UAE Labour Law Guide for Employers: Contracts, Probation and Every Leave Type

The UAE labour law that governs every private-sector employment relationship today is Federal Decree-Law 33 of 2021 — universally called the “new labour law” because it replaced a 1980 statute wholesale when it took effect on 2 February 2022. It abolished unlimited contracts, capped probation at six months with formal notice rules, wrote a complete leave matrix into statute — including the compassionate and bereavement leave entitlements employers most often get wrong — and kept the 21/30-day gratuity formula that quietly accumulates on every balance sheet.

This guide, updated July 2026, is the employer’s working map of the law: contracts, probation, hours, every leave type, termination and end-of-service, plus the enforcement reality that makes all of it a payroll problem — because MOHRE prices violations per employee, and the payroll function is where compliance is actually won or lost.

The 2022 reset: what changed and who it covers

Federal Decree-Law 33 of 2021, with its executive regulations and subsequent amendments, applies to private-sector employers across the UAE under MOHRE’s supervision — mainland and most free zones alike, with the two financial free zones running their own standalone employment laws. Which rulebook you sit under is decided by where the licence was issued, not by where the office happens to be in the UAE. Searches for “uae labour law 2022” and “new uae labour law” all point at this statute; there is no newer replacement, only amendments layered onto it.

Probation and notice are where most of that cost actually lands, and they land on the payslip rather than in a policy document. Our guide to probation, notice periods and final settlement in the UAE works through the article behind each figure and the order the payments come out in.

Where the employer is licensed	Employment rulebook	Practical effect on payroll
Dubai mainland (DET licence)	FDL 33 of 2021	Full MOHRE regime, WPS, ILOE, Emiratisation where in scope
Abu Dhabi, Sharjah, Ajman, Fujairah, Ras Al Khaimah, Umm Al Quwain mainland	FDL 33 of 2021	Same federal regime, same wage-transfer duties
Most UAE free zones	FDL 33 of 2021, administered with the zone authority	Federal entitlements; the zone handles permits and visas
DIFC	DIFC Employment Law	Written pay statements; DEWS replaces gratuity accrual
ADGM	ADGM Employment Regulations	Own statement and end-of-service provisions

The headline structural changes from the old regime: fixed-term contracts only (the unlimited contract was abolished, and after a 2022 amendment the fixed term can be of any agreed duration, renewable); recognised work models beyond full-time — part-time, temporary, flexible, remote and job-sharing; anti-discrimination and anti-harassment provisions with statutory force; non-compete clauses capped at two years; and a compensation-based remedy for unlawful termination. Around the law sit the operational systems employers answer to monthly: WPS wage transfers, the ILOE unemployment insurance scheme mandatory since 2023, and Emiratisation quotas for establishments in scope — the machinery covered in our MOHRE employer guide.

Contracts and probation: the first six months decide everything

Every employee needs a written fixed-term contract matching the MOHRE-registered offer letter — the days of the informal “we’ll sort the paperwork later” arrangement are priced in fines. Renewal is straightforward, and continuity of service carries across renewals for gratuity purposes.

Probation is where SMEs make their most expensive early mistakes, because the rules are precise: maximum six months, no extension, no re-probation of the same person. Termination during probation requires 14 days’ written notice from the employer. On the employee side the law splits by destination: one month’s notice to join another UAE employer (with the new employer potentially liable for recruitment-cost compensation to the old), 14 days to leave the country — and a return within three months after leaving can trigger the compensation rule too. Notice skipped is notice paid; the wage-based cost attaches automatically.

The contract itself has prescribed contents. Article 10(1) of Cabinet Resolution No. 1 of 2022 lists what a UAE employment contract must state, and Article 10(4) fixes the forms it may be written on — full-time, part-time, temporary, flexible, remote, job-sharing, or another form set by ministerial resolution.

