes process.
- End-of-service gratuity is calculated at 21 days’ basic salary per year for the first five years and 30 days per year thereafter, capped at two years’ total salary.
- Working hours are 8 hours per day or 48 hours per week, reduced to 6 hours per day during Ramadan.
- Annual leave entitlement is 30 days after one year of continuous service.
Overview of UAE Labour Law (Federal Decree-Law No. 33 of 2021)
Federal Decree-Law No. 33 of 2021 came into effect on 2 February 2022 and applies to all private sector employees in the UAE, including those in free zones. Key changes introduced by the new law include the requirement for fixed-term contracts (maximum three years, renewable), new leave categories (parental leave, study leave), revised end-of-service gratuity calculation and enhanced protections against discrimination and harassment.
The law also established the UAE Labour Court and introduced a mediation-first approach for resolving disputes. Executive Regulations (Cabinet Resolution No. 1 of 2022) provide detailed implementation rules for each provision.
Employment Contracts
Under the new law, all employment contracts must be fixed-term, with a maximum duration of three years renewable by mutual consent. Contracts must be in writing in Arabic and English and registered with MOHRE through the digital contract system. Key contractual requirements include:
- Job title, duties and work location.
- Salary, allowances and benefits.
- Working hours and rest days.
- Leave entitlements.
- Notice period for termination.
- Probation period (maximum six months).
- Non-compete clause (if applicable, limited to two years post-termination).
Working Hours and Overtime
Standard working hours are 8 hours per day or 48 hours per week. During Ramadan, hours are reduced to 6 hours per day for all employees. Overtime is payable at 125 per cent of the normal hourly rate for daytime overtime and 150 per cent for work between 10:00 pm and 6:00 am. Overtime is limited to two hours per day except in exceptional circumstances. Friday is the statutory rest day, although employers in certain sectors may substitute another day with MOHRE approval.
Leave Entitlements
Federal Decree-Law No. 33 of 2021 introduced several new leave categories. The table below summarises all leave entitlements:
| Leave Type | Entitlement | Payment |
|---|---|---|
| Annual leave | 30 days per year (after 1 year of service) | Full basic salary |
| Sick leave | 90 days total: 15 full pay, 30 half pay, 45 unpaid | As above |
| Maternity leave | 60 days: 45 full pay, 15 half pay | Full then half pay |
| Parental leave | 5 days (for both parents within 6 months of childbirth) | Full pay |
| Study leave | 10 days per year (for academic examinations) | Full pay |
| Bereavement leave | 3 – 5 days depending on relation | Full pay |
| National Day | 1 day | Full pay |
Unused annual leave may be carried forward with employer consent or paid in cash at the employee’s basic salary rate.
End-of-Service Gratuity
End-of-service gratuity (ESG) is a mandatory benefit for employees who complete at least one year of continuous service. The calculation is based on the employee’s basic salary, excluding allowances:
| Years of Service | Annual Entitlement (Basic Salary) |
|---|---|
| 1 – 5 years | 21 days per year |
| 5 years and above | 30 days per year (for years after the first five) |
The total ESG is capped at the equivalent of two years’ basic salary. An employee who resigns receives reduced ESG: 100 per cent after 5 years of service, 66.6 per cent after 3 to 5 years and 50 per cent after 1 to 3 years. Employees dismissed for gross misconduct forfeit their ESG entitlement. ESG must be paid within 14 days of the termination date.
Wage Protection System
The UAE Wage Protection System requires all salaries to be paid through the MOHRE WPS platform. Key compliance obligations include:
- Salaries must be paid on or before the contractual due date.
- WPS files must be submitted to MOHRE within the specified reporting window.
- All employees must be registered on the WPS with correct salary data.
- Salaries must be paid in full through the banking system.
- Late or partial payments result in automatic fines and MOHRE alerts.
- Persistent non-compliance can lead to suspension of visa services.
MOHRE classifies non-compliance in three severity levels: Level 1 (first offence, fine of AED 5,000), Level 2 (repeat offence within one year, fine of AED 10,000) and Level 3 (three or more offences within one year, fine of AED 20,000 plus suspension of visa services).
