UAE Labour Law 2023: The Ultimate Guide

The relationship between an employer and employee is one of the most important. It is vital to support the relationship with rules and regulations to ensure the safety of all parties. Countries tend to establish labour laws to regulate this relationship. In the United Arab Emirates, the law is called the UAE Labour Law.

What is UAE Labour Law? Labour law refers to rules and regulations governing the relationship between an employer and the employee. The law is established in Federal Law No. 8 On the Organisation of Labour Relations in the UAE. Several Decrees and Resolutions accompany the law. 

The law sets out rules for the private sector regarding how wages are paid, what kind of employment contracts are allowed and who helps with disputes. 

Employment Contracts

Employment contracts are contracts between the employer and the employee. These are mandatory to establish the legal boundaries for the work. The details of work contracts depend on whether you’re employed in the private or the public sector. 

Private-sector employment contracts

An employment contract can be either full-time or part-time. 

The latest Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector, the UAE Labour Law, established fixed-term contracts as the norm in the country. The new law came into effect on 2 February 2022. 

The fixed-term contract means an employee is hired on a fixed term that may be extended or renewed for a similar or shorter period. Suppose the contract is not renewed or extended upon expiry, but the parties continue to perform the obligations. In that case, the contract is automatically considered renewed under the same terms. 

Current unlimited employment contracts need to be converted into fixed-term employment contracts. 

Types of work arrangements

You can have different types of work arrangements. The available models are:

• Full-time – you work for a single employer only on a full-time basis.
• Part-time – you work for one or more employers for specific hours or days.
• Temporary work – you work on a particular assignment, with the contract ending upon completion.
• Flexible work – your working hours or days can change depending on the employer’s needs.
• Remote work – all or part of the work is performed outside the workplace.
• Job sharing – the tasks and duties are shared and divided amongst employees as agreed. The rules of part-time work apply to these contracts. 

Probation period in the private sector

The probation period in the UAE can’t exceed six months or be extended. When the employee finishes the probation and continues working for the company, the probation period will amount as part of their service. 

If the employer wants to terminate the contract during probation, they must give 14 days prior notice. Suppose the employee resigns during the probation period with the intention of leaving the UAE. In that case, they must provide a 14-day prior notice in writing.

Suppose the employee wants to change jobs to join another UAE company. In that case, they must provide a written notice of a minimum of one month. The new employer must also compensate the current employee’s recruitment costs unless otherwise agreed. 

Public sector employment contracts

Contracts for the public sector are available as follows:

• Full-time contracts – employees work full working days or hours. 
• Part-time contracts – employee works limited hours of the total working days or hours.
• Temporary contracts – employee works full working days or hours through the contract for three months, renewable at similar periods.
• Special contracts – a minister appoints the employee for a high position in the ministry or entity on a contract of two years, which can be renewed for another two years. 

Professional levels of jobs

The Ministry of Human Resources and Emiratisation (MoHRE) defines nine professional levels of jobs. These are similar to those issued by the International Labour Organisation (ILO). The nine levels are:

Level 1: Legislators, managers, and business executives

Level 2: Professionals in scientific, technical and human fields

Level 3: Technicians in the scientific, technical and humanitarian fields

Level 4: Writing professionals

Level 5: Service and sales occupations

Level 6: Skilled workers in agriculture, fisheries and animal husbandry

Level 7: Craftsmen in construction, mining, and other craftsmen

Level 8: Operators and assemblers of machinery and equipment

Level 9: Simple professions

Your labour is classed as skilled work if it fulfils all of the following conditions:

• You must be working at a professional level (one among the first five levels mentioned above).
• You’ve obtained a certificate higher than the secondary or equivalent certificate.
• The competent authorities attest to the certificate.
• The monthly salary you receive is not less than AED 4,000. 

Working hours

Working hours depend on whether you work in the public or the private sector.

Private sector working hours

The working hours in the private sector are:

• 8 hours per day or
• 48 hours per week. 

During the holy month of Ramadan, these hours are reduced by 2. 

The daily working hours can increase or decrease for certain economic sectors or categories of workers. The Executive Regulations of the Labour Law define these. 

