UAE Labour Law for Employers: What You Must Know in 2026

This guide covers the key provisions of the current UAE Labour Law as they apply to private sector mainland employers in 2026. It is a practical reference, not legal advice. For complex employment disputes or specific legal questions, we recommend consulting a qualified UAE employment lawyer.

Contract Types Under the Current UAE Labour Law

The 2021 law eliminated the previous distinction between limited and unlimited duration contracts for private sector employees. All private sector employment contracts in the UAE mainland are now issued as fixed-term contracts with a maximum duration of three years. Contracts can be renewed by mutual agreement on expiry.

This change has practical implications for employers. If your organisation has employees on unlimited duration contracts issued before 2022, those contracts remain valid until the contract end date or until they are renewed, at which point the new fixed-term framework should be applied. MOHRE issued transitional guidance on this. Employers who have not yet updated their contract templates should do so.

Working Hours, Overtime, and Rest Days

The standard working week under UAE Labour Law for mainland employees is 48 hours, typically structured as eight hours per day over six days, or nine hours per day over five days. During Ramadan, Muslim employees must not be required to work more than six hours per day or 36 hours per week.

Overtime is compensated at a rate of 1.25x the basic hourly rate for hours worked beyond the standard day, and 1.5x for hours worked between 10pm and 4am. Friday is the designated weekly rest day for mainland employees, though industry-specific exemptions exist for sectors where Friday operations are standard, such as hospitality and retail.

Employers who require employees to work on their designated weekly rest day must compensate them with either a replacement rest day or 150% of their standard daily wage for that day.

Annual Leave Entitlement

Under the current UAE Labour Law, employees are entitled to annual leave as follows.

1. Employees who have completed six months but less than one year of service: two days of leave per month.
2. Employees who have completed one full year of service: a minimum of 30 calendar days of annual leave per year.

Annual leave must be taken within the year it accrues unless the employer and employee agree to carry it forward. Untaken annual leave must be compensated in cash upon termination of employment. Employers who deny employees the right to take their leave or who fail to compensate for untaken leave on termination are in breach of the law.

Maternity and Paternity Leave

Maternity Leave

Female employees are entitled to 60 calendar days of maternity leave. The first 45 days are at full pay and the subsequent 15 days at half pay. This applies regardless of the employee's length of service. Maternity leave can be taken from one month before the expected delivery date.

An employee who is ill as a result of pregnancy or delivery is entitled to a further period of unpaid leave of up to 45 days, with a medical certificate. Terminating an employee on maternity leave or in connection with her pregnancy is prohibited and exposes the employer to significant legal liability.

Paternity Leave

Male employees are entitled to five days of paid paternity leave, to be taken within six months of the child's birth. This is a provision introduced under the 2021 law and was not available under the previous framework.

End of Service Gratuity

End of service gratuity is a mandatory statutory entitlement for all private sector mainland employees who have completed at least one year of continuous service. It is calculated on the employee's basic salary and does not include allowances.

1. For the first five years of service: 21 days of basic salary per year of service.
2. For service beyond five years: 30 days of basic salary per year of service.

Gratuity is payable on the termination of employment regardless of the reason for termination, unless the employee is terminated for gross misconduct under the specific grounds enumerated in the law. Resignation does not forfeit gratuity entitlement under the current law, which is a change from the previous framework where resigned employees in some circumstances received reduced gratuity.

Employers who are not accruing gratuity provisions accurately on their balance sheets are carrying a significant and growing liability. Ensure your finance function is calculating and provisioning for gratuity on a current basis.

Termination: Grounds, Notice, and Arbitrary Dismissal

Legitimate Grounds for Termination

An employer may terminate an employee's contract for legitimate business reasons, including poor performance, redundancy, or fundamental breach of contract by the employee. Termination must comply with the notice period provisions in the contract, which must be a minimum of 30 days and a maximum of 90 days.

Termination for Cause

The law lists specific grounds on which an employer may terminate immediately without notice and without gratuity. These include an employee assuming a false identity, causing financial loss to the employer through wilful misconduct, disclosing confidential business information, being absent without justification for more than 20 intermittent days or more than seven consecutive days in a year, and other specific grounds. Summary dismissal outside these specific grounds exposes the employer to an arbitrary dismissal claim.

Arbitrary Dismissal

If an employee successfully claims arbitrary dismissal before MOHRE or the courts, the employer may be ordered to pay compensation of up to three months total wage (basic plus allowances) in addition to any other entitlements. This is a significant financial exposure and the risk of arbitrary dismissal claims is one of the most common HR compliance risks we see underestimated by UAE employers.

WPS: Wage Protection System

All private sector mainland employers must pay employees through the Wage Protection System, which requires salary payments to be made via WPS-registered electronic bank transfers by the agreed pay date. Late payment of salaries triggers automatic MOHRE alerts and can result in a ban on new work permit applications until the arrears are settled. Repeated late payment triggers escalating penalties.

Ensure your payroll cycle is structured to meet the WPS deadline consistently. Cash payments, even where agreed by both parties, are not compliant with WPS requirements for registered employees.

Non-Compete Clauses

Non-compete provisions are permitted under UAE Labour Law but are subject to specific limitations. A non-compete clause must be limited in time, geography, and scope to what is necessary to protect the employer's legitimate business interests. The maximum enforceable duration is two years. Overly broad non-compete provisions are unenforceable and provide the employer with less protection than a well-drafted, proportionate clause.

Frequently Asked Questions

Do UAE Labour Law protections apply to freezone employees?

No, not directly. Freezone employees are governed by the regulations of their specific freezone authority, not by the mainland UAE Labour Law or MOHRE. DIFC employees fall under the DIFC Employment Law. ADGM employees fall under ADGM Employment Regulations. Other freezones have their own frameworks. If you have employees in both mainland and freezone entities, you are subject to different legal frameworks for each group and must manage them accordingly.

What is the maximum fine for a UAE employer who violates the labour law?

Fines for specific violations vary significantly depending on the nature of the breach. Fines for WPS non-compliance, failure to register employees with MOHRE, and other administrative violations are typically in the range of AED 1,000 to AED 10,000 per violation. More serious violations including arbitrary dismissal, failure to pay gratuity, or withholding passports can result in higher financial penalties and operational sanctions including bans on new work permit applications.

Can I include a trial or unpaid training period before the formal employment start date?

No. Any period during which a person is performing work under your direction in the UAE creates an employment relationship that triggers UAE Labour Law obligations, including the obligation to register the employee with MOHRE and sponsor their visa. Unpaid trial periods are not a recognised concept under UAE Labour Law and create significant legal and financial risk for employers.

Is there a statutory minimum wage in the UAE?

There is no universal statutory minimum wage in the UAE private sector applicable to expatriate employees. However, MOHRE has minimum salary thresholds tied to specific visa and skill classification categories, which effectively set a floor for certain employee categories. UAE national employees are subject to a separate minimum wage framework. The UAE minimum wage landscape continues to evolve and employers should monitor MOHRE guidance on current thresholds.

The HiringJet Team

Built by recruiters and business development professionals who have lived every side of the UAE job market.

Published: 3rd Aug, 2026 | Category: HR & Workforce Management | Author: The HiringJet Team