Employment laws in the UAE

When it comes to employment, the UAE tops the Global Competitiveness Index. To manage the strong labor force, the Emirati government has set labor laws that federally regulate employment in the country. 

Every stage of the employment timeline, from the first offer letter to the post-retirement pension provision, is governed by these laws.

As an employer, you have to understand and carefully navigate labor law compliance in the UAE. Failure can lead to heavy penalties under different conditions. But understanding employee eligibility, minimum wage, payroll, etc., manually can be tedious and error-prone. 

In this guide, we will explore key employment laws in the UAE that you, as an employer, should be aware of. 

Key employment laws in the UAE

Employment in the UAE follows regulations defined under certain federal decrees and systems, including:

Federal Decree by Law No. (33)- Regulating Labor Relations (Labor Law)

• This is the spinal labor law in the UAE, which defines most provisions and regulations for private sector employees.
• Cabinet Resolution No. (1) of 2022 defines the executive regulations that implement the provisions of the decree and provide operational details.

Ministerial Resolution No. (598) of 2022 Regarding the Wages Protection System and Its Amendments

• The Wage Protection System (WPS) mandates private-sector organizations to pay employees every month via authorized, approved banks and financial institutions only.
• The resolution defines deadlines, targeted establishments, and actions that operationalize this system.

Federal Law by Decree No (34) of 2023 Concerning Combating Discrimination, Hatred, and Extremism

• The law states offenses and their penalties that are to be considered in the workplace.
• It protects employees from discrimination and religious offenses, and obstruction of opinion and expression.

Federal Decree by Law No. (45) of 2021 Concerning the Protection of Personal Data 

• The decree protects personal data and is relevant for employee files, HR systems, monitoring, retention, and transfers.

Contract employment laws in the UAE

Labor laws in the UAE set out all types of work in the private sector as contracts. When you draft them, you need to prepare two copies of the contract, with one for the organizational record and another for the employee. 

Also, it’s very important to make sure that the terms are clearly defined with a notice period for termination of services, and the contract is conclusive and renewable. 

Types of contracts

The types of employment contracts in the UAE, as defined in Article 7 of the Labor Law, are:

• Full-time: Full-time workers work for one employer for the entire duration of working hours daily, throughout business days.
• Part-time: Part-time workers may work for one or more employers, for a specified number of working hours or business days.
• Temporary work: This kind of contract is tied to the specific type or time frame of a job. Which means, as soon as the job ends, the contract automatically expires.
• Flexible work: These contracts are mainly for unsteady workloads and on-demand schedules. Employees under these contracts work based on employer or organizational demands, whether they include increased workloads, operational needs, or even the current economic climate. 

Essential contract terms 

Per the Executive Regulations, an employment contract should include, in principle:

• Employer details such as name and address
• Employee identity details, including name, nationality, date of birth, and ID proof details
• Qualifications
• Occupation/profession (job title)
• Date of joining/commencement date
• Place of work
• Working hours and rest days
• Probation period (if any)
• Contract term (duration)
• Wage (as agreed), including benefits and allowances
• Annual leave entitlement (length)
• Notice period
• Termination procedures (how the contract can be ended)
• Any other data MOHRE requires to regulate the relationship 

Format requirements to know:

• The employer must issue the employment contract in two copies (one kept by the employer, one provided to the worker).
• The employment contract is concluded for a definite (fixed) period, renewable by agreement.
• Parties can add extra clauses if they do not conflict with the Decree-Law, the Executive Regulations, and applicable legal rules.

Additionally, if the contract includes a non-compete, the Executive Regulations specify that it should define (at least) the geographic scope, the clause period, and the nature of work that could harm the employer’s legitimate interests.

Minimum wage in the UAE

The UAE does not have a national minimum wage. However, the Ministry of Human Resources and Emiratisation, MoHRE, sets minimum wages for employees in the private sector.

Working hours in the UAE

Standard working hours in the UAE are set to 9 hours a day and 45 hours per week. 

By executive regulation of the Labor Law, these hours can be reduced by 2 hours during Ramadan. This reduction is to be followed for employees of all religious affiliations.