Contract must state	Why finance cares
Employer name and address; worker name, nationality, date of birth, proof of identity	Ties the contract to the MOHRE establishment file and the UAE immigration record
Qualification, job or occupation	Must match the activity on the licence for the work permit to issue
Date of work commencement	The start of the service term for gratuity
Workplace, working hours, rest days	Drives the overtime base and the Ramadan reduction
Probationary period, if any	Maximum six months, once only
Term of the contract	Fixed-term, of any agreed duration since the 2022 amendment
The agreed wage, including benefits and allowances	The basic-versus-allowance split that prices gratuity
Annual leave entitlement	The accrual payroll must post monthly
Notice period and termination procedures	30 to 90 days under Article 43(1)

Two clauses inside that list carry money. The wage line decides the basic-versus-allowance split, and therefore the gratuity liability that will accrue for years. The notice period decides the compensation payable when either side skips it: Article 43(3) makes the defaulting party pay a notice-period allowance equal to the worker’s wage for the full notice period or the remaining part of it, whether or not the other side suffered damage. On a wage of AED 18,000 and a 60-day notice period walked out on day one, that is AED 36,000, calculated under Article 43(4) on the last wage received.

Article 43(5) adds a detail employers routinely miss: where the employer terminates, the worker may take one working day a week unpaid during the notice period to look for another job, choosing the day and giving three days’ notice of it. And Article 10 of the Decree-Law caps a non-competition clause at two years from expiry of the contract, requires it to be limited in time, place and type of work, and voids it entirely where the employer terminated in breach of the law.

The probation and notice framework matters double when a third party sourced the hire: agency placement guarantees are typically written around these exact clauses, and a mismatch between the MOHRE contract and the agency terms voids the replacement protection the fee paid for. How to structure that — fee models, Permit 64 verification and guarantee terms — is covered in our guide to choosing a recruitment agency in Dubai.

Working hours and overtime: premiums, not favours

The statutory baseline is 8 hours a day or 48 a week, cut by two hours daily in Ramadan for all staff. Overtime is capped at roughly two additional hours a day and paid at premiums: basic hourly rate + 25%, rising to + 50% between 10pm and 4am for non-shift workers, with rest-day work compensated by a substitute day off or the + 50% premium. Senior managerial roles sit outside the overtime rules — a genuine exclusion that does not stretch to cover a team full of inflated titles, as MOHRE inspections regularly conclude.

The finance point: overtime is a payroll calculation with legal consequences, and it fails in spreadsheets far more often than in payroll engines. The worked examples — including the basic-wage base that trips people up — are in our overtime calculation guide.

Two ceilings sit above the daily limit and are easy to miss. Article 19(1) caps total working hours at 144 hours every three weeks, not merely two extra hours a day — so a fortnight of heavy overtime constrains the third week. And Article 18 prohibits more than five consecutive hours without a break, or breaks, totalling at least an hour, which are not counted inside working hours.

The exclusions from the maximum-hours rules are a closed list in Article 15(4) of Cabinet Resolution No. 1 of 2022, and they are narrower than most UAE job titles suggest.

Excluded category	Article 15(4) wording
Chairpersons and board members	(a)
Persons in supervisory positions where the position grants them the authority of the employer	(b)
Crews of naval vessels and seafarers with special service conditions	(c)
Continuous succession-shift work	(d), subject to average working hours not exceeding 56 hours a week
Preparatory or supplementary work necessarily done outside general limits	(e)

Note what limb (b) actually requires: not a senior-sounding title, but a position that confers the authority of the employer. A UAE inspection reads the job content, not the business card. Limb (d) is the one with a number attached — a shift operation still has a 56-hour weekly average to respect.

When wages are due, and what happens when they are late

Wage timing is now the sharpest edge of UAE labour compliance, because it is automated. Article 22(2) of the Decree-Law requires wages to be paid on their due dates in accordance with the regulations approved by the Ministry, and Article 16(1)(b) of Cabinet Resolution No. 1 of 2022 requires every establishment registered with the Ministry to pay through the Wage Protection System or another approved system.

The operative rules changed in 2026. Ministerial Resolution No. 340 of 2026, in force from 1 June 2026, repealed Ministerial Resolution No. 598 of 2022 and set wages as due on the first day of each Gregorian month, with no grace period, and required at least 85% of wages to transfer on time. Non-payment then escalates on a fixed clock rather than at an inspector’s discretion.

