Employment 2024 Comparisons

There is no relevant legal distinction between the terms “employee” and “worker” in the UAE.

Federal Decree Law No 33 of 2021 (the “Labour Law”) requires all employment contracts to be for a fixed term (which can be auto-renewed in practice) and include a notice period ranging from a minimum of 30 days to a maximum of 90 days. The Labour Law requires employment contracts to be in writing and include the following information:

• the name and address of the employer;
• the employee’s name, nationality, date of birth, qualification and job/profession;
• the amount of wages and the proportion of the total wages agreed as basic salary and allowances;
• the date on which the employment contract was entered into between the parties;
• the date on which the employment commenced or is due to commence;
• the duration of the employment contract;
• the location of the workplace;
• the probationary period (if any);
• annual leave entitlement; and
• notice period and procedures for terminating the employment contract.

For onshore UAE, a standard form dual language (Arabic/English) Ministry of Human Resources and Emiratisation (MOHRE) employment contract must be signed in two counterparts, with one being retained by the employee and the other by the employer. The MOHRE is the UAE government’s regulatory body governing employment relationships and the Emiratisation initiative. It plays an important role in overseeing the UAE’s workforce and regulating the employment process for the private sector in the UAE.

Due to the rigid nature of the standard form MOHRE contracts, it is customary in the UAE for employers and employees to enter into a supplementary private contract that expands on the terms set out within the standard form contract. Where the terms set out in either contract conflict with the other, it is the practice of the UAE courts to allow the employee to rely on whichever of the two conflicting terms is most favourable to the employee.

In the vast majority of cases, the relevant free zones each have their own standard form employment contract. Free zone standard form contracts are also generally bilingual contracts, which set out the core terms of employment derived from the Labour Law and any relevant free zone rules and regulations.

Free zones in the UAE are areas that have a special tax, customs and imports regime and are governed by their own framework of rules and regulations (with the exception of the UAE penal code, which applies both within and outside of the free zones). Private sector companies located within the UAE’s free zones are not governed by the MOHRE but are subject to the Labour Law (except for the financial free zones of the DIFC and ADGM, which hold their own employment laws).

Irrespective of varying free zone employment rules and regulations (again excluding the DIFC and ADGM), it is important to note that the Labour Law over-rides any free zone employment regulation that may be in contravention of the Labour Law, and it is ultimately the Labour Law that prevails when determining employment rights and remedies in the event of a dispute before the local labour courts.

If an employer seeks to utilise a post-termination restriction, this must be clearly depicted within the MOHRE/relevant free zone employment contract or the internal employment contract, failing which the employment will be deemed restriction free.

Changing Contractual Employment Terms

When changing the terms and conditions of employment, it is crucial to ensure that any modifications are not less beneficial to the employee than the provisions of the Labour Law. Key points to consider include the following.

• Freedom to agree: parties can agree to any contractual terms as long as they do not diminish the employee's benefits below the minimum standards set by the Labour Law.
• Written consent: any changes to the employment terms require the employee's express written consent.
• Protection of minimum entitlements: changes must not reduce the employee’s protected minimum statutory entitlements under the Labour Law.
• MOHRE oversight: any amendments that reduce employee benefits must be signed before a MOHRE officer. This ensures the employee is not signing under duress or misunderstanding.
• End of service gratuity: any reduction in the employee’s basic salary must include an agreement on its impact on the end of service gratuity entitlement.

These measures ensure that employment term changes are fair and transparent, protecting the interests of both the employer and the employee.

Maximum Working Hours

The maximum working hours are 48 per week over six days, or 40 per week over five days (however, the UAE Cabinet has the discretion to increase or decrease daily working hours for certain sectors or certain categories of worker). This equates to a maximum of eight hours per day, which is reduced to six hours per day (36 per week) during the holy month of Ramadan. Subject to the exceptions listed below, the total average working hours must not exceed 144 hours every three weeks.

Rest Days

An employee is entitled to a weekly paid rest period of not less than one day. For most office workers, for example, the rest days will be Saturdays and Sundays, although in practice the rest day(s) could be any day of the week.

Overtime Rates

Generally speaking, overtime must not exceed more than two hours per day, unless necessary to prevent or alleviate a substantial loss or serious accident. Overtime rates for eligible employees are as follows.

