UAE Labour Law Guide for Employers 2026: Contracts, Termination and Rights

The UAE’s labour law was overhauled in 2022 with Federal Decree-Law No. 33 of 2021. Two years on, many employers — particularly smaller businesses and newer entrants — are still making basic mistakes: wrong contract types, illegal probation periods, incorrectly handled terminations. Those mistakes lead to labour complaints, gratuity disputes, and fines.

This guide covers what UAE employers need to know in 2026: employment contracts, probation, leave entitlements, notice periods, termination, and MOHRE registration requirements. DIFC and ADGM operate under separate employment frameworks and are not covered here.

Who UAE Labour Law Applies To

Federal labour law (Federal Decree-Law No. 33 of 2021) applies to employees in mainland UAE companies and most freezones. Notable exceptions:

• DIFC — governed by DIFC Employment Law (DIFC Law No. 2 of 2019, as amended)
• ADGM — governed by ADGM Employment Regulations
• Domestic workers — covered separately under Federal Law No. 10 of 2017

If your business is on the mainland or in a standard freezone (DMCC, IFZA, Shams, etc.), the federal law applies to all your employees.

Employment Contracts: What Changed in 2022

The 2021 reforms abolished unlimited-term contracts. All new contracts must be fixed-term, with a maximum initial term of three years. After expiry, contracts can be renewed for the same or a different period.

What this means in practice:

• If you have employees on old unlimited-term contracts, those contracts became fixed-term for an equivalent period on 2 February 2022
• All contracts must be in Arabic (a translated copy in another language is acceptable alongside the Arabic version)
• Contracts must be registered in the MOHRE system before the employee starts work

The contract must include:

• Full name and nationality of both parties
• Job title and description
• Start date
• Contract duration
• Basic salary, allowances, and payment method
• Work location
• Probation period (if any)
• Working hours and leave entitlements

Verbal contracts are not enforceable in labour disputes. Everything must be in writing and registered.

Probation Periods: The Rules

Probation cannot exceed six months. During probation:

• Employer termination: 14 days’ notice required. If the employee is from overseas and the probation ends before completion, the employer must cover repatriation costs.
• Employee resignation: 14 days’ notice required if leaving for another UAE employer. One month if leaving the UAE entirely.

After probation ends, standard notice periods apply. You cannot extend or reset a probation period — once ended, it is ended.

A common employer mistake is to informally extend probation beyond six months. This is not permitted under the law. If an employee remains beyond six months without a formal termination or probation conclusion, they are legally past probation.

Working Hours

Standard maximum working hours are eight hours per day, 48 hours per week. During Ramadan, working hours reduce by two hours per day for Muslim employees.

Overtime rules:

• Overtime is capped at two hours per day
• Overtime pay: 25% above normal hourly rate
• Overtime between 9pm and 4am: 50% above normal hourly rate
• Employees working on a rest day are entitled to a compensatory day off or 50% additional pay

Certain categories of workers are exempt from overtime limits (senior management, security personnel in specific roles). These exemptions must be documented.

Annual Leave

Employees are entitled to:

• Less than one year’s service: Two days of annual leave per month (accrued during the first year)
• One year or more: 30 calendar days per year

Leave must be taken in the year it is due. If an employer requires an employee to postpone leave for operational reasons, the employer must pay out unused leave on termination.

Public holidays are separate. The UAE has approximately 14 public holidays per year, though exact dates vary annually. Employees required to work on public holidays are entitled to an additional day off or 50% additional pay.

Sick Leave

After completing the probationary period, employees are entitled to 90 days sick leave per year:

• First 15 days: full pay
• Next 30 days: half pay
• Remaining 45 days: unpaid

Sick leave must be supported by a medical certificate. You cannot terminate an employee for being on sick leave during the 90-day entitlement. Termination while on sick leave is unlawful and exposes the employer to compensation claims.

Maternity Leave

Female employees are entitled to 60 days maternity leave:

• First 45 days: full pay
• Last 15 days: half pay

If the child is born with health complications or the mother has a medical condition arising from the birth, the employee is entitled to an additional 30 days unpaid leave.

Fathers are entitled to five days paternity leave, which can be taken at any time within the first six months of the child’s birth.

Notice Periods

Standard notice periods once past probation:

Both employer and employee must respect these minimums. If either party fails to provide adequate notice, they owe the other party notice pay calculated at basic salary.

Note: notice periods during probation are different (14 days, as outlined above).