Day after the due date	Consequence under Ministerial Resolution No. 340 of 2026
2	System alerts issued to the establishment
5	New work permits suspended
11	Fine and reclassification of the establishment
16	An automatic labour dispute is raised
21	Executive instrument, attachment and travel-ban measures become available

For a UAE employer the practical implication is a calendar change, not a policy change: the payroll cycle has to close early enough that funds and the salary file clear before the first, not on it. Velmont Crest closes the cycle by the 25th so wages land on the 1st. The mechanics of the file itself sit in our WPS guide, and the employee-facing document that has to reconcile to it is covered in the payslip format guide.

Separately, Article 53 gives a hard deadline at the other end of the relationship: on expiry of a contract the employer must pay wages and all other entitlements within 14 days of the end date. That is the clock a final settlement runs against, and gratuity, accrued leave and notice-period pay all sit inside it.

Injury, suspension and the statutory compensation figures

Three provisions carry fixed numbers that belong in any UAE employer’s risk register, and all three are statutory rather than negotiable.

Work injury pay. Article 37(2)(b) requires the employer to pay the full wage throughout the treatment period or for six months, whichever is shorter. If treatment runs longer, the worker receives half wage for a further six months, or until recovery, proven disability or death, whichever comes first.

Death from a work injury. Article 37(3) entitles the worker’s family to compensation equal to 24 months of basic wage, subject to a floor of AED 18,000 and a ceiling of AED 200,000, calculated on the basic wage the worker received before death — and expressly without prejudice to the family’s right to end-of-service benefits and any other entitlement. On an AED 6,000 basic wage the formula gives AED 144,000; on an AED 12,000 basic wage it gives AED 288,000, which the AED 200,000 ceiling reduces.

Suspension during investigation. Article 40(1) allows temporary suspension for a maximum of 30 days with half the wage withheld while a disciplinary investigation runs. If the investigation ends in no violation, a shelved case or a warning only, the withheld wage must be paid. Suspending someone indefinitely on full stop-pay is not one of the options the article offers.

Article 38 then lists the five situations in which no work-injury compensation is due at all — self-inflicted injury, injury under the influence of alcohol or narcotics, deliberate breach of displayed safety instructions, wilful misconduct, and refusal without serious reason to be examined or treated — each of which has to be established through the competent authorities’ investigation, not asserted by the employer.

The leave matrix: what each type pays

Leave	Entitlement	Pay treatment
Annual	30 calendar days/year after one year (2 days/month from months 6–12)	Full pay
Sick	Up to 90 days/year after probation	15 days full, 30 half, 45 unpaid
Maternity	60 days (+ extensions in defined medical cases)	45 full, 15 half
Parental	5 working days per parent, within 6 months of birth	Full pay
Compassionate / bereavement	5 days (spouse); 3 days (parent, child, sibling, grandchild, grandparent)	Full pay
Study	10 working days/year after 2 years’ service	Paid, UAE-accredited institutions
Hajj (unpaid, once)	Up to 30 days	Unpaid

Read that table against the statute rather than against custom, because several rows carry conditions that cost money when they are missed.

