The UAE continues to be one of the most attractive business hubs in the Middle East, thanks to its pro-business ecosystem, advanced infrastructure, and diverse workforce. However, for companies to successfully operate or expand in the region, they must understand and comply with Labour Laws in UAE. These regulations govern the employer-employee relationship, ensure fair treatment, and foster a secure working environment. In this 2025 guide, we provide a complete breakdown of UAE labour legislation—from contracts to end-of-service benefits—while also exploring how solutions like an Employer of Record (EOR) in UAE can simplify compliance for global employers.
Table of Contents
- Overview of UAE Labour Law System
- Employment Contracts and Work Models
- Working Hours, Overtime, and Leave Policies
- Wages, End-of-Service Benefits, and WPS
- Hiring, Termination, and Employee Rights
- Compliance, Penalties, and Employer Obligations
- Hiring Through an Employer of Record (EOR) in the UAE
- Conclusion
- FAQs
Overview of UAE Labour Law System
The UAE’s employment landscape underwent significant transformation with the implementation of Federal Decree Law No. 33 of 2021, which officially came into effect in 2022. This law represents a major shift from earlier labour practices by aligning the UAE’s framework with international standards and introducing more flexible work models. The law applies to all private sector employees on the UAE mainland, while separate employment regulations apply in the country’s numerous free zones.
Legal Basis and Governing Authorities
The primary legislation governing private sector employment is Federal Decree Law No. 33 of 2021, which replaced the earlier Federal Law No. 8 of 1980. The government introduced it to promote a flexible, balanced, and transparent employment relationship. The Ministry of Human Resources and Emiratisation (MOHRE) is the central authority responsible for enforcing these laws, handling labour disputes, issuing work permits, and regulating employer obligations.
Applicability and Free Zones
While MOHRE governs mainland employment, the UAE has over 40 free zones—such as Dubai Multi Commodities Centre (DMCC), Jebel Ali Free Zone (JAFZA), and Abu Dhabi Global Market (ADGM)—that have their own labour rules. These zones may provide additional rights or variations in contract structures. Still, many follow the core principles of Labour Laws in UAE, particularly in areas like employee entitlements and termination procedures.
Employment Contracts and Work Models
The new UAE Labour Law mandates clear, legally binding employment contracts and introduces flexible work models to accommodate the changing nature of the global workforce.
Types of Employment Contracts
Employers can now choose between two types of contracts: limited-term (fixed) and unlimited-term (indefinite). Starting in 2023, the law mandates employers to issue only limited-term contracts, each with a maximum duration of three years and renewable by mutual agreement. These contracts must specify job title, salary, duties, working hours, leave entitlements, and notice periods. Both the employer and employee must sign and file the contract electronically with MOHRE.
New Work Models Introduced
The UAE now officially recognizes multiple work arrangements beyond traditional full-time employment. These include:
- Part-time contracts
- Temporary contracts
- Flexible working
- Remote working
This adaptability helps both employers and employees better align roles with specific business needs, especially in sectors like IT, marketing, and consulting. These changes also enhance the appeal of Global EOR Services, which often cater to distributed teams.
Working Hours, Overtime, and Leave Policies
The new labour reforms promote work-life balance and require employers to fairly compensate employees for overtime while granting generous leave entitlements. These reforms align with international standards and aim to boost employee satisfaction and productivity. Employers must implement these changes across all roles to remain fully compliant with UAE labour law.
Official Workweek and Ramadan Hours
The UAE’s official workweek now runs from Monday to Friday, following the shift implemented in 2022. Standard working hours are limited to 8 hours per day or 48 hours per week. During the holy month of Ramadan, Muslim employees work 2 hours less per day without a reduction in pay. Employers must clearly document and track employee hours in compliance with MOHRE regulations.
Overtime Entitlements
Employees who work beyond standard hours are entitled to overtime pay calculated at:
- 125% of their hourly wage for regular overtime
- 150% for night shifts or public holidays
Alternatively, employers may offer time off in lieu. Some managerial and supervisory roles may be exempt from overtime, but such classifications must be justified and documented properly.
Annual Leave, Sick Leave, and Special Leave
Under the Labour Laws in UAE, employees are entitled to:
- 30 calendar days of paid annual leave after one year of service
- 90 days of sick leave per year (with staggered pay: full, half, and unpaid)
- Maternity leave: 60 days (45 paid + 15 half-paid)
- Paternity leave: 5 working days
- Bereavement leave: 3–5 days depending on the relation
- Study leave: Up to 10 days for employees pursuing accredited programs
Wages, End-of-Service Benefits, and WPS
UAE labour law places a strong emphasis on salary transparency, timely payments, and long-term employee retention through statutory benefits.
Minimum Wage and Salary Payment Rules
As of 2025, there is no set minimum wage for expatriates in the UAE. However, Emiratis are subject to wage policies linked to their qualifications and Emiratisation initiatives. Employers must pay salaries monthly via the Wage Protection System (WPS), which monitors payment compliance and ensures employees are paid promptly and fairly.
Wage Protection System (WPS)
The WPS is a digital salary transfer platform overseen by MOHRE and the Central Bank of the UAE. All mainland employers must register and disburse wages through WPS. Delays or non-payments can result in hefty fines, freezing of new visa applications, and even suspension of business licenses.
