The United Arab Emirate's (UAE) booming economy and strategic location in Asia present exciting opportunities to expand your global footprint. However, with new markets come new regulations, and understanding the employment laws in UAE is crucial for your success.

Fortunately, this guide provides a comprehensive overview of key legal considerations for businesses hiring in the UAE. 

Whether you're a startup or a multinational corporation, you'll find valuable insights on contractual requirements and regulations, employee rights, and benefits, per the latest UAE Labor Law.

Contractual Agreements

Contractual agreements outline the expectations and obligations of both parties per the employment laws in UAE. 

You must include the following mandatory contractual elements:

• Dates of employment.
• Job details (title, description).
• Workplace location.
• Salary and payment schedule.
• Working hours and days.
• Annual leave entitlement.
• Notice period for termination.

Further, the UAE labor law allows you to include non-compete clauses by clearly defining the limitations in terms of time, location, and the type of work that you want to restrict your employees from engaging in.

Additionally, you may sign data processing agreements alongside employment contracts to process employee data within the bounds of the law. 

Types of Employment Contracts in UAE

The employment laws in UAE recognize the following employment agreements: 

• Full-time: Working regular hours each week with one employer.
• Part-time: Commits to specific hours or days with one or more employers.
• Temporary: Fulfills a specific project or assignment, ending upon completion.
• Flexible: Hours or days fluctuate based on business needs.
• Remote: Performs work outside the traditional office environment.
• Job Sharing: Collaboratively performs tasks and duties with another worker.

Obligations and rights for both parties

The employment laws in UAE require you to extend all possible rights like safe working conditions, pay salaries and benefits as agreed, fair termination procedures, and more.

Working Hours and Overtime

Article 17 of the Federal Decree-Law No. 33 of 2021 regulates the working hours and overtime compensation for the Private Sector in the UAE. Here’s an overview of it:  

Regular working hours

• The UAE labor law prescribes a 9-hour working day or a 45-hour working week. However, you must reduce the daily working hours by two during Ramadan (a holy month of the Islamic calendar). 
• The labor law in UAE calculates break time outside normal working hour limits. You must extend a break of more than one hour for every five consecutive working hours. 
• Further, you can stipulate specific working hours for remote employees covered under the labor laws of UAE.  

Overtime regulations and compensation

Minimum Wage and Compensation

No labor law in UAE stipulates a minimum wage rate or salary. 

However, the employment laws in UAE require you to ensure that the offered salaries cover the basic needs of your employees. 

Factors affecting wage determination

For example, expatriates willing to sponsor their dependent family for a UAE residence visa must earn at least AED 4,000 per month. 

You can determine wages based on individual factors like education, work experience, and even nationality. Your company size and industry standards could add further layers.

Employee Benefits and Social Security

The employment laws in UAE outline several mandatory benefits that you must provide to your employees. Here's a breakdown of the key benefits:

Statutory benefits

• End of service gratuity: You are required to extend gratuity payments upon termination of employment contract. 
• Social security: You are required to contribute to the applicable social security scheme. 
• Additional benefits: You must provide health insurance coverage to employees. We recommend Daman as your health insurance Provider in the UAE. Further, you may support new employees with accommodation support.

Social Security contributions and requirements

Vacations and Paid Time Off

The United Arab Emirates has specific regulations regarding employee paid leave and unpaid leave entitlements. Here's a breakdown of what you need to know:

Annual leave entitlement

• The labor law in UAE stipulates 30 days of paid annual leave to employees completing 6 months of service. 
• You can take two days of annual leave monthly for the rest of your first year of work. 
• The labor laws of UAE require you to extend annual leave entitlement to part-time employees based on their actual working hours. 
• You cannot restrict employees from using their accrued leave for more than two years.
• UAE labor law allows you to include official holidays and any other leaves caused by sickness if they fall within the annual leave.

Public holidays and special leaves

The UAE cabinet declares public holidays every year for religious and national spirits.

Other special leaves per the labor laws of UAE include:

Termination and Gratuity

Here's a breakdown of key points regarding termination and end-of-service gratuity per the labor laws of UAE:

Grounds for termination

Article 42 of UAE labor law lays down the grounds for termination:

Notice period and End-of-service benefits 

Article 43 of UAE labor law enforce a written notification to terminate the employment:

• You must serve a notice period of 1 month (30 days) to 3 months (90 days) to terminate the contract according to employment laws in UAE. 
• However, you are not required to serve written notices in the event of employee dismissal for deception and fraud, safety violations, workplace misconduct, and repeated performance issues.
• The new employment laws in UAE mandate gratuity pay upon termination and not exceeding two years' worth of basic salary.

• Moreover, you must pay all end-of-service entitlements within 14 days. 
• Failing to do so can result in fines ranging from AED 5,000 to AED 1,000,000.

Probation period in the UAE

• The labor laws of UAE allow you to keep an employee on probation for not more than six months.
• Notice Period During Probation: During probation, the statutory minimum notice period is 14 days. 
• Notice Period After Probation: After probation, the statutory minimum notice period is 30 days, with a maximum of 90 days for service exceeding 5 years. 

Discrimination and Equal Opportunity

The employment laws in UAE endorse discrimination-free and equal opportunity in the workplace:

Prohibitions against workplace discrimination

• The labor courts in UAE can penalize you for dismissing an employee due to a proven complaint filed with the Ministry of Human Resources and Emiratisation (MoHRE) or a lawsuit.

• UAE labor law recommends a subscription to the Wage Protection System to pay employees accurate and timely salaries. 

Learn more on payroll & HR compliance under the employment laws in UAE.

Health and Safety Regulations

Stay Compliant with Skuad

Employers Of Record (EOR) solutions like Skuad are the best way forward to enter the UAE market without establishing a legal entity. 

With Skuad handling payroll, employer tax obligations, social security contributions, and other legal matters concerning employment, you can focus more on attracting and retaining top talents.

Talk to an expert today and establish compliant workforces in over 160 countries, including the UAE. 

FAQs

Q1. What is the employment law in UAE 2024?

A1. The employment laws in UAE 2024 draw from several primary sources, forming a multi-layered legal framework including Federal Law No. 33 of 2021, orders from the Ministry of Human Resources and Emiratisation (MOHRE), Cabinet Resolutions, Judicial Precedents, and International Conventions. 

Q2. What is the new labor law in UAE 2024?

A2. The new UAE labor law is governed by Federal Decree-Law No. 33 of 2021, which came into effect in February 2022. It covers private sector employees and employers in the UAE. 

In addition to minor modifications, the new labor law in UAE has increased social security contributions, expanded Emiratisation requirements for companies with 20-49 employees in certain sectors, and introduced an unemployment insurance scheme.

Q3. What is the new law for termination of employment in the UAE?

A3.  While there haven't been entirely new laws specifically dedicated to termination in the UAE, Federal Law No. 33 of 2021 (often referred to as the “UAE Labor Law") introduced significant changes to previously existing termination regulations in 2021. Employers have more flexibility to terminate, but reasons must still be genuine to avoid penalties for arbitrary dismissal.

Q4. What is the termination rule in UAE?

A4. The core termination rule per UAE labor law requires a minimum of 30 days prior written notice from either party. However, exceptions for immediate termination exist. 

Remember, mutual agreement is always an option. Importantly, arbitrary dismissal can result in employee compensation. Further, specific employee situations might be treated differently.