Termination and Notice Periods
Either party may terminate an indefinite-term contract with written notice. The notice period depends on the employee’s length of service:
| Length of Service | Notice Period |
|---|---|
| Less than 5 years | 30 days |
| 5 years or more | 60 days |
| Probation period (first 6 months) | 14 days’ notice |
Summary dismissal without notice is permitted for gross misconduct as defined in Article 44 of the law, including: assault, theft, fraud, absenteeism for 20 consecutive days or 7 days without valid excuse, or disclosure of trade secrets. Termination must be documented in writing and all entitlements must be settled within 14 days.
Labour Disputes and the UAE Labour Court
Labour disputes in the UAE follow a structured resolution process. The first step is mandatory mediation by MOHRE through its Tasheel centres or the digital complaints portal. If mediation fails, the case is referred to the UAE Labour Court. The court operates a fast-track process for claims involving unpaid wages or end-of-service benefits.
Employers facing complaints should respond promptly through the MOHRE portal and maintain thorough documentation of the employment relationship. Failure to respond can result in a default judgment. The maximum timeframe for filing a claim is one year from the date of the dispute.
Penalties for Non-Compliance
The penalty regime under Federal Decree-Law No. 33 of 2021 includes administrative fines, operational restrictions and criminal liability for serious violations:
| Violation | Penalty |
|---|---|
| WPS non-compliance (Level 1) | Fine of AED 5,000 |
| WPS non-compliance (Level 3) | Fine of AED 20,000 plus visa service suspension |
| Employing workers without valid permits | Fine of AED 50,000 – AED 200,000 per worker |
| Failure to register employment contract | Fine of AED 10,000 |
| Failure to pay end-of-service gratuity | Fine of AED 50,000 plus gratuity amount |
| Non-compliance with MOHRE inspection | Fine of AED 5,000 – AED 20,000 |
| Discrimination or harassment | Fine of AED 50,000 – AED 200,000 |
Frequently Asked Questions
Are all employees in the UAE now on fixed-term contracts?
Yes. Federal Decree-Law No. 33 of 2021 requires all new employment contracts to be fixed-term with a maximum duration of three years. Existing indefinite-term contracts remain valid but are deemed converted to fixed-term contracts under the new law.
What is the maximum probation period under UAE labour law?
The maximum probation period is six months. Either party may terminate during probation with 14 days’ written notice. The probation period must be stated in the employment contract.
How is end-of-service gratuity calculated for an employee who resigns after two years?
For resignation after two years of service, the employee is entitled to 50 per cent of the standard ESG calculation. The standard amount is 42 days of basic salary (21 days per year for 2 years), so the entitlement is 21 days of basic salary.
What should an employer do if an employee files a complaint through the MOHRE portal?
The employer should respond to MOHRE through the portal within the specified timeframe (typically 14 days), providing all relevant documentation. Engaging a labour law consultant or lawyer is recommended. Failure to respond results in automatic escalation to the Labour Court.
Can an employer dismiss an employee without notice in the UAE?
Summary dismissal without notice is permitted only in cases of gross misconduct as defined in Article 44 of the law, including assault, theft, fraud, absenteeism exceeding 20 consecutive days, or breach of confidentiality. The employer must issue a written termination notice and pay all statutory entitlements within 14 days.
Does the UAE labour law apply to free zone companies?
Yes. Federal Decree-Law No. 33 of 2021 applies to all private sector employees in the UAE, including free zones. However, certain free zones (such as DIFC and ADGM) have their own employment regulations that may differ from the federal law.
How Bitrixme Can Help
Bitrixme provides comprehensive UAE labour law compliance services, including MOHRE registration, WPS implementation, employment contract drafting, end-of-service gratuity calculations and internal compliance audits. Our compliance specialists help employers across all Emirates and free zones maintain full regulatory compliance. Contact Bitrixme today to schedule a compliance audit or reach out on WhatsApp for an immediate consultation.
Disclaimer: This article provides general guidance on UAE labour law compliance and does not constitute legal advice. Employers should consult qualified legal professionals for advice specific to their circumstances, particularly regarding free zone-specific regulations.