• Ordinary overtime hours: pay equivalent to the basic wage paid during ordinary working hours of work plus an additional amount of not less than 25% of the basic wage for each additional hour worked (Article 19 (2) of the Labour Law).
• Night-time overtime hours (ie, between the hours of 10pm and 4am): pay equivalent to the basic wage paid during ordinary working hours of work plus an additional amount of not less than 50% of the basic wage for each additional hour worked (Article 19 (3)).
• Rest day (ie, the employee’s contractual day (s) off): a day off in lieu or pay equivalent to the basic wage paid during ordinary working hours of work plus an additional amount of not less than 50% of the basic wage for each additional hour worked (Article 19 (4)).

• Public holiday: a day off in lieu or pay equivalent to the basic wage paid during ordinary working hours of work plus an additional amount of not less than 50% of the basic wage for each additional hour worked (Article 28).

Exemptions

The Executive Regulations specify that certain professions are exempt from the maximum working time provisions of the Labour Law, including overtime pay. These exemptions apply to:

• board members, including the chair of a board of directors and other board members;
• supervisory roles – employees in managerial or supervisory positions, such as general managers;
• maritime workers – employees working on naval vessels and seamen;
• shift workers, provided their average working hours do not exceed 56 hours per week; and
• specialised workers – employees engaged in preparatory or complementary work that must be conducted outside of normal working hours.

The MOHRE also has the authority to issue additional exemptions based on market needs at any given time.

Travel Time

In certain situations, as follows, travel time between an employee’s accommodation and their place of work is considered part of their working hours:

• adverse weather conditions – when the weather is severe and national weather warnings are in effect, travel time can be counted as working hours;
• employer-provided transportation – if the employee is using transportation provided by the employer and there is an accident or emergency malfunction, the travel time is included in working hours; and
• contractual agreement – if it is explicitly stated in the employment contract, travel time can be considered part of working hours.

Consecutive Working Hours

Employees are prohibited from working more than five consecutive hours without taking a break of at least one hour. This break time is not counted towards the total working hours. However, the MOHRE has the authority to grant exemptions to this rule.

It is important to note that the DIFC and the ADGM have their own distinct regulations regarding working hours and overtime, which are not covered in this summary.

While there is currently no minimum wage in the UAE, the Labour Law empowers the MOHRE to issue a Ministerial Resolution to determine and enforce a minimum wage at any time.

Wage Protection System (WPS)

The payment of employee salaries is regulated by the WPS, a system established by the MOHRE to ensure employees are paid in full and on time. Key aspects of the WPS include:

• coverage – it applies to all onshore employers and some free zone employers;
• process – employers must pay wages through the WPS, which transfers funds via a clearing system managed by the UAE Central Bank to the employees' bank accounts; and
• minimum payment – employers must transfer at least 80% of the minimum salary stipulated in the MOHRE employment contract.

Employer Obligations

Employers have specific obligations under the WPS:

• notification – employers must notify the WPS before any employee does not receive their salary or is removed from the payroll;
• unexplained shortfalls – any unexplained shortfall in the monthly transfer can lead to difficulties for the employer, including the need for an explanation; and
• sanctions – in the absence of a valid reason for salary discrepancies, the MOHRE may impose fines, suspend work permit permissions and refer the matter for criminal prosecution.

These regulations ensure that employee wages are protected and that employers are held accountable for timely and accurate payments.

UAE law provides for the following types of statutory leave: annual, maternity, parental, sick, study and bereavement.

Annual Leave

Employees in the UAE are entitled to annual leave as follows.

• First year of employment – a minimum of 24 calendar days of leave, applicable after the first six months of employment. There is no leave entitlement during the probation period.
• After the first year – a minimum of 30 calendar days of leave each year.

Carrying Forward Leave and Cash Alternatives

Employees may carry forward up to half of their annual leave entitlement to the following year, with the employer’s approval. Any annual leave not carried over or used will be lost.

Employers have the option to compensate employees with a cash payment instead of carrying forward the leave.

Public Holidays

Public holidays declared by the UAE government are granted in addition to the annual leave entitlement, ensuring employees receive their full annual leave in addition to public holidays.

