UAE Labour Law: Complete Guide to Employee Rights, Leave, Working Hours & Termination (2026).

The UAE's labour market is governed by Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (the "Labour Law"), which came into force on 2 February 2022, replacing the previous Federal Law No. 8 of 1980. This comprehensive reform — supplemented by Cabinet Decision No. 1 of 2022 (the Implementing Regulations) and subsequent ministerial decisions — introduced fundamental changes to employment contracts, working arrangements, leave entitlements, termination procedures, and employee protections that affect every private-sector employer and employee in the UAE.

This guide, prepared by GSDA Legal Consultants' employment law team, provides a detailed analysis of the current legal framework as applied in practice, based on our experience advising employers ranging from multinational corporations to SMEs, and employees across all sectors and seniority levels.

Employment Contracts Under the New Law

The 2021 Labour Law eliminated the distinction between "limited" (fixed-term) and "unlimited" (open-ended) contracts that existed under the previous law. As of February 2022, all employment contracts in the UAE must be fixed-term, with a maximum duration of three years, renewable for equal or shorter periods. Employers were given a one-year transition period (until 1 February 2023) to convert all existing unlimited contracts to fixed-term contracts.

Every employment contract must be in writing, in Arabic (with a translation in the employee's language if different), and must specify the following minimum terms: the employer and employee details, the job title and description, the date of commencement, the contract duration, the workplace, the working hours, the rest days, the salary (basic salary plus allowances), the annual leave entitlement, the notice period for termination, and the end-of-service gratuity.

The law also introduced several new employment models: full-time employment (the standard model), part-time employment (with proportional entitlements), temporary or project-based employment, and flexible employment. These new models give employers and employees greater flexibility to structure working relationships, but each model carries specific requirements regarding hours, benefits, and termination that must be clearly stated in the contract.

Probation Period

The maximum probation period under the Labour Law is six months. During probation, the employer may terminate the employee by providing 14 days' written notice. If the employee wishes to resign during probation to leave the UAE, they must provide 14 days' notice. If the employee wishes to resign during probation to join another UAE employer, they must provide one month's notice, and the new employer is required to compensate the current employer for any recruitment costs, subject to a cap of two months' salary.

An employer may not impose a second probation period on the same employee for the same role. If the employee is re-hired after a break, a new probation period may apply only if the role has substantially changed.

Annual Leave Entitlements

The Labour Law establishes clear annual leave entitlements based on length of service. Employees who have completed more than six months but less than one year of service are entitled to two days of leave per month (pro-rated). Employees who have completed one year or more of service are entitled to 30 calendar days of paid annual leave per year.

During annual leave, the employee is entitled to their full salary — including basic salary and all fixed allowances — calculated based on the salary at the time the leave is taken. Employers must ensure that employees take their annual leave within the year it accrues. The law permits the carry-forward of leave days only with the agreement of both parties, and any accrued leave not taken upon termination must be paid out based on the basic salary.

Public holidays are separate from annual leave. The UAE mandates approximately 14 days of paid public holidays per year, including Eid Al Fitr (approximately 3 days), Eid Al Adha (approximately 4 days), the Islamic New Year (1 day), the Prophet's Birthday (1 day), Commemoration Day (1 day), UAE National Day (2 days), and New Year's Day (1 day). The exact dates are announced annually by the UAE Government. If an employee is required to work on a public holiday, they are entitled to a compensatory rest day plus a 50% salary supplement for the hours worked, or an additional 150% of the daily wage.

Maternity Leave, Paternity Leave, and Parental Leave

The 2021 Labour Law significantly enhanced maternity protections. Female employees are entitled to 60 calendar days of maternity leave: 45 days on full pay, followed by 15 days on half pay. This leave may commence up to 30 days before the expected delivery date (with medical certification). After exhausting the maternity leave, the employee may take up to an additional 45 days of unpaid leave if she is ill due to a condition caused by pregnancy or childbirth, supported by a medical certificate.

In addition, for six months following the date of delivery, the female employee is entitled to one or two daily nursing breaks totalling one hour per day. These breaks are paid and count as working hours.

The Labour Law also introduced paternity leave for the first time: male employees are entitled to 5 working days of paid paternity leave, to be taken within six months of the child's birth. Both parents are additionally entitled to 5 working days of paid parental leave per year, per parent, to be taken within the first six months of the child's birth.

Sick Leave

Employees who have completed their probation period are entitled to sick leave as follows: the first 15 days at full pay, the next 15 days at half pay, and any additional period (up to a total of 90 days in a 12-month period) without pay. Sick leave must be supported by a medical certificate from a UAE-licensed medical practitioner.

The employer may terminate an employee who exhausts 90 consecutive or intermittent days of sick leave in a 12-month period, provided that termination procedures are followed. However, the employer may not terminate an employee during a period of sick leave. If the employee's illness or injury was caused by work-related conditions, the employer bears all treatment costs and the employee is entitled to full pay during the sick leave period regardless of duration.

