UAE Labour Law: Employee Rights, Termination & Gratuity

UAE Labour Law sets the main rules for many employment relationships in the UAE private sector. The current federal framework is principally Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationships, as amended, together with Cabinet Resolution No. 1 of 2022 and relevant ministerial decisions. It covers contracts, wages, leave, termination and end-of-service entitlements.

The federal regime does not govern every worker in every UAE jurisdiction. It broadly applies to private-sector employment, including much employment in Dubai, but statutory exclusions and separate regimes apply. Federal and local government employees, members of the armed forces, police and security services, and domestic workers are outside the general Labour Relations Law. Domestic workers have separate legislation, while employment in the DIFC and ADGM financial free zones is governed by their own employment regimes. The applicable framework should therefore be identified before relying on a particular rule.

Employment Contracts Under UAE Labour Law

Private-sector employment contracts under the federal regime are concluded for a definite, renewable period agreed by the employer and worker. The former universal three-year maximum is no longer the current rule. A contract should record the agreed work pattern, wage, benefits, notice and other terms, and its provisions must not reduce statutory employee rights in the UAE.

The law recognises work patterns including full-time, part-time, temporary, flexible and job-sharing arrangements. Particular entitlements can be calculated differently for part-time or job-sharing workers, so the contract and applicable regulations matter.

Probation Periods

Probation may not exceed six months. An employer ending employment during probation must generally give at least 14 days’ written notice. A worker who intends to move to another UAE employer during probation generally gives at least one month’s written notice, while a foreign worker leaving the UAE generally gives at least 14 days’ written notice. Additional statutory conditions, including rules on recruitment costs and failure to observe notice, may apply.

Working Hours and Overtime

Normal working hours are generally limited to eight hours a day or 48 hours a week. During Ramadan, normal daily hours are reduced by two hours. A worker generally must not work more than five consecutive hours without breaks totalling at least one hour, and those breaks ordinarily do not count as working time.

Additional work is generally limited to two hours a day. Ordinary overtime is calculated using basic wage with at least a 25% increase; qualifying overtime between 10:00 pm and 4:00 am carries at least a 50% increase, subject to the shift-worker exception. The Executive Regulations contain exceptions and special rules for certain categories, sectors and work patterns.

Annual Leave

A full-time worker is generally entitled to 30 days of paid annual leave for each completed year of service. A worker who has completed more than six months but less than one year generally accrues two days for each month. Proportionate leave may be due for a final part-year when employment ends.

The employer may schedule leave according to operational requirements within the legal controls and should generally notify the worker at least one month before the leave date. When employment ends, payment for unused accrued annual leave is calculated on basic wage. Different calculations apply to part-time work.

Sick Leave

After probation, a worker may be entitled to up to 90 days of sick leave in a year, whether continuous or intermittent: the first 15 days at full pay, the next 30 days at half pay and the remaining 45 days without pay. During probation there is no statutory paid sick-leave entitlement, although the employer may grant unpaid leave supported by a medical report.

A worker should ordinarily notify the employer of illness within three working days and provide a medical report from the competent medical authority. Eligibility remains subject to the law’s conditions and exclusions.

Salaries, WPS and Unpaid Salary in the UAE

Employers covered by the Ministry of Human Resources and Emiratisation (MOHRE) system must pay contractual wages when due through the Wage Protection System (WPS) or another approved system. WPS transfers wages electronically through approved banks, financial institutions and exchange houses, helping MOHRE monitor whether the agreed amount is paid on time.

A private-sector worker recorded with MOHRE can report an unpaid or late salary. MOHRE offers a confidential salary-complaint service through which the worker’s identity is not disclosed to the employer, although the worker must identify themselves to MOHRE. A general labour complaint may be more appropriate when other employment entitlements are also disputed.

Notice Periods and Termination in the UAE

For ordinary termination under the federal regime, written contractual notice must generally be at least 30 days and no more than 90 days. The contract remains effective during notice and the worker is entitled to their full wage for that period. A party that does not serve the required notice may owe notice-period compensation.

Dismissal without notice is permitted only on specified statutory grounds. The employer must generally conduct a written investigation and provide a written, reasoned dismissal decision. The listed grounds include matters such as forged documents, serious loss or deliberate damage, repeated failure to perform basic duties after warnings, disclosure of work secrets, workplace assault and specified unauthorised absences. The law also defines limited circumstances in which a worker may leave without notice. Neither party should assume that a disputed allegation automatically removes the notice requirement.

Unlawful Termination

The specific unlawful-termination remedy in Article 47 applies when an employer terminates a worker because the worker filed a serious complaint with MOHRE or brought a lawsuit against the employer, and the complaint or lawsuit is proven valid. A court may award fair compensation based on the nature of the work, harm and length of service, capped at three months’ last wage. Compensation is not guaranteed and depends on the evidence and court’s assessment.