Unpaid Leave

Unpaid leave may be granted to employees with the employer’s consent. Key points to note include:

• gratuity and pension – any period of unpaid leave does not count towards end of service gratuity entitlement or statutory pension purposes;
• maternity leave extension – employees on maternity leave can take up to 45 calendar days of unpaid leave if medically necessary, with appropriate confirmation; and
• job search during notice period – if an employer terminates an employee's employment, the employee is entitled to one day of unpaid leave per week during the notice period to look for a new job.

Maternity Leave

Employees are entitled to up to 60 calendar days of paid leave, structured as follows:

• first 45 days – paid at 100% of the employee’s daily wage; and
• next 15 days – paid at 50% of the employee’s daily wage.

Parental Leave

Both male and female employees are entitled to up to five days of paid leave, which can be taken within six months of the birth of their child.

Sick Leave

Employees are entitled to a maximum of 90 calendar days of sick leave within a 12-month period, whether taken consecutively or intermittently. The leave is calculated as follows:

• first 15 days – paid at 100% of the employee’s daily wage;
• next 30 days – paid at 50% of the employee’s daily wage; and
• subsequent days – any additional sick leave beyond 45 days is unpaid.

During the probation period, sick leave is unpaid.

Bereavement Leave

Employees are entitled to up to five days of paid bereavement leave, with the exact duration depending on the degree of kinship to the deceased.

Study Leave

Employees are entitled to ten working days of paid study leave if they meet the following conditions:

• enrolment – the employee must be studying at an accredited university in the UAE; and
• service requirement – the employee must have completed at least two years of service with the employer.

During employment, employees have a statutory duty of fidelity to their employer, which includes an obligation not to compete, as mandated by the Labour Law.

The Labour Law allows for a contractual “non-compete” provision for certain employees, although future exclusions may apply to some skill levels and job types, potentially including junior employees. This non-compete clause can restrict post-termination activities for up to two years.

Such a provision must be reasonable in terms of geographical location, duration and the type of work restricted. It should only protect the lawful interests of the company.

If an employer terminates an employee or breaches the Labour Law, any post-termination restriction becomes null and void.

Currently, the Labour Law and its accompanying Executive Regulations limit the employer's compensation for a breach of the non-compete clause to three months' total salary, which can be paid by the employee or their new employer. The regulations do not support injunctive relief, and any court claim for breach requires the employer to prove damages. This maintains the previous requirement that employers provide strict proof of financial loss, even with a liquidated damages clause in the employment contract.

As a result, enforcing a non-compete clause in local courts remains challenging, making such clauses primarily a deterrent.

There is no statutory prohibition against solicitation, but it is common to include a non-solicitation clause in employment contracts.

Given the absence of injunctive relief under UAE law (outside of the DIFC and ADGM), enforcing a breach of a non-solicitation clause is challenging, making these clauses primarily a deterrent.

The UAE Commercial Transactions Law addresses unfair competition, prohibiting traders from inducing employees of competitors to join them for the purpose of usurping customers or having employees disclose their former employer's secrets to their new employer. While a civil claim for damages is a potential remedy for such breaches, it is notoriously difficult to obtain.

UAE Federal Decree Law No 45 of 2021 on the Protection of Personal Data, effective from 2 January 2022, aims to align the UAE with global data protection standards. Executive regulations, expected to be issued in 2024, will provide additional details on the law's provisions and assist employers in meeting compliance requirements.

The DIFC and ADGM free zones have their own data protection laws.

The UAE Constitution contains provisions designed to safeguard individuals' privacy, along with various other legislation including the Penal Code, as well as some Emirate-level and sector-specific laws and regulations.

In order to lawfully reside and work in the UAE, all expatriatesmust hold a UAE residency visa and work permit. A plethora of flexible visas and residency permits are available, which include benefits for individuals and their families.

Other than immigration requirements, there are no limitations to using foreign workers.

Employers must ensure that their employees have a valid residence visa and comply with the Labour Law by obtaining the necessary work permits for lawful employment. Failure to meet these requirements can result in financial penalties for both the employer and the employee.

In addition, employers are obliged to provide medical insurance for each employee in accordance with local health insurance laws.

