UAE labour law is governed by Federal Decree-Law No. 33 of 2021 (the Labour Law), effective 2 February 2022, replacing the 1980 Labour Law. The new framework introduced fixed-term contracts, flexible work models, anti-discrimination protections, and enhanced end-of-service benefits. Every UAE employer — mainland and free zone — must comply with MOHRE registration, WPS salary payments, Emiratisation targets, and mandatory health insurance. Last updated: June 2026.
For the UAE setup context, see how to start a business in the UAE: complete guide for foreign founders. For visa and work permit details, see GCC work permits and employment visas compared.
What changed under the 2022 Labour Law?
Federal Decree-Law No. 33 of 2021 replaced the 40-year-old Federal Law No. 8 of 1980 with five structural changes:
Fixed-term contracts only — all employment contracts are now fixed-term (maximum 3 years, renewable). Unlimited-term contracts — the previous default — were abolished. Existing unlimited contracts were required to convert by 1 February 2023.
Flexible work models — the law recognises full-time, part-time, temporary, and flexible work arrangements. Employers can engage workers on part-time or project-based contracts with clear hourly or output-based terms.
Anti-discrimination — discrimination based on race, colour, sex, religion, national origin, social origin, or disability is prohibited. Sexual harassment protections are codified for the first time.
Non-compete clauses — enforceable but limited to a maximum of 2 years post-employment, restricted to the same geographic area and similar business activity, and must be proportionate to the employer’s legitimate business interest.
End-of-service gratuity — maintained at 21 days’ basic salary per year for the first 5 years and 30 days per year thereafter, capped at 2 years’ total salary. A new alternative savings scheme was introduced, allowing employers to invest gratuity contributions in approved funds.
What are the key employer obligations?
| Obligation | Requirement | Authority | Penalty for non-compliance |
|---|---|---|---|
| MOHRE registration | All employers must register labour contracts with MOHRE | MOHRE | AED 5,000+ per violation |
| Wage Protection System (WPS) | All salaries paid through UAE-approved banks/payment agents | MOHRE / Central Bank | Licence freeze, visa suspension |
| Emiratisation | 2 % annual increase in Emirati workforce (50+ employees) | MOHRE | AED 6,000/month per unfilled position |
| Health insurance | Mandatory for all employees and dependents | DHA (Dubai) / DOH (Abu Dhabi) | AED 500–1,000 per uninsured employee |
| End-of-service gratuity | Accrued from day one, payable on termination | MOHRE / Courts | Court-enforced payment + penalties |
| Working hours | Maximum 8 hours/day, 48 hours/week (reduced during Ramadan) | MOHRE | Administrative penalties |
The Wage Protection System (WPS) is the most operationally significant obligation. Every salary payment must be processed through an approved WPS agent — typically a UAE bank — within the established payroll timeline. Failure to pay salaries through WPS triggers an automatic MOHRE alert, visa-processing freeze, and potential criminal referral.
How do probation and termination work?
Probation — maximum 6 months. During probation, either party can terminate with 14 days’ written notice. The employee must give 1 month’s notice if they intend to leave the UAE, or 14 days if moving to another UAE employer.
Termination by employer — requires 30 to 90 days’ written notice depending on contract terms. Valid grounds include performance failure, misconduct, redundancy, or business closure. Arbitrary dismissal — termination without a valid reason — entitles the employee to compensation of up to 3 months’ salary.
Termination by employee — requires 30 to 90 days’ written notice. The employee can terminate without notice in cases of employer breach — including unpaid wages, unsafe working conditions, or assault.
End-of-service gratuity — payable to all employees who complete at least 1 year of service: 21 days’ basic salary per year for years 1 to 5, and 30 days per year thereafter. The total gratuity cannot exceed 2 years’ total salary. Employees terminated for gross misconduct forfeit gratuity.
What about DIFC and ADGM employment law?
DIFC and ADGM operate under their own employment regulations, separate from the federal Labour Law. Key differences:
- DIFC Employment Law No. 2 of 2019 — follows English common-law principles, with its own employment contracts, end-of-service provisions, and dispute resolution through the DIFC Courts
- ADGM Employment Regulations 2019 — similarly follows common-law principles, with disputes resolved through the ADGM Courts
Employers in DIFC and ADGM register employees with the zone authority, not MOHRE. WPS and Emiratisation requirements may differ from the federal framework. End-of-service calculations follow zone-specific formulas.
For founders choosing between DIFC, ADGM, and mainland, the employment-law difference is secondary to the business-model fit. For details, see DIFC (Dubai International Financial Centre): complete guide.
What are the Emiratisation requirements?
UAE private-sector companies with 50 or more employees must increase their Emirati workforce by 2 % annually under MOHRE’s Emiratisation programme. The penalty for non-compliance is AED 6,000 per month per unfilled Emirati position — AED 72,000 per year per position.
Companies with fewer than 50 employees are currently exempt from the 2 % target but may face future requirements as the programme expands. Free zone companies with 50+ employees are also subject to Emiratisation.
Practically, most small foreign-founded companies in Dubai free zones fall below the 50-employee threshold and are unaffected. Companies approaching the threshold should budget for Emirati hires — typically in HR, customer service, or administrative roles — with average salaries of AED 8,000 to AED 15,000/month for entry-level positions.
Frequently asked questions
Does UAE labour law apply to free zone companies?
Federal Decree-Law No. 33 of 2021 applies to all UAE employers, including free zone companies, with the exception of DIFC and ADGM which have their own employment regulations. Free zone companies register labour contracts with MOHRE and must comply with WPS, health insurance, and end-of-service obligations.
Can I terminate an employee during probation?
Yes. During the maximum 6-month probation period, either party can terminate with 14 days’ written notice. No end-of-service gratuity is payable for service under 1 year.
What is the minimum wage in the UAE?
The UAE does not have a legislated minimum wage for private-sector employees. However, MOHRE sets minimum salary thresholds for visa categories: AED 4,000/month for dependent sponsorship (with accommodation), AED 15,000/month for the Green Visa, and AED 30,000/month for the Golden Visa professional track.
Sources and further reading
- Federal Decree-Law No. 33 of 2021 — UAE Labour Law, effective 2 February 2022
- MOHRE — Employment contracts, WPS, and Emiratisation (mohre.gov.ae)
- DIFC Employment Law No. 2 of 2019 — DIFC-specific employment framework
- ADGM Employment Regulations 2019 — ADGM-specific employment framework
- Dubai Health Authority — Mandatory health insurance (dha.gov.ae)