UAE Labour Law (Federal Decree-Law No. 33 of 2021)
The UAE's primary employment legislation effective since February 2, 2022, replacing the 1980 labour law with modernized provisions covering employment contracts, working hours, leave entitlements, wages, end-of-service gratuity, termination rules, and new protections against discrimination and harassment.
- What Is the UAE Labour Law (Federal Decree-Law No. 33 of 2021)?
- Major Changes from the 1980 Law
- Employment Contracts Under the New Law
- Working Hours, Leave, and Wage Protections
- End-of-Service Gratuity Calculations
- Termination Rules and Notice Periods
- Anti-Discrimination and Anti-Harassment Provisions
- UAE Labour Market Statistics [2026]
- Employer Compliance Checklist
- Frequently Asked Questions About the UAE Labour Law
What Is the UAE Labour Law (Federal Decree-Law No. 33 of 2021)?
Key Takeaways
- ✓Federal Decree-Law No. 33 of 2021 is the UAE's current employment legislation, effective since February 2, 2022. It replaced Federal Law No. 8 of 1980, which had governed employment in the UAE for over 40 years.
- ✓The new law introduced several first-time provisions: anti-discrimination protections, anti-harassment rules, flexible work models (part-time, temporary, freelance), and equal pay for equal work regardless of gender.
- ✓All employment contracts must be fixed-term (maximum 3 years, renewable). The old law's unlimited-term contracts were eliminated, with a one-year transition period that ended on February 1, 2023.
- ✓The law applies to all private sector employers and employees in the UAE mainland. It doesn't cover free zone employees, domestic workers, or federal/local government employees, each of whom have separate legislation.
- ✓End-of-service gratuity remains a core feature: employees who complete one year of continuous service are entitled to 21 days' basic salary per year for the first 5 years and 30 days per year thereafter, capped at 2 years' total salary.
The UAE's 1980 labour law served the country during its transformation from a small Gulf state to a global business hub. But by 2020, it was showing its age. The workforce had changed dramatically: gig workers, remote workers, part-time professionals, and freelancers had no legal framework. Discrimination and harassment protections were minimal. And the unlimited contract structure created confusion around termination and notice periods. Federal Decree-Law No. 33 of 2021 addressed all of this. It's a ground-up modernization of UAE employment law, designed for a 21st-century labor market. The law recognizes new work models, strengthens worker protections, introduces anti-discrimination provisions for the first time, and standardizes contract types. For HR teams operating in the UAE, the 2022 law changed almost everything: contract structures, leave calculations, termination procedures, non-compete rules, and gratuity entitlements all needed updating. Companies that didn't convert unlimited contracts to fixed-term by the February 2023 deadline were in automatic non-compliance.
Major Changes from the 1980 Law
The 2022 law wasn't a minor amendment. It was a complete replacement. Here are the most significant changes.
| Area | Old Law (1980) | New Law (2022) |
|---|---|---|
| Contract types | Limited and unlimited contracts | Fixed-term only (max 3 years, renewable) |
| Work models | Full-time only | Full-time, part-time, temporary, and flexible work recognized |
| Discrimination | No specific provisions | Prohibited based on race, color, sex, religion, national origin, social origin, or disability |
| Harassment | No specific provisions | Sexual harassment and bullying explicitly prohibited |
| Equal pay | No specific provisions | Equal pay for equal work regardless of gender |
| Non-compete clauses | Allowed with broad scope | Limited to 2 years maximum, must be proportionate to role |
| Probation | Up to 6 months, minimal regulation | Up to 6 months, 14-day notice required for termination during probation |
| End-of-service gratuity | Different calculations for limited vs unlimited | Unified calculation for all fixed-term contracts |
Employment Contracts Under the New Law
The shift to mandatory fixed-term contracts is the most structurally significant change for employers.
Fixed-term contract requirements
Every employment contract in the UAE must now be fixed-term, with a maximum duration of 3 years. Contracts can be renewed for the same or a shorter period upon agreement by both parties. There's no limit on the number of renewals. The contract must be in writing (Arabic is the official language for legal purposes, though bilingual contracts are standard) and must specify: job title and description, commencement date, contract duration, workplace location, working hours, remuneration details, leave entitlements, notice period, and termination provisions. Verbal contracts aren't enforceable under the new law.
Probation period rules
Probation can't exceed 6 months. During probation, either party can terminate the contract with 14 days' written notice. If the employee wishes to leave the UAE during probation, the notice period is 14 days. If the employee wants to move to another UAE employer during probation, the notice period is 30 days (and the new employer must compensate the original employer for recruitment costs if agreed in the original contract). An employer who terminates during probation must give 14 days' notice and pay the employee for the notice period if the employee isn't required to work it.
Working Hours, Leave, and Wage Protections
The new law updated several working condition standards to align with international norms.
Working hours
Standard working hours are 8 hours per day or 48 hours per week. This can be reduced to 6 hours per day during Ramadan. Overtime is permitted up to 2 hours per day and must be compensated at 125% of the regular hourly rate for daytime overtime and 150% for nighttime overtime (between 10 PM and 4 AM). Friday remains the standard rest day, though employers can designate an alternative day with MOHRE approval. Employees who work on their rest day must receive either a substitute day off or overtime pay at 150% of the daily rate.