The key principles of health and safety legislation in the UAE mandate that every employer must:

• provide employees with suitable means of protection against injuries, occupational diseases, fire and hazards resulting from the use of machinery and other equipment at the workplace;
• display detailed instructions on preventing fire and protecting employees from workplace hazards in a permanent and prominent place at the workplace;
• make available a first aid kit containing medicines, bandages and other first aid materials;
• ensure the workplace is kept clean and well ventilated;
• assign one or more physicians to thoroughly examine employees exposed to certain occupational diseases;
• provide medical care to employees according to standards prescribed by the MOHRE;
• inform each employee about the specific dangers and risks related to their employment, as well as the protection and mitigation measures that must be adopted; and
• prohibit employees from bringing or allowing others to bring any kind of alcoholic drinks for consumption on work premises.

Unpaid leave may be granted to employees at any time, with the employer’s consent. Any period of unpaid leave does not count for end of service gratuity entitlement or statutory pension purposes.

UAE nationals are entitled to paid sabbatical leave to complete their National Service requirements.

This is not applicable in the UAE.

Unlike employment legislation in many other jurisdictions, UAE law does not recognise the concept of redundancy. Consequently, there is no mandated redundancy procedure, leading to potential disputes over termination payments.

Without specific redundancy provisions, employers must ensure compliance with existing UAE laws regarding employment termination and associated payments.

In addition, the Labour Law does not impose any collective or individual consultation obligations. Works councils, employee bodies and unions are also not permitted in the UAE.

There are no trade unions in the UAE, and employee representatives are not common.

Trade unions do not exist in the UAE, and employee representatives are uncommon.

The Labour Law stipulates that an employment contract can be terminated for various reasons, including but not limited to:

• agreement in writing by both parties; and
• by either party, in accordance with the provisions of the Labour Law and the contractual notice period.

Either party may end the employment contract for any “legitimate reason” by providing written notice to the other party. However, the Labour Law does not define what constitutes a “legitimate reason”, and there is limited case law on this due to the law's recent implementation. It is likely that reasons such as poor performance, misconduct or employer bankruptcy could be considered legitimate, subject to various burdens of proof.

There are no legal provisions governing collective redundancy.

Under the Labour Law, if an employer terminates an employee's employment, the employee is entitled to one day of unpaid leave per week during the notice period to search for a new job.

The Labour Law mandates that all employees are placed on fixed-term contracts with no maximum duration. These contracts must include a notice period ranging from a minimum of 30 days to a maximum of 90 days.

Notice Within Probation

Termination

Where an employer terminates an employee’s employment, a minimum of 14 days’ written notice must be served on the employee.

Resignation

When an employee resigns during the probationary period, they must provide written notice in accordance with the Labour Law, as follows.

• A minimum of 30 days' notice if the employee is resigning to take up employment with a different UAE employer. In this case, the new UAE employer is required to compensate the current employer for the employee’s recruitment costs, as stipulated by the Labour Law.
• A minimum of 14 days' notice in all other cases. If the employee leaves the country and returns to take up new employment within three months, the new UAE employer must compensate the previous employer for the employee’s recruitment costs, in compliance with the Labour Law.

If notice is not served, the party terminating the contract must compensate the other party in an amount equal to the employee’s salary for the notice period.

Entitlements Following Termination

• Accrued benefits, including any benefits specified in the employment contract, such as outstanding incentive payments.
• Normal salary and benefits are due up to and including the termination date. Notice can be paid in lieu upon mutual consent.
• Accrued but untaken annual leave will be compensated.
• End of service gratuity is payable upon termination for employees with one year or more of continuous service. It is calculated based on the basic salary, as follows:
1. 21 days' salary per year for continuous service between one and five years; and
2. 30 days' salary per year for continuous service beyond five years.
• Repatriation flight – the employer must cover the cost of repatriating the employee to their home country or another agreed location. This is not payable if the employee does not repatriate or resigns.

These entitlements must be paid upon termination, and no later than 14 days from the termination date, in accordance with the Labour Law. Failure to pay within this timeframe may result in financial penalties for the employer.

Arbitrary Dismissal Compensation

Historically, terminations not based on poor performance or gross misconduct, in line with strict legal provisions, entitled employees to up to three months' gross salary as compensation for unfair dismissal.

Under the current Labour Law, employees are entitled to three months' wages as compensation for “unlawful termination” if they are dismissed after raising a serious complaint with the MOHRE, a relevant free zone authority or the courts, provided these claims are upheld. To date, local courts have strictly adhered to this rule, awarding compensation only where a complaint was made shortly before the employee's termination.