Leave	Article of FDL 33 of 2021	Condition the statute attaches
Annual, 30 calendar days	Art 29(1)(a)	Two days per month between six and twelve months of service; Art 29(1)(c) gives a pro-rated entitlement for the final part-year
Annual, carry-forward	Art 29(5) with Cabinet Resolution 1 of 2022 Art 19(1)	Not more than half the annual leave may be carried into the following year, or a cash allowance agreed in lieu
Annual, cash on exit	Art 29(9), Cabinet Resolution 1 of 2022 Art 19(2)	Paid for the accrued balance regardless of how long the leave has been outstanding, computed on the basic wage
Sick, 90 days	Art 31(3)	15 days full, 30 half, the remainder unpaid; no paid sick leave during probation (Art 31(2)); notify the employer within three working days (Art 31(1))
Maternity, 60 days	Art 30(1)	First 45 days full wage, next 15 half wage
Maternity, additional absence	Art 30(2)	Up to 45 further days, continuous or intermittent, unpaid, on medical certificate
Maternity, sick or determined child	Art 30(4)	30 days full pay after maternity leave ends, extendable by 30 unpaid days
Breastfeeding breaks	Art 30(9)	One or two breaks a day for six months from delivery, not exceeding an hour in total
Bereavement	Art 32(1)(a)	Five days for a spouse, three for a parent, child, sibling, grandchild or grandparent, from the date of death; proof of death produced on return (Cabinet Resolution 1 of 2022 Art 21(3))
Parental	Art 32(1)(b)	Five working days per parent, continuous or intermittent, within six months of the birth
Study	Art 32(2)	Ten working days a year, minimum two years’ service, admission letter from an institution accredited in the UAE (Cabinet Resolution 1 of 2022 Art 21(1))
Unpaid leave	Art 33(2)	Excluded from the service term for gratuity and pension purposes

Two rows in that table are where employers most often get the arithmetic wrong.

Annual leave carry-forward is capped by regulation, not by agreement. Article 19(1) of Cabinet Resolution No. 1 of 2022 permits the worker to carry forward not more than half the annual leave into the following year, or to agree a cash allowance in lieu at the wage in force when the entitlement arose. A policy that lets untaken days roll indefinitely because “we agreed it” sits outside that provision, and the accrued balance still has to be paid out on exit under Article 19(2), on the basic wage.

The additional 45 unpaid maternity days do not build service. Article 30(2) states in terms that the period is not included within the service term for which the female worker is entitled to end-of-service benefits, or within the retirement contribution period. That matters directly to the gratuity accrual: an employee who takes the full additional absence accrues no gratuity across it, and payroll should suspend the accrual for those days rather than run it straight through. The same exclusion applies to ordinary unpaid leave under Article 33(2), and Article 51(4) excludes unpaid absence days from the service term generally.

Deductions from wages: the caps are specific, and they are not one number

Article 25 is the provision employers cite loosely and apply incorrectly. It is a closed list — no amount may be deducted or withheld from a wage except in the cases it names — and each case carries its own limit. There is no general “10% of salary” rule, and the five-days figure everyone half-remembers belongs to damage, not to fines.

Article 25(1)	Deduction permitted	Limit written into the article
(a)	Redemption of loans granted to the worker	Within the monthly deduction ceiling in the article, with written consent and without interest
(b)	Recovery of amounts paid in excess of entitlements	Not more than 20% of the wage
(c)	Contributions to bonuses, retirement pensions and insurances	Per the legislation in force
(d)	Contributions or loans repayable to an establishment savings fund approved by the Ministry	—
(e)	Instalments for a social project or other approved benefit	Requires the worker’s written agreement to participate
(f)	Amounts for violations under the establishment’s approved penalty regulation	Not more than 5% of the wage
(g)	Debts due under a court judgment	Not more than a quarter of the wage; awarded alimony may exceed a quarter
(h)	Rectifying damage caused by the worker’s mistake or breach of instructions	Not more than the wage of five days per month, unless the competent court approves more
Art 25(2)	All reasons combined	Total deduction and withholding may not exceed 50% of the wage

Work an example. An employee on a monthly wage of AED 12,000 has an outstanding salary advance, was overpaid AED 4,000 last quarter, and damaged equipment through a documented breach of instructions. The overpayment recovery is capped at AED 2,400 a month (20%). The damage recovery is capped at five days’ wage — on a 30-day month, AED 2,000. Any disciplinary fine under an approved penalty regulation is capped at AED 600 (5%). And whatever combination is applied, Article 25(2) stops the total at AED 6,000 for the month.

The practical rule that follows is simple: each deduction line on a payslip must map to one lettered case in Article 25, carry the document that case requires — written consent, an approved penalty regulation, a court order, an incident record — and be tested against both its own cap and the 50% aggregate. Deductions that fail that test are the ones that surface in a MOHRE complaint, and the wage that reaches the bank still has to reconcile to the payslip you issue.