You should note that the time spent commuting to the workplace is not included in the working hours. Again, some exceptions apply. 

Every employee is also entitled to have one or more breaks when they work for five consecutive hours. The breaks must be less than an hour and aren’t calculated within the working hours. 

Overtime

The employer has the right to ask an employee to work overtime. Overtime must not exceed two hours in one day. 

Suppose the nature of the work forces the employee to work beyond the normal hours. In that case, they are entitled to a pay equal to regular working hours’ remuneration plus 25% of that pay. This can increase to 50% if the overtime occurs between 10 pm and 4 am. However, 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. Alternatively, the employer must pay equal to normal working hours’ remuneration plus 50% of that pay.

Public sector working hours

The seven emirates have slight differences in working hours. 

If you work in a federal government entity, then your working hours are:

• A four-and-a-half-day working week
• Eight hours from 7.30 am to 3.30 pm from Monday to Thursday
• From 7.30 am to 12 pm on Fridays
• Saturdays and Sundays are the official weekend.

Local government entities in Abu Dhabi, Dubai, Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah Governments use a similar work week. The Government of Sharjah employees work four days a week, from Monday to Thursday. The official weekend in Sharjah is Friday, Saturday and Sunday. 

Leaves and holidays

What about leaves and holidays in the UAE?

Employees working in the private sector are entitled to:

Annual leave

Available after employees have completed six months of service. You should receive 30 days of fully paid annual leave if you’ve completed one year of service and two days per month if you’ve completed six months but not one year.

Sick leave

Available for more than 90 days a year and after the end of the probationary period. The sick leave can be continuous or intermittent. The salary is payable as full pay for the first 15 days, half pay for the next 30 days, and no salary will be paid for the rest 45 days. Employees also need to notify their employer within a maximum of three days. They must also submit a medical report issued by an authorised medical entity. 

Study leave

Employees who have worked for at least two years with an employer are entitled to a ten-day study leave per year to sit examinations. The employee must study for the leave in one of the UAE’s certified educational institutions. 

Maternity leave

A female worker is entitled to 60 days maternity leave, of which 45 days should be fully paid and 15 days half-paid leave. The employee can also take an additional 45 days off without pay if she has an illness due to pregnancy or childbirth and cannot resume work. 

Parental leave

Private sector employees are entitled to a five working day parental leave. The parental leave starts from the day of the birth to six months. The parental leave is a paid leave. The UAE was the first Arab country to grant parental leave to employees in the private sector!

Compassionate leave

Employees can take a paid bereavement leave for five days in the case of the death of a spouse and three days in case of the death of a parent, child, sibling, grandchild or grandparent. 

Leave to complete Hajj

Employees can get special leave to perform Hajj under the provision that the leave is without pay and doesn’t exceed 30 days. The leave can also be granted just once during employment with the company. 

Umrah leave

The UAE Labour Law doesn’t provide conditions that entitle employees to Umrah leave. It is up to the employer to consent and deduct from the employee’s annual leave. Alternatively, it could be allowed as unpaid leave. 

Public holidays

The public and private sectors must give employees a day off during public holidays. The public holidays that warrant a day off include:

• Gregorian New Year on 1 January
• Eid Al Fitr (4 days)
• Arafat Day and Eid Al Adah (4 days)
• Hijra New Year (Islamic New Year)
• Prophet Mohammed’s birthday
• National Day (two days)

The date of these holidays can change. For example, Islamic holidays are determined according to moon sightings. 

Wages

Payment of wages is the responsibility of the employer. The salary should also be clearly defined in the employment contract. 

All private sector employers must pay their employees’ salaries through the Wages Protection System. Failure to do so will result in fines and penalties.

The WPS system transfers employee salaries to accounts in banks or financial institutions authorised by the Central Bank of the UAE. MoHRE doesn’t process any transactions. The salary payments can be:

• In Emirati Dirham.
• Any other currency agreed upon by both parties in the employment contract.

Employees wages are due from the first day of the month following the expiry of the period for which the wages are specified in the contract. 

If this period isn’t specified, the employee must be paid once a month, at minimum. 

The employer defaults on paying the salary if they do not do so within the first 15 days after the due date. A shorter period may be agreed upon in the employment contract.

