The relationship between an employer and employee is one of the most important for the effective management of human capital, directly impacting productivity, job satisfaction, and overall business success. Labour laws are established to support and regulate a good employer-employee bond while maintaining the safety of all parties.
As a global hub for talent, workforce, and business, the UAE has always placed significant importance on fostering a fair, ethical, and structured work environment. To support these standards further, the UAE has established comprehensive and well-thought-out labour laws that regulate all aspects of an employee-employer relationship. By setting clear regulations, the UAE continues to attract a diverse workforce while maintaining a stable and thriving employment landscape.
This blog will explore the UAE labour law for 2025, the most significant changes to the legislative framework, what employers should adhere to, and the rights employees are entitled to during their employment.
Recruitment and Employment Contracts
Employment Contracts
Previously, employees were allowed to be employed under either permanent or fixed-term employment contracts.
The new Federal Decree-Law No. 33 of 2021 covering the Regulation of Labour Relations in the Private Sector, according to UAE labour law, established fixed-term contracts as the standard employment type in the country. The new law came into effect on 2 February 2022.
As per the new legislation governing employment recruitment and contracts, all employees must be employed on a fixed-term contract, not exceeding three years in length. If the contract is not renewed or extended upon expiry and the employer and employee under the contract continue to perform the duties, then the contract is automatically considered renewed under the same terms.
Models of Work
Previously, the labour laws only allowed full-time employment of work models. Part-time was introduced in 2019, and in 2020, the COVID regulations allowed some further flexibility.
The new UAE labour law changes applicable to 2025 allow new work models, including
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Full-time
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Part-time for one or more employers
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Temporary
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Flexible
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Remote working
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Job sharing
All employees have the same entitlements. However, some of these work models may be pro-rated ( benefits and allowances may be adjusted based on working hours or contract type).
Probationary Period
Before amendments to the labour law came into effect for 2025, employees were allowed a maximum of six-month probationary period. It cannot exceed this or be extended and requires no notice period to terminate the contract from either party.
If an employee finishes the probationary period of six months and continues to work for the company, the probation period will count as part of their service.
In the new UAE labour law, the probationary period for a maximum of 6 months remains the same. In case the employer wants to terminate the contract, they should issue 14 days of prior notice.
If the employee resigns during the probation period with the intention of leaving the UAE, they must provide a 14-day prior notice in writing.
On the other hand, if the employee wants to join or switch to another company within the UAE, they must provide a written prior notice of one month.
The new employer also must pay back the current employer for any hiring costs, like visa fees or work permits—unless both companies agree otherwise.
Non-compete Restrictions
The UAE Labour Law permits employers to include non-compete restrictions in employment contracts with no maximum length. It was generally agreed to be 12 months.
The new UAE labour law to be followed in 2025 states that non-compete clauses can be used and last up to two years.
Non-compete restrictions can go no further than what is required to protect legitimate business interests, which limits the scope of the business in terms of geographical location, type of work, and length.
The law covering non-compete restrictions also sets out the circumstances in which post-termination restrictions can be enforceable. This includes situations where the employer terminates the employment in breach of its legal obligations mandated to the employee under the contract.
Restrictive covenants can be set aside if any of the following takes place:
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The parties come to a written agreement
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The new employer or the employee pays three months of compensation to the old employer. It should also be subject to the old employer providing their consent in writing
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The employee is terminated during their probationary period or
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As it may be stated, it is appropriate according to the labour market needs.
Employee Benefits
Internal Policies
The UAE labour law has been silent on offering any mandatory internal policies. Now, with the new amendments, any employer or organisation with 50+ employees must have grievance and disciplinary sanctions policies in place. Any other policies are at the discretion of the company.
Overtime
Before new changes were made to UAE labour law applicable for 2025, employees could work an additional two hours of overtime per day.
Overtime hours are compensated at an increased rate of pay, at 125% of normal pay during ordinary working hours, 150% of normal pay between 9:00 pm and 4:00 am, and 150% of normal pay on non-work days. While there were certain exemptions to limit overtime, they were very limited.
The new UAE labour law gives employers the right to ask an employee to work overtime, but it must not exceed two hours in one day.
If the nature of the overtime or workload forces an employee to work beyond the normal hours, the employer is entitled to a pay equal to regular working hours’ remuneration plus 25% of that pay. This percentage can go up to 50% if the overtime is between 10:00 pm to 4:00 am. The rule doesn’t apply to employees who work in shift work.
Employees working on their day off are entitled to a substitute rest day. In addition to that, alternatively, the employer should pay equal to normal working hours’ remuneration plus 50% of that pay.
Payment of Salaries
The old labour law made it mandatory for salaries or wages to be paid in dirhams (AED). The latest amendments allow the payment of salaries in other currencies (other than AED), but they should be agreed through an agreement between the employer and the employees.
The payment of salaries is the responsibility of the employer, and the salary should also be clearly stated in the employment contract.
All private sector employers should pay their salaries through the WPS (Wage Protection System). If not, they will be subject to fines and penalties.
The WPS system transfers employee salaries to accounts in approved banks or financial institutions authorised by the Central Bank of the UAE. MoHRE doesn’t process any transactions.