Compassionate leave in the UAE — the bereavement entitlement in Article 32 — deserves its own paragraph because it is the one employers most often handle informally and incorrectly. The law grants paid leave of five days for the death of a spouse and three days for a parent, child, sibling, grandchild or grandparent, from the date of death. It is a statutory minimum, separate from annual leave, and payroll should code it as its own paid-leave type. Handling a bereaved employee’s leave as “take it from your annual days” is both unlawful and, from any management perspective, a poor trade for the goodwill it burns.

Every row of that table is also an accrual question — annual leave earned but untaken is a real liability, and the payroll treatment of leave accruals is where clean books and labour-law compliance turn out to be the same task. Maternity mechanics get their own deep treatment in our maternity leave employer guide.

3–5 days

Paid bereavement leave under Article 32 — five days for a spouse, three for a parent, child, sibling, grandchild or grandparent

Termination, notice and the cost of getting it wrong

Outside probation, termination requires a legitimate reason and contractual notice of 30 to 90 days, worked or paid in lieu. Article 44 lists the narrow cases permitting dismissal without notice — proven fraud, deliberate serious safety breaches, convictions involving honour or trust and similar — and each demands a documented investigation before the letter is signed. Termination held unlawful (retaliatory, or outside legitimate grounds) can cost up to three months’ wages in compensation on top of notice and end-of-service dues.

Article 44 is a closed list of ten cases, and every one of them requires a written investigation first, with the dismissal decision itself in writing, reasoned, and handed to the worker.

Article 44 case	The condition attached
1. Impersonation, or forged certificates or documents	Proof required
2. Gross physical loss to the employer, or deliberate damage acknowledged by the worker	The Ministry must be informed within 7 working days of the employer becoming aware
3. Breach of written workplace safety by-laws	Must be written, displayed visibly and communicated
4. Failure to perform basic contractual duties	Requires a written investigation and two warnings of dismissal
5. Disclosure of an industrial or intellectual property secret causing loss	Loss, missed opportunity or personal gain must follow
6. Drunkenness, narcotics or breach of public morals at the workplace	During working hours or at the workplace
7. Assault on the employer, a manager, a superior or a colleague	Must be punishable under UAE legislation
8. Unjustified absence	More than 20 intermittent days in a year, or more than 7 consecutive days
9. Exploiting the position illegally for personal gain	Proof required
10. Joining another establishment without following the prescribed rules	—

The mirror provision matters just as much. Article 45 lets a worker leave without notice while keeping full end-of-service rights where the employer breaches its contractual or statutory obligations, and Article 47 makes a termination unlawful where it follows a serious complaint to the Ministry or a proven lawsuit — with fair compensation set by the court, capped at three months’ wage on the last wage received and payable on top of the notice allowance and gratuity. On an AED 20,000 wage that ceiling is AED 60,000.

The quiet discipline here is documentation. UAE labour disputes run through MOHRE conciliation before court, and outcomes track the file: signed contracts, wage records matching WPS, warning letters that exist on paper rather than in memory. Employers with clean payroll archives settle disputes quickly and cheaply; employers without them fund settlements shaped by what they cannot prove.

Gratuity: the liability accruing while nobody looks

End-of-service gratuity for foreign employees follows Article 51: 21 days of basic wage per year of service for the first five years, 30 days per year thereafter, computed on the final basic wage, capped at two years’ total wages, with one year of service as the qualifying floor and unpaid absence excluded from the count. Alternative savings-scheme models can replace the accrual approach where formally adopted.

Worked through, on a UAE employee leaving after seven years and four months on a final basic wage of AED 9,000 a month. The statute fixes the day counts but not the divisor used to turn a monthly basic wage into a daily one; a 30-day month is the working convention across the UAE market, and the figure you use should be stated in the contract rather than assumed at exit.