Minimum wages

The UAE Labour Law doesn’t currently define a minimum salary. However, the law mentions that salaries should be enough to cover the employee’s basic needs. 

Unpaid or delayed salaries

If you have any complaints or concerns regarding unpaid or delayed salaries, you can contact MoHRE. You can register a salary complaint and wait for the authorities to help deal with the issue. 

Gratuity 

Employees who have spent one year or more in continuous service are entitled to gratuity upon the termination of the contract. The gratuity is calculated as follows:

• Full gratuity pay is based on 21 days’ salary for each year of work when the employee has served for more than one year but less than five.
• Full gratuity pay of 30 days’ salary for each year worked following the first five years if the employee has served more than five years.

Please note that the total gratuity shouldn’t exceed two years’ salary. 

For other types of employment contracts, the gratuity is calculated differently. The calculations are based on the following:

• The number of working hours per year divided by the number of working hours in a full-time contract multiplied by 100, equal to the percentage on which the benefits are calculated. The percentage will then be multiplied by the value of the end-of-service benefit due for the full-time contract. 

Employee benefits

There are certain employee benefits that employers must provide by law. 

Health insurance

The law states that employers must offer their employees a minimum level of healthcare coverage. The health insurance must be covered without deducting the premium from their salary or reducing the compensation to compensate for these premiums. 

Please note that this doesn’t require the employer to cover health insurance for the employee’s dependents. However, every person staying in the country must have adequate health insurance. 

Insurance system for workers

The UAE has an insurance policy system in place for private-sector workers. The insurance policy is called Taa-meen, and it’s an alternative option for employers keeping a bank guarantee of AED 3,000 when recruiting a new employee. 

According to Ministerial Resolution No. 318 of 2022 Concerning Bank Guarantees and Employees Protection Insurance Scheme, employers can either:

• Procure a bank guarantee issued from a bank operating in the UAE. The bank guarantee must be no less than AED 3,000 for each worker. The guarantee must be valid for one year from the issue date and renewed automatically. 
• Buy an insurance policy for the worker.

Unemployment Insurance Scheme

There is also an unemployment insurance scheme for Emiratis and residents working in the federal and private sectors. The scheme provides financial support if you lose a job due to termination by the employer. 

End-of-service benefits in the private sector

UAE nationals under full-time contracts are eligible for pensions and end-of-service benefits. 

Employers must register entitled employees to the General Pension and Social Security Authority pension schemes within 30 days of the employee joining the company. 

Foreign workers in the private sector are entitled to the following:

• A gratuity for the served fraction of a year provided the employee has completed one year of continuous service.
• The gratuity is calculated based on the last wage or the basic salary. 
• Money owned by the employer may be deducted from the worker’s gratuity.

These end-of-service entitlements should be paid within 14 days from the contract’s end date.

Workplace health and safety

Clause 13 of the UAE Labour Law states that employers must provide employees with a safe and appropriate work environment. The law states that employers and employees are obliged to keep the work environment safe. 

In addition, construction and industrial workers aren’t permitted to work in the summer in certain heat. Employees aren’t allowed to work during the hottest hours of the day during the summer months. 

Any injuries related to work should be reported to MoHRE. 

Non-compete restrictions

The UAE Labour Law permits employers to include non-compete restrictions in employment contracts. The restrictions must be limited, however. They need to be used to the extent necessary to:

• Protect the company’s legitimate interests
• Be defined in respect of time, place and the nature of work.

The non-compete restriction cannot exceed two years from the date of the expiration of the employment contract. 

Gender equality and discrimination

The labour law also has rules to prevent discrimination in the workplace. 

There is a Law on Equal Wages and Salaries 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. The law on equal wages was established in 2018. 

Disciplinary rules

Employers are free to set disciplinary penalties in the private sector. These can range from written notice to warning employees of temporary suspension and termination. 

The disciplinary sanction should take into account the severity of the violation. The sanctions should also be clarified to the employees. Sanctions can only be imposed after an investigation, and the employer has been heard. 

Termination of employment

Employers and employees have a right to terminate an employment contract. They can do so by serving a notice period and complying with other legal consequences. 

