UAE Labour Law

Introduction & Scope

UAE Federal Decree-Law No. 33 of 2021 is the primary legislation governing private-sector employment in the United Arab Emirates. It took effect on 2 February 2022, replacing Federal Law No. 8 of 1980 — the statute that had regulated employment relationships for over four decades. The implementing regulations are set out in Cabinet Decision No. 1 of 2022.

The new UAE labor law applies to every employer and employee operating in the UAE, including those in free zones that do not maintain their own employment legislation. It does not cover federal or local government employees, domestic workers (governed by Federal Decree-Law No. 9 of 2022), or members of the armed forces and police. Employees in the DIFC and ADGM fall under those jurisdictions' separate employment regulations.

Chapter 1 establishes definitions used throughout the decree-law. The most consequential for employees are "basic wage," "continuous service," "employer," and "employee." These definitions directly determine how gratuity is calculated, what counts as service, and which salary component matters for end-of-service benefits.

Understanding the scope of the law is the first step. If you work for a mainland private-sector company or a non-exempt free zone, this law applies to you. If you work in DIFC, ADGM, or a government entity, a different framework governs your employment — and your gratuity may be calculated differently or replaced by a defined-contribution scheme.

Employment Contracts

Under UAE labour law, every employment relationship must be documented in a written contract registered with the Ministry of Human Resources and Emiratisation (MOHRE). One of the most significant changes in the new law is that all contracts are now fixed-term, with a maximum duration of three years, renewable by mutual agreement. The unlimited contract category that existed under the 1980 law has been abolished.

A valid employment contract must state the job title, start date, contract duration, workplace, basic salary, and any allowances. Probation periods are capped at six months. During probation, the employer must give the employee 14 days' written notice before terminating. An employee who wants to leave during probation must give the same 14 days' notice — or one month's notice if they intend to leave the country entirely.

The contract is also required to specify the notice period for termination after probation, which must be between 30 and 90 days. Employers who had employees on unlimited contracts before February 2022 were required to convert those contracts to fixed-term by February 2023.

For gratuity purposes, the contract's start date, end date, basic salary figure, and any recorded unpaid-leave periods are the inputs that matter most. Use the gratuity calculator to estimate your entitlement based on these contract details.

Wages & Basic Salary

The UAE labour law basic salary provisions require employers to pay wages through the Wages Protection System (WPS), an electronic salary-transfer system monitored by MOHRE and the Central Bank of the UAE. Wages must be paid in UAE dirhams, on the date specified in the contract, typically on a monthly cycle. If an employer is more than 15 days late on salary, MOHRE can suspend the company's ability to issue new work permits — a significant commercial penalty.

The law draws a clear line between basic wage and total remuneration. Basic wage excludes housing allowance, transport allowance, commissions, bonuses, overtime pay, and any other supplementary payments. This distinction is critical because gratuity is calculated on basic wage only, not the gross salary package. An employee earning AED 15,000 total with AED 8,000 basic will have gratuity computed on AED 8,000.

There is no statutory minimum wage in the UAE that applies across all sectors and nationalities, but the law requires that wages be "sufficient" and paid on time. Unauthorized deductions from salary are prohibited — employers may only deduct amounts specifically permitted by law, such as court-ordered garnishments or repayment of documented advances, and total deductions cannot exceed 50% of the employee's wage in any pay period.

Wage disputes are among the most common labour complaints filed with MOHRE. If your salary is delayed, reduced without agreement, or paid through channels other than WPS, document everything and consider filing through the MOHRE app or a Tasheel centre.

Working Hours and Rest Periods

Standard working hours under UAE labour law are 8 hours per day or 48 hours per week. During Ramadan, working hours are reduced by two hours per day for fasting employees — a provision that applies regardless of the employee's nationality or religion, as long as they are observing the fast. Certain sectors — hotels, retail, restaurants, and security — may operate on shift patterns, but the same weekly limits apply.

Overtime is permitted up to two additional hours per day, compensated at 125% of the normal hourly rate. Overtime worked between 10 PM and 4 AM attracts a 150% rate, unless the employee is classified as a shift worker whose regular schedule includes night hours. Employees are entitled to at least one rest day per week, typically Friday, though the employer may designate a different day provided the employee receives at least one full 24-hour rest period in every seven-day cycle.

Working-hours rules do not change the gratuity formula directly. However, overtime disputes regularly surface in final-settlement negotiations, particularly for employees in construction, hospitality, and retail where unpaid overtime may represent a significant claim alongside gratuity.

Leave Entitlements

UAE labour law provides several categories of statutory leave. Annual leave is 30 calendar days per year for employees who have completed one year of service, and two days per month for employees with more than six months but less than one year. Unused annual leave must be settled financially if not taken before the contract ends — it cannot be forfeited.

Sick leave entitlement is 90 days per year, structured in tiers: the first 15 days at full pay, the next 30 days at half pay, and the remaining 45 days unpaid. Employees cannot be terminated for taking sick leave within this 90-day allowance, and sick leave does not begin until the probation period has ended.

Maternity leave is 60 days — 45 at full pay and 15 at half pay — and does not require a minimum service period. After returning, the employee is entitled to two nursing breaks of 30 minutes each for six months. Paternity leave is five working days, to be taken within six months of the child's birth.