Working Hours and Overtime

The standard maximum working hours under the UAE Labour Law are 8 hours per day or 48 hours per week. For certain sectors — including retail, hospitality, and security — the daily maximum may be extended to 9 hours by ministerial decision. During the holy month of Ramadan, working hours are reduced by 2 hours per day for all employees, regardless of religion.

Overtime is permitted up to a maximum of 2 hours per day, subject to the employee's consent. Overtime pay is calculated at the basic hourly rate plus a 25% supplement for overtime worked during normal hours, and the basic hourly rate plus a 50% supplement for overtime worked between 10:00 PM and 4:00 AM. Employees who work on a rest day are entitled to either a compensatory rest day or payment of 150% of their basic daily wage for the hours worked.

The law also mandates a minimum daily rest period of 12 consecutive hours between shifts, and employees must receive at least one rest day per week (typically Friday, but the employer may designate any day by agreement).

Resignation and Notice Periods

Either party may terminate a fixed-term employment contract by providing written notice in accordance with the notice period specified in the contract, which may not be less than 30 days and may not exceed 90 days. The notice period is the same for both employer and employee, and the parties must continue to perform their contractual obligations during the notice period.

If an employee resigns without serving the required notice period, they may be required to compensate the employer an amount equal to their salary for the notice period or the unserved portion thereof (commonly called "notice period compensation" or "payment in lieu of notice"). Conversely, if an employer terminates the employee without providing the required notice, the employer must pay the employee the equivalent salary for the notice period.

The Labour Law also provides for immediate termination without notice in certain circumstances. An employer may terminate an employee without notice if the employee assumes a false identity, commits a serious error causing substantial financial loss to the employer, violates workplace safety instructions, fails to perform basic duties after a written warning, discloses confidential information, is found intoxicated or under the influence of drugs during working hours, assaults the employer or a colleague, or is absent without valid reason for more than 20 intermittent days or 7 consecutive days in a year.

An employee may resign without notice if the employer fails to fulfil contractual or legal obligations, the employer or their representative assaults or harasses the employee, working conditions pose a serious threat to the employee's safety or health (provided the employer was aware and failed to act), or the employer assigns the employee work substantially different from the agreed-upon role without the employee's written consent.

Final Settlement and End-of-Service Gratuity

Upon termination of employment — whether by resignation, dismissal, or contract expiry — the employer must pay the employee's final settlement within 14 days of the last working day. The final settlement includes the basic salary and allowances up to the last working day, end-of-service gratuity (detailed below), payment for any accrued but untaken annual leave (calculated on basic salary), any approved overtime or other dues, and repatriation costs (the employer must provide a one-way flight to the employee's home country or last place of residence, unless the employee has already secured new employment in the UAE).

The end-of-service gratuity is calculated based on the employee's basic salary (excluding allowances, commissions, and bonuses) as follows: 21 calendar days' basic salary for each year of the first five years of service, and 30 calendar days' basic salary for each additional year of service beyond five years. The total gratuity may not exceed two years' total salary. For periods of less than one year, the gratuity is calculated proportionally, provided the employee has completed at least one year of continuous service.

The 2021 Labour Law eliminated the previous distinction between the gratuity entitlement of employees who resign and those who are terminated. Under the previous law, employees who resigned received a reduced gratuity based on their length of service. Under the current law, the full gratuity is payable regardless of the reason for termination, except where the employee is terminated for gross misconduct under Article 44 of the Labour Law, in which case the employer may withhold the gratuity.

Non-Compete Clauses and Post-Employment Restrictions

The Labour Law recognises the employer's right to impose non-compete restrictions on employees who have access to confidential information, trade secrets, or client relationships. However, any non-compete clause must be in writing, limited in duration (maximum two years from the date of termination), limited in geographical scope, and limited to the same type of work performed during the employment.

The employer bears the burden of proving that the non-compete clause is necessary to protect legitimate business interests, and UAE courts have consistently struck down non-compete clauses that are unreasonably broad in scope, duration, or geographical application.

Workplace Discrimination and Harassment Protections

The 2021 Labour Law introduced explicit prohibitions on workplace discrimination and harassment. Article 4 prohibits discrimination on the basis of race, colour, sex, religion, national origin, social origin, or disability. Article 14 prohibits sexual harassment, bullying, and any verbal, physical, or psychological violence by the employer or colleagues. Violations of these provisions are subject to administrative fines and may constitute criminal offences under other UAE legislation.

GSDA Legal Consultants' employment law practice advises employers on HR policy development, employment contract drafting, workforce restructuring, and compliance with MOHRE regulations. We also represent employees in wrongful termination claims, gratuity disputes, and labour complaints before MOHRE and the UAE courts. Contact our Dubai office for a confidential consultation.