Termination: Lawful and Unlawful

Lawful Termination Grounds

An employer can lawfully terminate an employee with notice for:

• Poor performance (documented, with a formal warning process)
• Redundancy
• Restructuring
• Expiry of a fixed-term contract without renewal

Termination Without Notice (Gross Misconduct)

Article 44 of the 2021 law allows termination without notice for specific gross misconduct grounds, including:

• Fraud, forgery, or providing false documents on joining
• Causing serious material damage to the employer
• Disclosing confidential business information
• Being convicted of a criminal offence
• Being in a state of intoxication or under the influence of drugs at work
• Physical assault on the employer, a manager, or a colleague

Gross misconduct termination must be investigated and documented. Instant dismissal without proper process creates risk even when the underlying conduct was serious.

Unlawful Termination

Termination is considered arbitrary if carried out without a valid reason or in breach of the legal process. Compensation for arbitrary termination is up to three months’ full pay.

You cannot terminate an employee for:

• Making a legitimate complaint against the employer
• Being on approved sick leave (within the 90-day entitlement)
• Being on maternity leave
• Exercising a legal right

Employee-Initiated Resignation

Employees can resign with notice and remain entitled to full end-of-service benefits if they have completed at least one year of service. Resignation without serving notice may result in a deduction from end-of-service pay, but this cannot eliminate the gratuity entitlement entirely.

End of Service Gratuity

Every employee who completes at least one year of service is entitled to gratuity on leaving. The calculation is based on basic salary (not total remuneration):

• First five years: 21 days basic salary per year
• Beyond five years: 30 days basic salary per year

For a full breakdown of gratuity calculations including part-year calculations and the new optional Savings Scheme, read the UAE end of service gratuity guide.

MOHRE Registration Requirements

All mainland employees must be registered with the Ministry of Human Resources and Emiratisation (MOHRE). This includes:

• Online contract registration via the MOHRE portal (tas.mohre.gov.ae)
• Work permit issuance (linked to the employment visa process)
• WPS (Wage Protection System) registration and monthly compliance

WPS is mandatory for all employers with one or more registered employees. Salaries must be paid through an approved WPS channel by the due date each month. Late payment triggers a ban on new work permit applications. Persistent non-compliance leads to fines. For the full breakdown of WPS obligations, see the UAE WPS guide.

Freezone employees are generally registered with their freezone authority rather than MOHRE directly, but most freezones apply equivalent standards and their own labour regulations aligned to the federal law.

Emiratisation Rules for Private Sector Employers

Emiratisation requirements apply to private sector employers based on company size and sector:

• Companies with 50 or more employees in target sectors must maintain a minimum Emirati headcount, increasing by 2% per year
• Companies with 20-49 employees must hire at least one Emirati employee in skilled positions

Non-compliance triggers quarterly financial contributions (effectively fines) per unfilled Emirati position. The rates increased significantly from 2024.

Smaller businesses (fewer than 20 employees) are not subject to mandatory Emiratisation quotas but may benefit from hiring incentives.

Handling Labour Disputes

Labour disputes go through MOHRE’s conciliation process first. If not resolved at MOHRE level, cases proceed to the Labour Court.

The process:

1. Employee or employer files a complaint with MOHRE
2. MOHRE schedules a conciliation session (typically within 2-3 weeks)
3. If unresolved, MOHRE refers the case to the Labour Court
4. Labour Court judgments can be appealed to the Court of Appeal

Most straightforward disputes (unpaid salary, gratuity disputes, unlawful termination) are resolved at the MOHRE conciliation stage. Complex cases, particularly those involving fraud or significant sums, proceed to court and can take 6-18 months.

If an employee files a complaint while still employed, the employer cannot terminate them in retaliation — this constitutes unlawful dismissal regardless of other circumstances.

Key Employer Checklist

Before hiring each employee, confirm:

• Written contract in Arabic (plus translated copy if required) — ready before first day
• Contract registered on MOHRE portal
• Work permit and visa processed
• WPS account set up and salary cycle registered
• Health insurance arranged (mandatory in Dubai for all employees; mandatory across UAE for all sponsored visa holders)
• Probation period documented within the contract (maximum six months)

After hiring:

• Pay salaries on time via WPS every month
• Accrue annual leave correctly from day one
• Document any performance issues with written warnings before proceeding to termination
• Never terminate an employee on sick leave within their 90-day entitlement

For guidance on structuring your payroll correctly, see the UAE payroll guide for small businesses.

The Bottom Line

UAE labour law is more employee-protective than many employers expect. The 2022 reforms strengthened worker rights while also clarifying employer obligations. The biggest risks for employers come from documentation failures — verbal agreements, unregistered contracts, informal probation extensions — rather than intentional wrongdoing.

If you are hiring your first UAE employee, take the time to register correctly with MOHRE, set up WPS, and use a properly structured fixed-term contract. The administrative overhead is manageable and the protections run both ways: a well-documented employment relationship protects the employer as much as the employee.