Overview
Creating a UAE employee contract is not just a formality—it’s a legal requirement that defines the working relationship between employers and employees. Whether you’re hiring locally or overseas talent, the structure, clarity, and legality of your employment contract in the UAE can make or break your business reputation. Unfortunately, many employers overlook important clauses or fail to comply with UAE Labour Law, resulting in disputes, penalties, or labor complaints.
In this blog, we’ll cover the top 7 mistakes to avoid in a UAE employee contract and guide you in drafting a compliant, transparent, and risk-free agreement. uae employee contract
1. Missing Essential Legal Clauses
A valid UAE employee contract must include essential information such as job title, work location, salary, working hours, leave entitlements, and contract duration. Leaving out any of these may render the contract incomplete or legally invalid.
| Mandatory Clause | Required? |
|---|---|
| Job Title & Responsibilities | ✅ Yes |
| Work Hours | ✅ Yes |
| Basic & Total Salary | ✅ Yes |
| Leave Entitlement | ✅ Yes |
| Contract Type & Duration | ✅ Yes |
Tip: Use MOHRE’s standard contract template as your starting point.
2. Unclear Probation Period Terms
According to UAE labour law, the maximum probation period is six months. The contract must clearly state the probation period, notice requirements, and whether benefits apply.
Common Errors:
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Extending probation beyond 6 months
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Not specifying notice periods for termination during probation
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Failing to document evaluation methods
3. Ignoring Language Requirements
The UAE mandates that employment contracts be written in Arabic as the official language. If a bilingual contract is used, the Arabic version takes precedence in legal matters.
Mistake: Using only English or another language, which can lead to misinterpretation in court.
4. Not Defining Allowances & Benefits Clearly
Some employers include housing, transportation, or other allowances in the salary without separating them. This can cause disputes during end-of-service calculations, as gratuity is based on basic salary only.
| Salary Breakdown Example | Amount (AED) |
|---|---|
| Basic Salary | 4,000 |
| Housing Allowance | 2,000 |
| Transport Allowance | 1,000 |
| Total Salary | 7,000 |
Always break down the salary structure in the UAE employee contract to avoid confusion.
5. Ambiguous Termination Clauses
One of the most sensitive areas in a UAE employee contract is the termination policy. Employers must comply with notice periods (30 days minimum) and list valid reasons for contract termination.
Don’t:
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Use vague terms like “terminated for cause” without explanation
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Skip the end-of-service calculation clause
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Forget to mention notice period obligations
6. Failure to Update Contract with Law Changes
The UAE updated its labor laws in 2022 with Federal Decree Law No. 33. Many older contracts remain non-compliant due to outdated terms, such as unlimited contracts or expired clauses.
Solution: Audit and update existing contracts regularly to match UAE labour law reforms.
7. Not Including Confidentiality or Non-Compete Clauses (When Applicable)
Although not always mandatory, omitting confidentiality clauses or non-compete agreements can lead to intellectual property loss or direct competition from former employees.
Best Practice: Include these clauses if your business deals with sensitive information, client data, or unique services.
Conclusion
Avoiding these 7 common mistakes when drafting a UAE employee contract not only ensures legal compliance but also builds a trustworthy employer-employee relationship. A well-structured contract protects both parties, minimizes risk, and supports smooth operations. Whether you’re onboarding your first employee or expanding your team, make sure every contract reflects the latest UAE employment laws, is clear in structure, and is aligned with best practices.
Pro Tip: Use digital HR solutions like MaxERP to automate and standardize compliant employee contracts.
FAQs
Q1: Is a written UAE employee contract mandatory?
Yes, under UAE labour law, all employment relationships must be documented with a valid contract.
Q2: Can a probation period exceed six months?
No, the maximum probation period allowed by law is six months.
Q3: What should be included in a UAE employee contract?
Job title, responsibilities, salary breakdown, work location, probation, leave, and termination terms.
Q4: Are verbal contracts legal in the UAE?
No. Only written contracts registered with MOHRE are considered valid.
Q5: How often should employee contracts be reviewed or updated?
At least annually or whenever there are legal or organizational changes.