Service band	Days of basic wage	Daily basic wage (AED 9,000 ÷ 30)	Gratuity (AED)
Years 1–5, at 21 days per year (Art 51(2)(a))	105	300	31,500
Years 6–7, at 30 days per year (Art 51(2)(b))	60	300	18,000
Final 4 months, pro-rated under Art 51(3)	10	300	3,000
Total end-of-service benefit	175		52,500

Three statutory checks then run over that number. Article 51(6) caps the whole benefit at two years’ wage — on a gross wage of AED 15,000 a month that ceiling is AED 360,000, so it does not bite here, but on long service and a high basic it can. Article 51(4) excludes unpaid absence days from the service term, which is where the unpaid maternity days under Article 30(2) and any unpaid leave under Article 33(2) drop out. And Article 51(7) permits the employer to deduct from the benefit only amounts payable under the law or a judgment, on the conditions in the Implementing Regulation — it is not a general set-off against anything the employee is said to owe.

Two employer truths about gratuity. First, it is computed on basic wage, which makes the basic-versus-allowances split in every contract a long-term cost decision, not a formatting choice. Second, it is a real, growing liability that belongs in the monthly accounts as a provision — a company that meets its gratuity obligation for the first time in the month an employee resigns has been misstating its numbers for years. Run any employee’s figure through our UAE gratuity calculator, and see Dubai gratuity law explained clause by clause for the edge cases, including the divisor the statute never specifies.

“

Every article of the labour law eventually becomes a line in payroll. If payroll is right every month, compliance is mostly done; if it is improvised, no policy manual will save you.

Enforcement: how the law actually bites

MOHRE enforces through inspections, the WPS wage-monitoring system and a per-employee fine schedule set under Cabinet Resolution No. 21 of 2020, escalating on repetition, with parallel fines for permit and contract violations, and WPS blocks that freeze new work permits while wages sit unpaid. Add the corporate tax angle — fines are non-deductible, as our fine check guide explains — and a labour violation is one of the most expensive ways a UAE SME can save administrative effort. The wage-transfer machinery itself is unpacked in our WPS guide.

Where each obligation lands in the accounts

The reason this statute belongs on an accounting firm’s site is that almost none of it stays in the HR file. Each obligation resolves into a ledger entry, and a UAE business that books them monthly never meets them as a surprise.

Obligation under FDL 33 of 2021	Ledger treatment	Reviewed
Monthly wages, Art 22	Payroll expense, cleared through the WPS bank file	Every cycle, closed by the 25th
Overtime premiums, Art 19	Payroll expense on the basic-wage base, +25% or +50%	Every cycle
Annual leave earned, Art 29	Accrued liability, released as leave is taken or paid out	Monthly
Gratuity, Art 51	Provision built monthly on final basic wage and service to date	Monthly
Notice-period allowance, Art 43(3)	Recognised when the obligation arises, not when paid	On each exit
Final settlement within 14 days, Art 53	Payable, cleared inside the statutory window	On each exit
Work-injury pay and the AED 18,000–200,000 death compensation, Art 37	Provision once the obligation is probable	On each incident
MOHRE fines under Cabinet Resolution No. 21 of 2020	Expense — and non-deductible for UAE corporate tax	On assessment

The last row is the one that quietly doubles the cost. A penalty is not a deductible expense in a UAE corporate tax computation, so the cash goes out and the deduction never arrives — the point our fine check guide develops. The rows above it are the reason a monthly gratuity and leave accrual is not bookkeeping pedantry: a UAE company that first recognises AED 52,500 of gratuity in the month an employee resigns has been reporting a profit it never had, and its financial statements have been telling the FTA, its bank and its shareholders the same wrong number for years.

How Velmont Crest helps employers stay clean

Our payroll and WPS processing service exists to turn this entire statute into a monthly routine: wages calculated with the right overtime premiums, every leave type coded to its correct pay treatment, gratuity accrued as a real provision, WPS files submitted on time every time, and the payroll archive kept dispute-grade. Around it we run the wider compliance calendar — contracts renewed before expiry, ILOE confirmed, the MOHRE file checked alongside VAT and corporate tax dates — so labour compliance stops being a collection of near-misses and becomes a by-product of paying people correctly. If any part of your payroll still runs on memory and goodwill, that is the exposure; pricing it out is a conversation, and the fix is a tailored quote away.