End-of-Service Gratuity
Employees who complete at least one year of service are entitled to an end-of-service gratuity calculated as:
- 21 days’ basic wage per year for the first five years
- 30 days’ wage per year for subsequent years
Employers and employees can mutually agree to convert gratuity into a retirement savings scheme or pension fund as per the new optional alternative introduced in recent years.
Hiring, Termination, and Employee Rights
From Emiratisation quotas to notice periods and severance payments, employers must follow a structured legal process when hiring or terminating employees.
Hiring Emiratis vs Expatriates
The UAE actively promotes local hiring through Emiratisation mandates, especially in companies with 50+ employees. Employers must register with MOHRE and offer minimum employment quotas for UAE nationals. Expatriate hiring requires valid work permits, residence visas, and MOHRE approval. Many foreign businesses streamline this process by partnering with an Employer of Record in UAE, which manages these formalities on their behalf.
Probation, Notice Periods, and Termination Rules
Employers may place employees on probation for up to 6 months, during which termination is allowed with 14 days’ notice. After probation, notice periods range from 30 to 90 days, depending on contract terms. Dismissals must have legal justifications such as misconduct, redundancy, or performance issues.
Resignation and Employee Entitlements
Employees must serve the notice period when resigning. They retain their right to end-of-service gratuity, leave encashment, and final settlements. Failure to comply with notice period terms may result in wage deductions or legal disputes.
Compliance, Penalties, and Employer Obligations
UAE’s labour ecosystem encourages fairness, safety, and accountability. Employers have legal obligations that, if ignored, can result in severe penalties or loss of operating privileges.
Anti-Discrimination and Equal Pay
The Labour Laws in UAE prohibit all forms of discrimination based on gender, nationality, religion, or disability. Employers must also ensure equal pay for equal work, particularly to close gender wage gaps. Violations can lead to fines and lawsuits under MOHRE oversight.
Health and Safety Standards
Employers are legally obligated to provide:
- A safe and hazard-free environment
- Adequate safety gear and training
- Medical insurance as mandated by law
Failure to implement safety protocols may result in criminal charges and civil liability in case of workplace accidents.
Labour Dispute Resolution Process
Disputes must be registered with MOHRE within 30 days of occurrence. The ministry attempts to mediate before referring unresolved cases to the Labour Court. Most claims involve unpaid wages, wrongful dismissal, or contract breaches.
Hiring Through an Employer of Record (EOR) in the UAE
What is an EOR in the UAE?
An Employer of Record (EOR) is a third-party service that legally employs staff on behalf of foreign companies. This solution enables businesses to hire in the UAE without setting up a local entity, streamlining onboarding, payroll, and compliance under UAE labour law.
EOR Compliance with UAE Labour Law
A compliant Employer of Record in UAE acts as the legal employer for your workforce, managing all aspects of HR, payroll, and compliance under UAE labour law. This enables foreign companies to hire talent in the UAE without setting up a local entity.
Key responsibilities of an EOR in the UAE include:
- MOHRE Registration
Ensures all employees are legally registered with the Ministry of Human Resources and Emiratisation. - Contract Management and Visa Processing
Drafts legally compliant employment contracts and handles all visa and residency procedures for expatriate hires. - Payroll via the Wage Protection System (WPS)
Processes monthly salaries through the UAE’s WPS platform, ensuring transparency and regulatory compliance. - End-of-Service Benefits Administration
Calculates and disburses gratuity payments as per UAE Labour Law based on employee tenure and salary.
This makes Global EOR Services a practical solution for companies aiming to:
- Test new markets before setting up a physical presence
- Hire remote teams or contractors for short-term or project-based roles
- Scale operations compliantly without the administrative burden of entity formation
Partnering with an Employer of Record in UAE ensures faster onboarding, legal protection, and operational agility for global businesses entering the UAE market.
Conclusion
Understanding the Labour Laws in UAE allows businesses to operate successfully and ethically within the Emirates. These regulations balance employer authority with employee rights by covering employment contracts, flexible work models, end-of-service gratuity, and dispute resolution. Global businesses that want to hire in the UAE quickly and compliantly can choose to leverage an Employer of Record as a strategic solution. This approach not only reduces administrative burdens but also ensures compliance with evolving laws and provides a smoother, more efficient path to talent acquisition through Global EOR Services.
FAQs
The UAE follows a Monday to Friday workweek, with a maximum of 8 hours per day or 48 hours per week.
There’s no universal minimum wage for expatriates, but Emiratis are covered under wage guidelines linked to Emiratisation.
Employees are entitled to 30 calendar days of paid annual leave after completing one year of service.
Yes, by using an Employer of Record (EOR) in UAE, companies can legally hire and manage employees without establishing a local business.
The probation period in the UAE cannot exceed 6 months, and termination during this time requires 14 days’ notice.
Gratuity is based on 21 days’ basic wage per year for the first five years, and 30 days per year after that.
WPS is a government-monitored payroll system that ensures employees are paid accurately and on time through registered banks.
Yes, UAE labour law supports flexible, part-time, temporary, and remote work models as of the 2022 reform.
Termination requires a valid reason, 30–90 days’ notice, and final settlement of dues including gratuity and unused leave.
Global EOR Services help companies hire faster, stay compliant, manage payroll, and navigate UAE labour laws without entity setup.
Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant or Labour Law expert for specific guidance.