Leave entitlements
Annual leave is 30 calendar days per year after completing one year of service. Employees with 6 to 12 months of service are entitled to 2 days per month (prorated). Sick leave is 90 days per year: the first 15 days at full pay, the next 30 days at half pay, and the remaining 45 days unpaid. Maternity leave is 60 days: 45 days at full pay and 15 days at half pay. The new law introduced paternity leave for the first time: 5 working days within 6 months of the child's birth. Bereavement leave is 5 days for the death of a spouse and 3 days for other immediate family members.
Wage Protection System
The UAE's Wage Protection System (WPS) requires all private sector employers to pay wages through approved banks and exchange houses. Salaries must be paid on the dates specified in the employment contract, and employers who delay salary payments beyond 15 days of the due date face penalties. MOHRE monitors WPS compliance through automated systems and can suspend an employer's ability to issue new work permits if wages are consistently delayed.
End-of-Service Gratuity Calculations
End-of-service gratuity (EOSG) is a lump sum payment every employee is entitled to upon completing at least one year of continuous service.
Calculation formula
The gratuity is calculated on basic salary only (excluding allowances, bonuses, and commissions): 21 days' basic salary for each year of the first 5 years of service, and 30 days' basic salary for each additional year beyond 5 years. The total gratuity amount can't exceed 2 years' total basic salary. For partial years, the gratuity is prorated. Example: an employee earning AED 15,000 basic salary who worked for 7 years would receive: (21/30 x AED 15,000 x 5) + (30/30 x AED 15,000 x 2) = AED 52,500 + AED 30,000 = AED 82,500.
Gratuity deductions and forfeiture
Under the new law, employees are entitled to their full gratuity regardless of who initiates the termination, as long as the contract is terminated lawfully. This is a change from the old law, where employees who resigned from unlimited contracts before completing 5 years received reduced gratuity. However, employees dismissed for gross misconduct (Article 44 violations) may forfeit their gratuity. Employers can deduct any amounts owed by the employee from the gratuity, but must pay the net balance within 14 days of the last working day.
Termination Rules and Notice Periods
The new law simplified termination by eliminating the distinction between limited and unlimited contract terminations.
Lawful termination
Either party can terminate a fixed-term contract by giving written notice of at least 30 days (or up to 90 days if specified in the contract). The notice period must be the same for both employer and employee. During the notice period, the employee continues to work and receive full pay. Employers can place an employee on garden leave during the notice period, but must continue paying their salary. Termination takes effect at the end of the notice period. An employer can terminate without notice for gross misconduct, including assault, fraud, disclosure of confidential information, repeated failure to perform duties after written warnings, and being under the influence of alcohol or drugs at work.
Illegal termination and protections
The new law explicitly prohibits termination on discriminatory grounds (race, color, sex, religion, national origin, disability) or as retaliation for filing a complaint with MOHRE or participating in an investigation. Employees who are illegally terminated can file a complaint with MOHRE and claim compensation of up to 3 months' salary (in addition to any notice period or gratuity owed). This is a significant improvement over the old law, which had limited recourse for wrongful termination.
Anti-Discrimination and Anti-Harassment Provisions
For the first time in UAE employment law, Federal Decree-Law No. 33 includes explicit protections against workplace discrimination and harassment.
Discrimination protections
Article 4 prohibits discrimination based on race, color, sex, religion, national or social origin, or disability. This covers all aspects of employment: hiring, compensation, promotion, training, and termination. The law also mandates equal pay for equal work regardless of gender, marking a significant step in the UAE's gender equality efforts. Employers must ensure their HR policies, job advertisements, and promotion criteria don't discriminate on prohibited grounds.
Harassment protections
Article 14 prohibits sexual harassment, bullying, and any form of verbal, physical, or psychological violence against employees. Employers must take preventive measures, establish complaint mechanisms, and investigate reports promptly. Employees who experience harassment can file complaints with MOHRE without fear of retaliation. The law protects complainants from adverse employment actions taken in response to a good-faith harassment report.
UAE Labour Market Statistics [2026]
Key data illustrating the scale of the UAE's private sector employment environment.
Employer Compliance Checklist
Staying compliant with the new UAE labour law requires updating contracts, policies, and systems.
- Convert any remaining unlimited contracts to fixed-term contracts immediately. The February 2023 deadline has passed, and non-converted contracts put employers at risk of fines.
- Register all employees in the Wage Protection System and ensure salaries are paid through approved channels on time every month.
- Update your employee handbook to include anti-discrimination and anti-harassment policies, complaint procedures, and investigation processes as required by the new law.
- Review and update non-compete clauses in existing contracts. They must now be limited to 2 years and proportionate to the employee's role and access to confidential information.
- Calculate and provision for end-of-service gratuity using the new unified formula. The old limited vs unlimited distinction no longer applies.
- Ensure probation period procedures comply with the new 14-day notice requirement and the rules around moving to a new employer during probation.
Frequently Asked Questions
Does the new labour law apply to free zone employees?
Can I still have unlimited contracts in the UAE?
How is end-of-service gratuity calculated if the employee resigns?
What happens if I'm late paying salaries through WPS?
Is there a minimum wage in the UAE?
Can an employee work for multiple employers under the new law?
Written by Adithyan RK