Post-termination Procedures

An employer can terminate an employee by providing notice, without needing to refer to the MOHRE. It is advisable to issue the notice in writing due to the heavy reliance on documentary evidence under UAE civil procedure rules. Termination notices are often emailed to the employee, which satisfies the UAE civil procedure code regarding document service.

Within 48 hours of termination, the employer should notify the MOHRE and complete the visa cancellation formalities for the residence visa and work permit. If the employee is not sponsored by the employer for residency purposes, the employer may cancel only the work permit.

Failure to comply with MOHRE notification and visa/work permit cancellation requirements can result in fines or penalties for both the employer and the employee. The MOHRE may also restrict the employer's ability to apply for new residence visas and work permits, or refuse the employee a new work permit with a different UAE employer.

An employer can terminate an employee's employment contract with immediate effect, following a written investigation in accordance with the Labour Law (and/or its internal policies, where applicable), under the following circumstances:

• the employee assumed a false identity or forged documents;
• the employee made a mistake causing significant material loss to the employer;
• the employee violated the company’s safety policies;
• the employee consistently failed to perform their primary duties as outlined in the employment contract, despite an investigation and at least two warnings of dismissal if their behaviour persisted;
• the employee disclosed trade secrets or intellectual property, resulting in loss to the employer or personal gain for the employee;
• the employee was intoxicated or under the influence of illegal drugs or committed immoral acts in the workplace during working hours;
• the employee committed any form of assault (verbal or physical) against the employer, manager, supervisors or co-workers;
• the employee was absent from work for more than 20 non-consecutive days or seven consecutive days without a legitimate reason or justification acceptable to the employer;
• the employee misused their position for personal gain; or
• the employee joined another employer without complying with the necessary requirements and permissions as provided by the Labour Law.

Employers must comply with various reporting obligations before terminating an employee for any of the above reasons, to avoid the risk of the termination being deemed unfair and the employee raising a claim before the local labour courts seeking compensation.

Employees who are summarily dismissed for gross misconduct are entitled to their full end of service gratuity entitlement.

Post-termination Procedures

An employer can terminate employment by providing notice to the employee without referral to the MOHRE. It is advisable to issue the notice in writing, given the high reliance on documentary evidence under UAE civil procedure rules. Termination notices are often emailed to employees, as this method satisfies the UAE civil procedure code for document service.

Within 48 hours of terminating employment, the employer should notify the MOHRE of the termination. The employer and employee should then proceed to complete the necessary visa cancellation formalities for the residence visa and work permit. If the employee is not sponsored for residency by the employer, the employer can cancel only the work permit.

Failure to comply with MOHRE notification and visa/work permit cancellation requirements may result in fines or penalties for both the employer and the employee. In some cases, the MOHRE may restrict the employer's ability to apply for new residence visas and work permits, or refuse to issue the employee a new work permit with a different UAE employer.

Termination and settlement agreements are commonly used in practice, but they do not require a specific form or name. These agreements are often referred to as “settlement agreements” or “final settlement and release agreements”.

Despite entering into a settlement agreement, an employee cannot waive their rights under the Labour Law. This means that an employee can later challenge the settlement and assert their original claim, subject to a one-year limitation period under the Labour Law. This period starts from the date the employment entitlement became due – typically the employee’s termination date.

While there is a risk that an employee may challenge a previously agreed settlement, such agreements are widely used and generally respected. If a claim reaches the labour court, the presiding judge will consider the settlement agreement and usually regard it as a binding document.

UAE National Employees

UAE National employees benefit from special protections. Terminating a UAE National employee requires adhering to strict procedures and obtaining permissions from the relevant UAE authorities before proceeding.

Whistle-blowers

Outside of the DIFC and ADGM, whistle-blowing protections are limited due to the UAE’s strict privacy laws.

Historically, any termination not based on poor performance or gross misconduct, as defined by strict legal provisions, entitled the employee to compensation of up to three months' gross salary for unfair dismissal.

Under the new Labour Law, compensation of three months' wages is specified for “unlawful termination”. This applies when an employee is terminated for raising a serious complaint to the MOHRE, the relevant free zone or the courts, and if such claims are upheld.