An employee’s salary is due from the first day of the month following the expiry of the period of which the salaries are specified in the contract. If the period is not specified, the employer should pay the employee once a month minimum.
The employer will be considered a default in paying the salary if they fail to do so within the first 15 days after the due date. A short grace period may be agreed upon in the employment contract.
Maternity Leave and Maternity Pay
The previous labour laws in the UAE allowed female employees to complete one year of service and be entitled to maternity leave of 45 days, paid at the employee’s usual rate of pay. The leave can be extended for 100 days of unpaid maternity leave if the employee suffers from any illness related to pregnancy or delivery.
The new UAE labour law in effect for 2025 has increased the maternity leave to 60 days, of which 45 days are at 100% pay and the rest 15 days at 50% or half pay. Now, there are no minimum qualifying service requirements for maternity leave or pay.
Employees are eligible for an additional 45 days of unpaid leave if they suffer from a pregnancy-related illness and cannot resume work. Besides that, the employee can take an extra 30 days of paid leave and 30 unpaid leave if the child has any challenges or disabilities.
The maternity leave and pay laws are also now available to women who suffer from a miscarriage or stillbirth after six months of pregnancy.
Leaves and Holidays in The UAE
The leaves and holidays applicable to employees according to the new UAE labour law for 2025 are as follows:
Annual Leave
Basic annual leave entitlement remains the same:
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Two days per month during the first year of employment
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30 days from the second year of employment onwards
Previously, employees were entitled to carry forward or be paid in lieu for any unused annual leave at the end of the holiday year.
The latest updates for UAE labour law 2025 restrict employees from the right to carry forward unused annual leave to the next year. If the employee wishes to carry forward or receive payment in lieu, it can only be made after a written agreement from the employer. Payment in lieu for unused holidays on termination is at the rate of basic salary only.
Sick Leave (After Probation)
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First 15 days: Full pay
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Next 30 days: Half pay
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Next 45 days: Unpaid
Study Leave
Previously, there were no study leave entitlements. The latest amendments to UAE labour law allow 10 days per year for employees with 2+ years of service.
Parental Leave
UAE labour laws for 2025 allow a five-day paid parental leave, which starts from the day of birth to six months. The UAE was the first Arab country to entitle parental leave to employees in the private sector.
Compassionate Leave
Previously, labour laws in the UAE did not allow for any compassionate leave entitlement. In 2025, employees have the benefit of a 5-day compassionate leave for the death of a spouse and a 3-day leave for the death of a parent, sibling, grandchild, or grandparent.
Hajj Leave (Religious Pilgrimage)
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Up to 30 days unpaid (once during employment)
Umrah Leave (Religious Pilgrimage)
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Not mandated; at employer’s discretion (can be unpaid or deducted from annual leave)
Public Holidays (Paid Days Off)
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New Year (Jan 1)
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Eid Al Fitr (4 days)
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Arafat Day and Eid Al Adha (4 days)
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Islamic New Year
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Prophet Mohammed’s Birthday
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UAE National Day (2 days)
Islamic holidays follow moon sightings and may vary each year.
Termination of Employment
Dismissal With Notice
Before the latest amendments to the UAE labour law, employees could be dismissed by employers for a ‘valid reason.’ Fixed-term employment contracts cannot be terminated prior to the expiration date outside of summary dismissal without compensation being payable.
The law covering employee dismissal for any valid or legitimate reasons remains the same for 2025. The expiration of a fixed-term contract is a valid reason for dismissal. Employees on fixed-term employment contracts can now be dismissed on notice as normal, without the requirement to fulfill additional compensation being payable.
Victimisation, i.e.,. dismissing an employee for filing a complaint against the employer is unlawful.
Dismissal or Termination of Contract Without Notice
The UAE labour law, in effect for 2025, allows both the employer and employees to terminate or dismiss a contract without notice.
The employer can terminate the contract without notice if the employee has:
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Adopted a false identity or submitted forged documentation and certificates.
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Committed an error resulting in a substantial material loss to the employer or deliberately damaged the properties of the employer.
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Divulge any employer sectors that resulted in losses or missed opportunities.
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Been found drunk or under the influence of prohibited drugs during working hours.
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Assaulted the employer, the manager, or any colleagues during work.
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Exploited his position to obtain personal results or gains.
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Joined another company without abiding by the rules related to changing workplaces.
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Violated instructions concerning employee safety and the place of business.
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Failed to perform basic duties and responsibilities specified in the employment contract and continues to do so even after receiving multiple warnings.
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Been absent without a lawful excuse for more than 20 intermittent days or more than seven successive days.
An employee can terminate the work contract without notice if the employer:
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Fails to meet contractual or legal obligations towards the employee.
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Assaults or harasses the worker at the workplace, provided the employee notifies MoHRE within five working days.
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Asks the employee to perform fundamentally different work from what was agreed upon or specified in the employment contract.
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Fails to remove factors that threaten the employee’s health and safety despite being aware and informed of those factors.
Notice Periods
The latest UAE labour law for 2025 still maintains a notice period of 30 days for employees who have completed their probationary period. However, a maximum of 90 days’ notice period has been introduced.
