UAE labour law has undergone significant reform since the implementation of the new Labour Law (Federal Decree-Law No. 33 of 2021) and its amendments. The new law introduced fixed-term contracts for all employees, flexible work models, enhanced maternity leave, non-compete provisions, and stronger protections against arbitrary dismissal. Employers who have not updated their employment contracts and HR policies since 2022 are likely operating outside the current legal framework.
Employment Contracts: What the New Law Requires
Under the new UAE Labour Law, all employment contracts must be on a fixed-term basis with a maximum initial term of three years, renewable. Open-ended contracts are no longer valid for new hires. Existing open-ended contracts had a grace period for conversion. Contracts must be in Arabic or bilingual, specify the job title, remuneration, working hours, leave entitlements, and notice period. MOHRE has standard contract templates available on the Tasheel system which must be used for work permit applications.
Leave Entitlements
Employees are entitled to 30 days of annual leave per year after completing one year of service (two days per month for the first year). Sick leave is 15 days full pay, 30 days half pay, and 30 days unpaid per year, subject to a medical certificate. Maternity leave is 60 days — 45 days on full pay and 15 days on half pay. Paternity leave is five days. Bereavement leave is provided for immediate family members. Study leave of ten days per year applies for employees enrolled in UAE educational institutions.
End-of-Service Gratuity
UAE law mandates end-of-service gratuity for all employees who complete one year or more of service. The calculation is 21 days of basic salary for each of the first five years, and 30 days of basic salary for each subsequent year, capped at two years of total salary. Gratuity is based on the last drawn basic salary, not total remuneration. Employees who resign before five years are entitled to a proportion: one third after one to three years, two thirds after three to five years. Employers must fund gratuity liabilities — in the DIFC and ADGM, the End of Service Savings System (DEWS and GPSSA) is mandatory.
Termination and Notice Periods
Under the new law, either party can terminate the employment contract by giving the contractually agreed notice period. The minimum notice period is 30 days (for employees with more than six months service) and up to 90 days for senior roles. Termination without notice (summary dismissal) is permitted in specific cases of gross misconduct listed in the law. Termination of pregnant employees, employees on sick leave, or employees who have filed a legitimate complaint to MOHRE within the protected period is prohibited and can result in significant compensation awards.