UAE Labour Law (Federal Decree-Law No. 33 of 2021) governs all employment relationships in the UAE private sector. This guide covers working hours, leave entitlements, termination rules, gratuity, and how MaxERP helps employers stay fully compliant.

What Is UAE Labour Law?

UAE Labour Law refers to Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, which replaced the previous Labour Law No. 8 of 1980. The new law came into effect on 2 February 2022 and introduced significant changes to employment contracts, working hours, leave types, and termination procedures.

The law applies to all private sector employers and employees in the UAE mainland. Free zone employees are generally covered by the same law unless their specific free zone has separate employment regulations (such as DIFC and ADGM, which have their own employment frameworks).

Key Changes Under the New UAE Labour Law 2022

Employers must be aware of these major updates from the 2022 reform:

• All employment contracts must be fixed-term (maximum 3 years, renewable)
• Unlimited contracts were abolished — existing unlimited contracts had to be converted
• New flexible work models introduced: part-time, temporary, and freelance
• Probation period capped at 6 months; employee can resign with 30 days notice during probation
• Parental leave introduced: 5 days for fathers, 45 days for mothers
• Bereavement leave: 5 days for first-degree relatives, 3 days for extended family
• Anti-discrimination and harassment provisions significantly strengthened

Employment Contracts Under UAE Labour Law

All private sector employment in the UAE must be based on a written fixed-term contract registered with MOHRE. Key contract requirements include:

• Must be in Arabic (the legally binding version) with an English translation
• Must state job title, salary, working hours, and duration
• Maximum contract duration is 3 years (renewable upon mutual agreement)
• Contract terms cannot be less favourable than UAE Labour Law minimums

MaxERP includes a digital contract management module that generates MOHRE-compliant employment contracts and tracks renewal dates automatically.

Working Hours Under UAE Labour Law

Standard working hours in the UAE are:

• 8 hours per day or 48 hours per week for most employees
• Reduced to 6 hours per day during Ramadan for Muslim employees
• Overtime is limited to 2 additional hours per day (maximum 10 hours total)
• Employees must receive a 30-minute rest break after 5 consecutive hours

Leave Entitlements Under UAE Labour Law

Annual Leave

Employees who complete one year of service are entitled to 30 calendar days of paid annual leave. Employees with six months to one year of service receive two days per month of annual leave on a pro-rata basis.

Sick Leave

After completing probation, employees are entitled to 90 days of sick leave per year: the first 15 days are fully paid, the next 30 days are at 50% pay, and the remaining 45 days are unpaid.

Maternity Leave

Female employees are entitled to 45 days of fully paid maternity leave, plus an additional 15 days at 50% pay if needed for medical reasons. Mothers of newborns with health complications or disabilities receive an additional 30 days unpaid leave.

Other Leave Types

• Parental Leave (Paternity): 5 paid working days within 6 months of the child’s birth
• Bereavement Leave: 5 days for spouse or child; 3 days for parents, siblings, or grandparents
• Study Leave: 10 days per year for employees enrolled in UAE-accredited institutions
• Hajj Leave: 30 days unpaid leave once during employment for Muslim employees

Termination Rules Under UAE Labour Law

The new UAE Labour Law distinguishes between lawful and unlawful termination:

Notice Period

The minimum notice period for both employer and employee is 30 days, and maximum is 90 days. The notice period must be specified in the employment contract. During the notice period, the employee has the right to one paid day per week to search for a new job.

Arbitrary Dismissal

If an employer terminates an employee without a valid reason (arbitrary dismissal), the employee is entitled to compensation equivalent to three months salary, in addition to their full notice period pay and gratuity.

Reasons for Termination Without Notice

An employer may terminate an employee immediately without notice only under specific circumstances defined in UAE Labour Law Article 44, including fraud, assault, breach of confidentiality, or absence without reason for more than 20 days in a year.

End-of-Service Gratuity Under UAE Labour Law

Every employee who completes one year of service is entitled to end-of-service gratuity, calculated as follows:

• First 1 to 5 years: 21 working days of basic salary per year of service
• Beyond 5 years: 30 working days of basic salary per additional year
• Maximum total gratuity: capped at 2 years total basic salary
• Gratuity is calculated on basic salary only — not total package

Employees who resign before completing 5 years receive a reduced gratuity. Those who are terminated unfairly receive full gratuity plus additional compensation.

Non-Competition Clauses

UAE Labour Law allows non-competition clauses in employment contracts under the following conditions: the employee is 21 or older, the restriction is necessary to protect legitimate business interests, the clause does not exceed 2 years in duration, and is limited to a specific geographic area and activity type.

How MaxERP Helps UAE Employers Stay Labour Law Compliant

Complying with UAE Labour Law manually is complex, especially as the law evolves. MaxERP provides a complete compliance management system for UAE employers:

• Automated leave calculation engine aligned with UAE Labour Law
• Gratuity calculator with accurate pro-rata and resignation scenarios
• Contract management with renewal alerts and MOHRE document templates
• Attendance tracking that enforces working hour limits and flags overtime
• Payroll processing with WPS compliance and audit trails
• Employee records management with document expiry notifications

MaxERP acts as your built-in UAE Labour Law compliance engine — keeping your HR processes accurate, documented, and audit-ready at all times.

 

Frequently Asked Questions (FAQs) — UAE Labour Law

• What is the new UAE Labour Law?

The new UAE Labour Law is Federal Decree-Law No. 33 of 2021, effective from 2 February 2022. It replaced Labour Law No. 8 of 1980 and introduced fixed-term contracts, new leave types, flexible work models, and stronger employee protections.

• How many days annual leave are employees entitled to in UAE?

Under UAE Labour Law, employees who complete one year of service are entitled to 30 calendar days of paid annual leave. Employees with between 6 and 12 months of service receive two days per month on a pro-rata basis.

• What is the gratuity calculation in UAE?

Gratuity is 21 working days of basic salary per year for the first 5 years, and 30 working days per year thereafter. It is calculated on basic salary only, and the total is capped at 2 years of basic salary.

• Can an employer terminate an employee without notice in UAE?

Only under specific circumstances defined in Article 44 of UAE Labour Law — such as proven fraud, assault, serious confidentiality breach, or extended unexplained absence. All other terminations require the contractual notice period.

• Does UAE Labour Law apply to free zone employees?

Yes, for most free zones. However, DIFC and ADGM have their own employment laws. All other free zone employees are covered by UAE Federal Decree-Law No. 33 of 2021.

• What is the probation period under UAE Labour Law?

The maximum probation period is 6 months. Employees can resign during probation with 30 days notice if they have a new UAE job, or 14 days notice if leaving the UAE entirely.

 

Stay fully compliant with UAE Labour Law with MaxERP. Automate leave, payroll, contracts, and gratuity — all in one platform. Book your free demo today.