This law is widely referred to as the “New UAE Labour Law” and forms the legislative framework governing private-sector employment relationships in the United Arab Emirates. It applies to all employees — UAE nationals and expatriates alike — working in private companies, with the exception of certain categories (such as government-sector employees, workers in agriculture and grazing under specific conditions, and domestic workers, who are governed by a separate law).
This law replaced Federal Law No. 8 of 1980 and introduced a fundamental shift in the UAE labour market, most notably the complete abolition of unlimited-term employment contracts.
Key Provisions Relating to Individuals (Employees)
1. Contract Type (Article 8)
It is no longer permissible to enter into unlimited-term employment contracts. All employment contracts must now be fixed-term, with a maximum duration of 3 years, renewable for one or more additional terms.
2. Probationary Period (Article 9)
The probationary period may last up to a maximum of 6 months. During this period:
- The employer may terminate the contract with a minimum of 14 days’ written notice.
- The employee may terminate the contract, in order to move to another job within the UAE, with one month’s notice.
3. Flexible Work Patterns (Article 7)
The law formally recognises six work patterns: full-time, part-time, temporary work, flexible work (freelance), remote work, and job-sharing.
4. Working Hours (Article 17)
The general limit is 8 hours per day / 48 hours per week, with a two-hour daily reduction during Ramadan for all employees (not only Muslim employees). Certain sectors (hospitality, security, retail) may operate 9-hour shifts with Ministry approval.
5. Annual Leave
30 calendar days per year after completing one year of service (calculated on a pro-rata basis before then).
6. Termination and Notice (Articles 43, 44, 45)
- Termination for any lawful reason requires written notice of no less than 30 days and no more than 90 days.
- Articles 44 and 45 set out the circumstances under which either party may terminate the contract immediately, without notice, in the event of a serious breach of obligations.
7. End-of-Service Gratuity (Article 51)
This is one of the most frequently searched provisions of the law. The key rules are:
- Calculated based solely on the last basic salary (excluding housing allowance, transport allowance, or any other allowances).
- 21 days’ basic salary for each of the first 5 years of service.
- 30 days’ basic salary for each additional year beyond the fifth.
- Maximum gratuity cap: two years’ total salary.
- Requires at least one full year of continuous service; calculated on a pro-rata basis for partial years.
- Unpaid leave days are not counted toward the length of service.
- The employer must settle the employee’s final dues (including the gratuity) within 14 days of the end-of-service date.
Practical example: An employee with a basic salary of AED 6,000 who has completed 7 years of service:
- First 5 years: 105 days × AED 200 (daily wage) = AED 21,000
- Following 2 years: 60 days × AED 200 = AED 12,000
- Total: AED 33,000 (below the AED 144,000 cap)
8. Discrimination and Equal Pay
The law contains explicit provisions prohibiting discrimination and establishing the principle of “equal pay for work of equal value.”
Key Provisions Relating to Employers and Businesses
- Obligation to Contract Correctly: The actual employment contract registered with the Ministry must reflect the true nature of the work arrangement (full-time/part-time/flexible). Any contract that contravenes the provisions of the law is considered void — even if concluded before the law came into effect — unless it is more favourable to the employee.
- Stricter Penalties (August 2024 Amendments): Fines of up to AED 1 million for certain serious violations, such as employing workers without a permit or trading in work visas.
- Overtime (Article 19): Clear limits and mandatory compensation for any work performed beyond regular working hours.
- Alternative End-of-Service Scheme: Under Cabinet Resolution No. 96 of 2023, employers may opt to enrol in an alternative savings scheme in place of the traditional end-of-service gratuity.
- Domestic Workers Excluded: Domestic workers are not covered by this law; they are governed by a separate law (Federal Decree-Law No. 9 of 2022 and its amendments).
Frequently Asked Questions
Are unlimited-term employment contracts still available in the UAE?
No. Since February 2022, all new contracts must be fixed-term (up to a maximum of 3 years, renewable).
Is housing allowance included in the end-of-service gratuity calculation?
No, the gratuity is calculated on basic salary only, excluding any allowances.
Do I lose my end-of-service gratuity if I am dismissed for a serious violation?
Under recent legal interpretations of Article 44, dismissal for a serious violation no longer automatically results in the complete forfeiture of the gratuity, as was the case under the previous law. However, this depends on the circumstances of each case, and it is specifically advisable to consult a lawyer in this situation.
What is the legal notice period for resignation or dismissal?
Between 30 and 90 days, as specified in the contract, except in cases of immediate termination under Articles 44 and 45.
When must an employee receive their final dues?
Within 14 days of the employee’s last actual working day.
When Do You Need a Specialist Employment Lawyer?
- If you have been unfairly dismissed, or your employer refuses to pay your end-of-service dues.
- In the event of a dispute over contract classification or unpaid overtime.
- When drafting or reviewing employment contracts for your company to ensure full compliance with the law and avoid the stricter penalties.
- When dealing with workplace discrimination or harassment cases.
- During company restructuring and any resulting collective contract terminations.
Related Services from Our Firm
🔗 Employment Law – Our Employment Law Services
Related Laws
- UAE Federal Arbitration Law — for resolving employment disputes through arbitration in certain executive contracts
- UAE Domestic Workers Law
- DIFC Employment Law — for employees of companies registered within the Dubai International Financial Centre
- ADGM Employment Regulations