This remedy is separate from notice compensation, unpaid wages and end-of-service entitlements. Other contractual or statutory issues may also arise from a termination, so the facts and applicable employment regime must be reviewed.

End-of-Service Gratuity in the UAE

A qualifying full-time foreign worker who completes at least one continuous year is generally entitled to traditional end-of-service gratuity based on the last basic wage:

• 21 days of basic wage for each of the first five years of service; and
• 30 days of basic wage for each year after the first five years.

After the first continuous year, a fraction of a year is calculated proportionately. Unpaid absences are excluded from the service period, and traditional gratuity is capped at two years’ wage. Calculations differ for part-time and job-sharing arrangements. UAE nationals are subject to applicable pension and social-security legislation.

An employer participating in the approved alternative end-of-service savings scheme may make prescribed contributions for an enrolled worker instead of accruing traditional gratuity for the enrolment period. When employment ends, wages and other contractual and statutory entitlements are generally due within 14 days, subject to any lawful deductions or disputed amounts.

Non-Compete Clauses

A non-compete clause may be used where the work gives an employee access to clients or business secrets, but it must be limited by time, place and type of work to what is necessary to protect a legitimate business interest. The restricted period cannot exceed two years after the contract ends. Enforceability depends on the wording, the circumstances in which employment ended and the statutory and regulatory conditions; a clause is not automatically enforceable merely because it appears in a contract.

How MOHRE Labour Complaints Are Handled

Where the federal labour system applies, a worker, employer or beneficiary may submit a complaint concerning an entitlement arising from the employment relationship. MOHRE first examines the dispute and seeks an amicable settlement. Supporting evidence may include the employment contract, wage records, correspondence, resignation or dismissal documents and calculations of the amount claimed.

Under the current procedure, MOHRE may issue an enforceable decision on an eligible claim totalling AED 50,000 or less. It may also decide a claim involving non-compliance with a prior MOHRE amicable-settlement decision, regardless of value. If settlement is not reached in a claim outside MOHRE’s decision-making jurisdiction, MOHRE refers the dispute to the competent court with a supporting memorandum. Challenges to qualifying MOHRE decisions now go to the competent Court of First Instance rather than the Court of Appeal.

Complaint and court deadlines can affect a claim, and procedural rules may change. Affected parties should act promptly and check the current MOHRE private-sector labour-complaint service before filing. A MOHRE complaint does not guarantee settlement, a favourable decision or compensation.

Practical Steps for Employees and Employers

Employees should retain their signed contract, MOHRE records, payslips or WPS evidence, leave records, notices and relevant messages. Employers should keep compliant contracts and payroll records, apply leave and disciplinary procedures consistently, and document investigations and termination decisions.

For an overview of related services, visit our Labour & Employment Law practice-area page. If you need advice about a particular contract, unpaid salary, termination or gratuity calculation, you can book a consultation.

Frequently Asked Questions

What law governs private-sector employment in the UAE?

Federal Decree-Law No. 33 of 2021, as amended, and its Executive Regulations provide the principal framework for many UAE private-sector employment relationships. Exclusions and separate regimes apply, including separate legislation for domestic workers and distinct employment rules in the DIFC and ADGM financial free zones.

How is end-of-service gratuity calculated in the UAE?

Under the traditional federal scheme, a qualifying full-time foreign worker with at least one continuous year generally receives 21 days of last basic wage for each of the first five years and 30 days for each later year, subject to proportional calculation, excluded unpaid absences and a cap of two years’ wage. Part-time calculations and the approved alternative savings scheme can produce a different result.

What can an employee do about unpaid salary?

A private-sector employee registered with MOHRE may use the confidential salary-complaint service for unpaid or late wages, or file a general labour complaint if other rights are also disputed. The worker should preserve their contract, WPS or bank records and communications, act promptly and follow current MOHRE instructions.

What notice is required when employment is terminated?

Ordinary termination generally requires written notice of at least 30 days and no more than 90 days, as agreed in the contract. Different rules apply during probation and in the limited statutory cases permitting termination or departure without notice. Unserved notice may result in notice-period compensation.

How can an employee file a labour complaint with MOHRE?

An eligible worker can apply through the MOHRE website or mobile application and provide identity, employment and claim information plus supporting evidence where available. MOHRE reviews the complaint, contacts the parties and seeks settlement before deciding eligible claims or referring unresolved matters to the competent court under the current procedure.

Disclaimer: This article provides general information only and does not constitute legal advice. Employment rights and procedures depend on the applicable regime, current law, contract and facts. Official English translations are provided for convenience; the Arabic legislative text prevails in the event of conflict. Consult a licensed UAE legal professional about your circumstances.