Overtime laws in the UAE require you to make sure the duration doesn’t go beyond the threshold, and the overtime pay rates are as follows:

• Regular overtime – 1.25x times the hourly pay 
• Weekends & public holidays – 1.5x times the hourly pay

Mandatory benefits 

Every employee is entitled to benefits as defined by employment laws in the UAE. Employers are required to provide wage protection, statutory leave, gratuity, and more. Here are some of the employee rights in the UAE that you need to remember:

• Protection against bullying or harassment: If an employee in the UAE is bullied or harassed, they are legally protected. The law strictly prohibits sexual harassment, bullying, or any verbal, physical, or psychological violence against employees by their superiors or colleagues. 

If employees are unable to solve the problem internally, they should file a formal grievance with MoHRE, as per Article 54 of the Labor Law. 

• Statutory sick pay: Employees in the UAE are entitled to a sick leave period of up to 90 days per year after completing their probation. You have to guarantee full pay for the first 15 days and half for the next 30 days. For the remaining 45 days, the leave is unpaid. Employees must provide a medical report from a licensed UAE health authority.
• Maternity leave and pay: Employment laws in the UAE entitle female employees to a Statutory Maternity Leave of 60 days. The employee receives full pay for the first 45 days and half pay for the remaining 15 days.
• Paid annual leave: Employment laws in the UAE entitle workers in the private sector to a minimum of 30 holidays with full pay and official holidays, for each year of their extended service. If the service period is more than six months and less than a year, they have the right to 2 days of paid leave per month.

Termination

Termination laws in the UAE allow you to terminate the contract under appropriate and relevant conditions, or the employee can do it voluntarily. Under any circumstances, either the employer or the employee needs to issue a written notification of the termination. Here’s what you need to know:

• Employees and employers need to adhere to the warning period and commit to work during the duration. Provided it is not more than 30 days and not less than 90 days.
• Make sure that the termination is done on valid grounds. As an employer, here are some conditions that you can remember:
  • Mutual consent: When you and the employee consent to terminating the contract.
  • Term expiry: The contract expires and isn’t renewed.
  • Gross misconduct: In cases of conduct violations like forged documents, intoxication at work, or causing substantial financial loss, the termination can be executed without notice. 
• If a terminated employee files a serious complaint with the MoHRE, and it’s proven true, the termination is designated as unlawful, under Article 47 of the Labor Law. This will entitle the employee to three months’ full pay as compensation. 
• Gratuity: Employees are required to be registered with the General Pension and Social Security Authority (GPSSA) or the Abu Dhabi Pension Fund (ADPF). These agencies replace the standard end-of-service gratuity benefits with a pension. For contribution rates, you may refer to the government site.

Navigate employment laws in the UAE with trusted support

Handling admin in the UAE can be tedious and extensive for any employer. Moreover, every step of the employment pipeline is critical. 

Compliance failures lead to heavy penalties, both legal and monetary. This is where an EOR like Payoneer Workforce Management can help you out. 

Payoneer Workforce Management enables you to

• Onboard talent in the UAE, so that you can engage local talent without setting up a legal entity.
• Get assistance with employment laws in the UAE.
• Manage payroll and streamline contractor payments
• Handle benefits, timesheets, and more

Speak to our experts today and begin engaging talent in the UAE to expand internationally, quickly and seamlessly.

FAQs

1. Does hiring Emiratis require a specific kind of contract?

Yes, hiring UAE citizens requires a specific contract template, as prescribed by the Ministry of Human Resources and Emiratisation. Once issued, the employee needs to digitally sign the contract with their UAE Pass.

2. Are indefinite contracts allowed in the UAE?

No, the law clearly defines a contract as conclusive and renewable. Indefinite contracts may not be permitted in the UAE, resulting in penalties to the contractor or the employer. 

3. What is Fake Emiratisation?

Fake Emiratisation refers to the illegal practice of hiring an Emirati who doesn’t actually work. This is mostly done to meet quotas and reduce penalties. This can lead to fines.