Kb Employment Law Uae

Knowledge Pack — UAE Federal Employment Law (Decree-Law 33/2021)

Primary Sources

• Federal Decree-Law 33/2021 — Employment Relations Law (effective 2 February 2022; replaced the previous UAE Labour Law 8/1980).
• Cabinet Decision 1/2022 — Implementing Regulation on non-compete, part-time, and flexible work.
• Federal Decree-Law 47/2022 — Corporate Tax Law (affects pay structuring, particularly for MNE employees).
• MOHRE circulars — Ministry of Human Resources and Emiratisation issues guidance on enforcement and thresholds.
• Wage Protection System (WPS) — mandatory electronic salary payment framework.

Important: DIFC and ADGM are separate jurisdictions. Federal Decree-Law 33/2021 applies only to employers registered onshore with MOHRE (mainland UAE + non-DIFC/ADGM free zones).

Contract Types (Decree 33/2021)

• Contracts must be in Arabic (or bilingual with Arabic controlling).
• Electronic contracts via MOHRE platform acceptable.

Probation

• Maximum 6 months.
• Either party may terminate with minimum 30 days' written notice during probation (employee) or 14 days if employee is resigning to join another employer.
• Employer may terminate with 14 days' notice during probation without end-of-service award.
• Probation time counts toward continuous service for gratuity.

Working Hours

Annual Leave (Art 29)

• Minimum 30 calendar days per year after completing 12 months of service.
• Pro-rated for partial years.
• Employer may direct when leave is taken; employee cannot forfeit leave except on mutually agreed encashment at termination.
• Unused leave on termination: paid in lieu at basic daily rate.

Public Holidays

• UAE federal holidays (National Day, Eid, New Year, etc.) — approximately 14 days per year.
• Employees required to work on holidays: time off in lieu or additional pay as agreed.

Sick Leave (Art 31)

• Maximum 90 days per year:
  • First 15 days: full pay
  • Next 30 days: half pay
  • Remaining 45 days: unpaid

Maternity and Paternity Leave

• Maternity leave: 60 calendar days paid (45 before and/or after birth; plus 15 days at half-pay if medically required post-birth).
• Paternity leave: 5 working days within 6 months of birth.
• Employer may not dismiss employee on maternity leave or for 6 months after return.

Notice Periods (Art 43)

• Minimum 30 days notice; maximum 90 days (as agreed in contract, not exceeding 90 days).
• Notice must be in writing.
• Employer may pay wages in lieu of notice.
• Employee who resigns to join a competitor during notice period may be required to pay liquidated damages if agreed.

Termination for Cause — Without Notice or EOSG (Art 44)

Employer may dismiss without notice or end-of-service gratuity only on the following grounds:

1. Employee assumed false identity or submitted forged qualifications.
2. Employee committed an error or omission causing serious financial loss (MOHRE notification within 48 hours required).
3. Employee violated safety instructions putting colleagues/property at risk.
4. Employee disclosed trade secrets causing harm to employer.
5. Employee found in a state of intoxication or under influence of controlled substance during work.
6. Employee assaulted employer, supervisor, or co-worker.
7. Employee repeatedly failed to perform essential duties after two written warnings.
8. Employee was absent without justification for 7 or more consecutive days, or 20 or more non-consecutive days in a year.

Procedural requirement: even for Art 44 terminations, employers should conduct an investigation and provide opportunity for the employee to respond. Courts may award compensation for procedural failures even when substantive cause exists.

End-of-Service Gratuity (EOSG) — Art 51

Calculation formula

Calculation base: basic salary only — excludes housing allowance, transport allowance, commission, and other supplements. This exclusion significantly reduces gratuity for employees with high allowance structures.

Cap: total gratuity cannot exceed 2 years' total basic salary.

No forfeiture on resignation

Unlike KSA (where resignation below 2 years forfeits the award), UAE Decree-Law 33/2021 abolished the previous system where resignation reduced the gratuity. All employees now receive the full gratuity on termination for any reason (including resignation), subject only to the pro-rata and cap rules above.

EOSG calculation example

Employee: 6 years' service; monthly basic salary AED 20,000

• Years 1–5: 21 days/year × 5 = 105 days' basic salary = 105 × (20,000/30) = AED 70,000
• Year 6: 30 days × 1 = 30 days' basic salary = AED 20,000
• Total EOSG: AED 90,000 (check against 2-year basic cap = AED 480,000 — cap not triggered)

Non-Compete (Art 10 + Cabinet Decision 1/2022)

• Post-termination non-compete enforceable for up to 2 years.
• Must be proportionate in:
  • Geographic scope: limited to the jurisdiction(s) where the employer actually operates.
  • Activity scope: limited to work the employee actually performed.
  • Duration: 1–2 years; courts may reduce excessive terms.
• Cabinet Decision 1/2022 requires the non-compete to be included in the employment contract (not a side agreement) and must be proportionate.
• Courts apply UAE Civil Transactions Code principles to assess proportionality — an overly broad clause is narrowed, not voided.

Sponsorship and Visa

• Employer sponsors: MOHRE work permit + GDRFA residence visa.
• On termination: employee has a 60-day grace period to find new employer sponsorship or leave the UAE.
• 2-year Green Visa: self-sponsored residency for employees earning AED 4,000+/month (not dependent on employer).
• Golden Visa: 10-year self-sponsored residency for investors, entrepreneurs, specialized talent (specific qualifying criteria).
• Employer must cancel work permit and residence visa on termination within 30 days.

Wage Protection System (WPS)

• Mandatory for all MOHRE-registered employers with 50+ employees (extended phasing to smaller employers).
• Salaries must be paid electronically via approved financial institutions.
• Payment must reach employees by the end of the calendar month or contractual date.
• Non-compliance: MOHRE can block new visa applications, impose fines, and suspend company operations.

Emiratisation

• Private sector employers must meet UAE national (Emirati) hire quotas — regulated by MOHRE.
• Quotas vary by industry and company size; sectors include financial services, hospitality, retail, technology.
• Non-compliance triggers: quarterly fines (AED 6,000–8,000 per unfilled Emirati slot per month), loss of labor permits.
• Employers incentivized via NAFIS program (government subsidizes part of Emirati salary).

Flexible Work Arrangements (Decree 33/2021)

New work categories introduced:

• Part-time employment: employee works less than full standard hours; proportionate entitlements.
• Temporary employment: for project-based work with defined scope.
• Remote work: recognized; must be documented in contract; MOHRE permit required.
• Job-sharing: two employees share one role; documented agreement required.

DIFC and ADGM Distinction

Entities registered in DIFC or ADGM are not governed by Federal Decree-Law 33/2021. DIFC uses Employment Law 4/2021 with the DEWS scheme; ADGM uses Employment Regulations 2024 with the Workplace Savings Plan. See [[kb-employment-law-difc]] and [[kb-employment-law-adgm]].

Caveats & Currency

Federal Decree-Law 33/2021 and Cabinet Decision 1/2022 are relatively recent; MOHRE issues circulars regularly refining the rules. Emiratisation targets and penalties change annually. Verify current public holiday schedule, WPS coverage thresholds, and Green/Golden Visa qualifying criteria. The 2-year cap on EOSG introduced in the 2022 implementing regulations should be verified against any subsequent amendments.

Related Skills

• [[kb-employment-law-difc]]
• [[kb-employment-law-adgm]]
• [[kb-employment-law-ksa]]
• [[kb-data-privacy-uae-pdpl]]
• [[draft-employment-contract]]