The Labour Law includes provisions on equality and anti-discrimination, prohibiting all forms of discrimination based on race, colour, sex, religion, national or social origin, or disability.

The Labour Law also prohibits employers from:

• preventing equal opportunity; and
• hindering equal access to or continuation of employment and the enjoyment of rights.

Employees are now protected from sexual harassment, bullying and verbal, physical or psychological violence in the workplace. Employers are also prohibited from coercing or threatening employees to undertake work or provide services against their will.

Employers may not terminate or threaten to terminate a female employee's employment due to pregnancy or maternity leave. Violations by employers can result in claims for compensation of up to three months' gross salary.

While the Labour Law does not specify explicit remedies for employees in cases of discrimination, bullying or sexual harassment, employers found in violation may face fines ranging from AED5,000 to AED1 million. These fines can be multiplied based on the number of employees affected by the breach.

In Dubai, all court hearings are now conducted virtually. Although parties can request in-person hearings, such requests are often denied unless the case involves a marriage dispute. Other emirates use a hybrid system of virtual and in-person hearings, with the mode decided at the court’s discretion for each case.

If a party wishes to request a different mode for the hearing (eg, a virtual hearing instead of an in-person one proposed by the court), the request can be granted without the consent of the other party. Aside from the mode of being heard virtually rather than in person, there are no other differences between virtual and in-person hearings.

For onshore entities, an employer or employee can file a complaint to the MOHRE in the event of a breach of the terms of an employment contract or a breach of the Labour Law.

For free zone-located entities, an employer or employee can file a complaint to the relevant free zone authority in the event of a breach of the terms of an employment contract, a breach of the Labour Law or a breach of the relevant free zone employment regulations.

In the first instance, a mediation meeting between the parties will be arranged. This meeting is informal and the MOHRE or relevant free zone authority will attempt to mediate and resolve the dispute. The mediator will hear representations from both parties and offer guidance and a suggested approach on resolving matters.

The MOHRE (except for claims under AED50,000) and relevant free zone hold no legal power; if the matter is not resolved during the mediation, it will be referred to the labour court, where the first hearing will be before the Court of First Instance.

For any action to be filed before the labour court, the MOHRE must issue a court referral letter granting permission for a claim to be filed. This is generally valid for a period of three weeks.

All proceedings brought before the labour court must be issued in Arabic. Generally, an employer and an employee will appoint a UAE-qualified advocate through a power of attorney to appear and present the case before the court.

The labour courts consists of three tiers:

• the Court of First Instance;
• the Court of Appeal; and
• the Cassation Court, which is the highest level of the court system (along with the Federal and Supreme Courts).

A claim will proceed initially with the Court of First Instance until a judgment is provided (or the matter is settled), which can thereafter be appealed in the Court of Appeal if the quantum of the claim exceeds AED50,000. The Court of Appeal will then consider the matter further and thereafter a final avenue of appeal (subject to various caveats) is available before the Cassation Court. A Court of Cassation judgment cannot be appealed and will be considered as the final judgment on the matter. Thereafter, the winning party must execute and enforce a judgment through the Execution Court.

Employees are exempt from paying court fees for any claim raised below the value of AED100,000.

Unlike many common law jurisdictions, in the UAE each party is responsible for their own legal costs as well as disbursements, which are not recoverable by a winning party, except for a small nominal amount (AED2,000–5,000) awarded at the final hearing to the winning party at the complete discretion of the court.

In all cases, no claim for any rights due will be heard after one year from the date of violation.

Labour litigation can be protracted and expensive for all involved, and is best avoided where possible.

The Labour Law in the UAE grants equal employment rights to all employees, with the following exceptions:

• employees of federal and local government entities;
• members of the armed forces, police and security services; and
• domestic servants employed in private households and similar roles.

For all other employees, the Labour Law presides over employment-related matters.

The MOHRE requires an employment contract issued by the MOHRE to be executed in order to validate and legalise any employment arrangement. This contract must include confirmation of the governing and applicable laws. Any attempt to bypass this requirement is considered a violation of public order and is unlawful.

In contrast to many common law jurisdictions, the UAE requires each party to bear their own legal costs and disbursements. These expenses are not recoverable by the winning party, except for a small nominal amount (between AED2,000 and AED5,000) that may be awarded at the final hearing at the court's complete discretion.