Other statutory leave types include bereavement leave (three to five days depending on the relationship), study leave for UAE nationals (10 working days per year), and Hajj leave (30 days, once during employment, unpaid).

Unpaid leave periods are particularly relevant for gratuity because they are excluded from continuous service, reducing the final EOSB payout. Confirm whether your unpaid leave affects your gratuity using the calculator.

End of Service Gratuity

The gratuity chapter is the most frequently referenced section of UAE labour law. Every private-sector employee who completes at least one year of continuous service is entitled to an end-of-service benefit upon leaving, regardless of whether they resign or are terminated. The UAE labour law gratuity computation follows a two-tier formula:

• First 5 years: 21 days of basic wage for each year of service.
• After 5 years: 30 days of basic wage for each additional year.
• Cap: Total gratuity cannot exceed two years of basic wage.

Only the last drawn basic salary is used for the calculation — allowances, bonuses, and commissions are excluded. Under the 2021 decree-law, the old penalty for resignation before five years has been removed. Employees who resign now receive the full gratuity amount regardless of who initiated the separation. This is one of the most significant changes in the new UAE labor law compared to the 1980 statute.

The employer must pay all dues, including gratuity, within 14 days of the contract ending. For worked examples and a full breakdown of the labor law UAE gratuity calculation, read the complete gratuity guide, or check the resignation vs. termination comparison.

Termination of Employment Contract

Either party may end an employment contract by providing written notice. The notice period must be between 30 and 90 days as stated in the contract. During the notice period, the employee continues to receive full pay and is entitled to one unpaid day per week to search for new employment, if the termination was initiated by the employer.

UAE labour law lists specific grounds for termination without notice, including gross misconduct, fraud, assault on the employer or a colleague, repeated absence without justification (more than 20 non-consecutive days or seven consecutive days in a year), disclosure of confidential information, and reporting to work under the influence of alcohol or drugs. The employer must conduct a written investigation before dismissing an employee for cause.

An employee may also terminate without notice if the employer fails to meet contractual or legal obligations, assaults the employee, or creates conditions that make continued work impossible. In cases of arbitrary dismissal — termination for reasons unrelated to work performance — the employee may be entitled to compensation of up to three months' wages in addition to the standard gratuity and notice-period pay.

Non-compete clauses are permitted under the new law but restricted: they must be limited in duration, geography, and scope, and they cannot prevent the employee from working in the same field entirely. Courts may reduce or void a non-compete clause that is deemed unreasonable.

Disciplinary Penalties

Employers may impose disciplinary action for workplace violations, but UAE labour law restricts the available penalties to a defined list: written warning, fine (capped at five days' wage per incident), suspension without pay for up to 14 days, withholding of periodic increment, deferral of promotion, and dismissal in the cases specified by law. A penalty cannot be imposed for the same offense twice, and the employer must notify the employee of the charge in writing and allow them to respond before any decision is made.

Fines collected from employees must not be used for the employer's benefit — they are to be deposited into a fund designated for worker welfare. Records of all disciplinary actions must be maintained in writing and can be reviewed during a MOHRE inspection or in the event of a labour dispute. An employee who believes a penalty was unfair can challenge it through the grievance process described in Chapter 9.

Grievances and Labour Disputes

When salary, leave, gratuity, or any other entitlement is disputed, UAE labour law requires the employee to file a complaint with MOHRE before going to court. MOHRE attempts amicable mediation within 14 days of receiving the complaint. If mediation fails, the ministry refers the case to the competent labour court.

Labour cases filed by employees are exempt from court fees if the claim value is under AED 100,000. Employees can file complaints through the MOHRE mobile app, the ministry's website, or by visiting a Tasheel service centre in person. The statute of limitations for employment claims is one year from the date the entitlement became due — so an employee who left in January 2026 must file any gratuity or salary claim by January 2027 at the latest.

The most common disputes involve delayed salary, incorrect gratuity calculation, withheld leave balances, and unlawful termination. In each case, documentary evidence — contract, payslips, WPS records, leave approvals, and termination letters — carries more weight than verbal testimony. If your employer has not paid your gratuity, gather these documents and follow the steps in the unpaid gratuity guide.

Occupational Safety and Health

Employers must provide a safe working environment, supply personal protective equipment at their own cost, and ensure employees are trained on workplace hazards relevant to their role. UAE labour law prohibits outdoor work during the hottest hours — 12:30 PM to 3:00 PM — from 15 June to 15 September. This midday break rule is actively enforced through MOHRE inspections, and violations carry fines of up to AED 5,000 per worker found in breach.

Employees have the right to refuse work that poses an immediate, serious danger to life or health, provided they report the situation to the employer without delay. Work-related injuries must be reported by the employer, who is also responsible for all treatment costs. If an occupational injury results in permanent partial or total disability, the employee is entitled to compensation calculated according to schedules in the implementing regulations — separate from and in addition to any gratuity entitlement.

The law also requires employers to provide adequate accommodation for workers who are housed by the company, meeting standards set by ministerial resolution. Accommodation-related complaints can be filed with MOHRE alongside other labour complaints.