An employment contract may be terminated in the following situations outlined in Article 42 of the UAE Labour Law:

• The employment contract’s term expires and isn’t renewed or extended.
• The employer and employee agree to end the contract in writing.
• Either party wishes to end and notifies the other party of the agreed-upon notice period. 
• The employer’s death can end the contract. 
• The contract can end if the employee dies or cannot work based on a medical certificate for sick leave.
• The worker is facing a final court judgment of a freedom-restriction penalty for a period of not less than three months.
• The establishment closes permanently by UAE legislation.
• The employer becomes bankrupt or involved or faces economic or exceptional reasons preventing the continuation of work.
• The employee fails to fulfill the conditions to renew the work permit outside the employer’s control.

Notice period of termination

The notice period to terminate the contract for legitimate reasons requires the following:

• A written notice
• The terminating party serves a notice of 30 days to 90 days. 

Termination of contract without notice

Both employees and employers can terminate an employment contract for very specific reasons. 

For the employer to terminate the contract without notice, they can do so if the employee:

• Has adopted a false identity or submitted forged documents and certificates.
• Has committed an error causing substantial material loss to the employer or deliberately damaged the properties of the employer.
• Has violated instructions concerning employee safety and the place of business.
• Has failed to perform basic duties determined in the employment contract and continued to do so even after receiving warnings.
• Has divulged any employer sectors that resulted in losses or missed opportunities.
• Has been found drunk or under the influence of prohibited drugs during working hours.
• Has assaulted the employer, the manager or any colleagues during work.
• Has been absent without a lawful excuse for more than 20 intermitted days or more than seven successive days.
• Has exploited his positional to obtain personal results or gains.
• Has joined another company without abiding by the rules related to changing workplaces.

An employee can terminate the work contract if the employer:

• Fails to meet contractual or legal obligations towards the employee.
• Assaults or harasses the worker at the workplace, provided the employee notifies MoHRE within five working days. 
• Asks the employee to perform fundamentally different work from what was agreed upon in the employment contract. 
• Fails to remove factors that threaten the employee’s health and safety despite being aware of those factors.

Arbitrary dismissal

If you believe the employer has fired you without a valid reason, you can complain to the Ministry of Human Resources and Emiratisation. 

Work permits and visas

There are 12 types of work permits available if you want to work in the UAE. The different types of work permits are:

• A permit to recruit someone from outside the UAE.
• A permit to transfer a foreign employee from one establishment to another.
• A permit for a resident on a family sponsorship.
• A temporary permit to hire an employee to complete a job within a specified timeframe.
• A one-mission permit to recruit an employee from abroad to complete a temporary or specific job during a pre-established period.
• A part-time permit to recruit a worker under the part-time contract, which means the employee’s working hours or days are less than the full-time contract.
• A juvenile permit to recruit an employee between 15 and 18 years.
• A student training and employment permit to employ a 15-year-old student already living in the UAE.
• A UAE/GCC national permit to employ a UAE or GCC national.
• A golden visa holder is permitted to hire a worker with the UAE’s Golden Residence visa. 
• A national trainee permit to train UAE nationals.
• A freelance permit is issued to self-sponsored UAE foreigners who provide services or perform tasks for individuals or companies. 

You or your employee must ensure you have a valid work permit before you start working. The employer must have:

• A valid trade license and
• The authorised signatory of the company must file the application.

You can find more information about work permits through the government portal. 

The cost of work permits ranges between AED 250 and AED 3,450. The cost depends on the company’s classification, reflecting the company’s compliance with the UAE Labour Law, the Wages Protection System and the other relevant MoHRE resolutions and directives. 

Canceling a work permit

Employers can cancel a work permit if the work contract ends. The employer must acknowledge that it has paid the worker everything they are entitled to. The permit cancellation form should also include the employee’s signature. 

The UAE Labour Law states that working without a valid work permit is illegal. 

Emiratisation

The UAE Government has recently begun a push to include more Emiratis in the workforce. The Government runs a training program called the NAFIS – the Emirati Talent Competitiveness Programme. 

The programme aims to have 10% of the UAE private sector jobs in the hands of Emiratis by 2025. To achieve this, the programme will spend money to train and employ young and experienced Emiratis. 

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