Employee leaving while still being employed under unlimited term contracts requires a minimum notice period of:
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30 days for employees with up to five years of service
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60 days for employees with between 5 and 10 years of service
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90 days for employees with 10 years’ service or more.
Summary Dismissal
Summary dismissal is when an employer immediately terminates an employee’s contract without notice or end-of-service benefits due to serious misconduct.
Article 120 of the Old UAE labour law prescribed specific and limited reasons for which employees could be summarily dismissed. Employees who were summarily dismissed were also not entitled to a notice period of end-of-statutory-benefit.
The well-defined old law for summary dismissal remains the same for 2025 but with two further additions: (1) Abusing position with the aim of obtaining personal gains and profits and (2) Joining another establishment without complying with the controls and procedures in place.
UAE labour law for 2025 has also placed more limitations on summary dismissal, where if the employee fails to carry out basic duties and responsibilities, they may be dismissed only after a written investigation and written warning have been technically issued.
Employees summarily dismissed lose their entitlement to their notice period but now retain their entitlement to an end-of-service gratuity payment.
End of Service Gratuity (ESG)
Under the old UAE labour law, employees with one year of service were entitled to an end-of-service gratuity payment, calculated at the rate of 21 calendar days’ basic pay for every year of service up to five years of service and 30 calendar days’ basic pay for every year of service over five years’ service.
The employee’s basic pay was calculated on the basis of calendar days, and allowed a maximum cap of two years of remuneration.
Employees who were summarily dismissed lost entitlement to ESG, and those who resigned within a period of less than five years of service will face a reduction in their share of ESG.
The latest UAE labour law for 2025 continues the ESG entitlement for employees with over one year of service, calculated on the same basis as before.
Employees summarily dismissed now have the right to retain their entitlement to ESG, and no reductions are applicable when an employee resigns.
Payment of ESG, together with all other termination payments, must be made within 14 days of the termination date.
Potential Liability
Discrimination
Previously there was limited protection against discrimination for employees primarily arising out of wider anti-hate legislation.
Now the labour laws offer comprehensive protection for employees against discrimination on the grounds of race, skin color, sex, religion, national origin, social origin, or disability. Positive discrimination in favour of Emiratis is an exempted category.
The latest labour law also covers a strict equal wage and salary policy for men and women that guarantees both genders should have equal job opportunities. Men and women also need to receive the same pay for their work.
Harassment
The former labour laws in the UAE had little to no anti-harassment provisions for employees. The latest updates for the law express strong protections against sexual harassment, bullying, and any verbal, physical, or psychological violence against employees have been introduced.
Fines
Before recent changes applicable to 2025, the UAE labour law contained a limited right for the UAE courts to issue fines against employers.
New UAE labour law is now revised to enable the UAE courts to levy fines against employers for any legitimate breach of the established laws.
Fines apply as follows:
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AED 20,000-100,000 for providing false information to recruit an expatriate employee
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AED 50,000-200,000 for illegally employing an individual or recruiting an employee without having work to provide and
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AED 5,000-1,000,000 for any violation of the UAE Labour Law.
Fines can be doubled by the court for repetition of violations.
Frequently Asked Questions
How Does The Final Settlement Work?
The final settlement for an employee is specified in the UAE labour law. The calculation involves all the payable dues by the employer to the employee who is quitting due to retirement, resignation, or being fired/terminated.
What is the basic salary in UAE labour law?
The UAE does not have a minimum salary requirement, but it broadly mentions that the salary offered by an employer should be reasonable enough to cover the basic needs of the employees.
How many sick leaves per month in the UAE?
The benefits of sick leave are offered on a full-paid basis for the first 15 days, half-paid for the next 30 days, and unpaid for a period lasting for a total of 45 days. During this period, sick leave in the UAE includes paid and unpaid parts of the leave with a focus on financial issues.
Which is better, the end of the contract or resignation?
Resignation allows an employee to part ways on better terms with the employer, keeping room for future employment opportunities still open and possible. Terminations, especially those that end on a negative note, can impact an employee’s professional image and credibility in a given industry.
How many days is emergency leave in the UAE?
The UAE labour laws or employers do not legally define the duration or period of emergency leave. They commonly grant it for up to 30 days, with the initial 15 days paid at full salary and the subsequent 15 days at half pay. Beyond this period, any additional leave taken is unpaid.
Is the probation period mandatory in the UAE?
No probation is not mandatory in the UAE. Most employers prefer to use a probationary period to assess the capacity and the suitability of a potential candidate for a given job role and to adapt to the working environment. The United Arab Emirates Labour Law 2023 sets a maximum probation period of six months for all employees.
Legal age of work in the UAE?
Children below the age of 15 cannot work in the UAE. Children between the ages of 15 and 18 years can work- but they are subject to many conditional rules and should have a juvenile work permit to work.
Why did the new UAE labour law come into place?
The new Labour Law came into force in February 2022. The government hopes the new amendments made to the law will help to enhance employment rights and boost the region’s competitiveness in the labour market. The primary purpose of the new UAE labour law is to attract top talent to its private sector.
