UAE Labour Law 2025: 7 Essential Areas for Businesses and Employers

Navigating employment-related laws can feel overwhelming, especially in a dynamic market like the UAE. With the UAE Government continuously adapting its regulations to ensure fairness, both employers and employees must stay ahead of these developments.

That’s where this guide comes in. We've distilled everything you need to understand about the UAE Labour Law in 2025, highlighting how the Ministry of Human Resources and Emiratisation (MOHRE) shapes the labour landscape, what changes matter most, and how you can stay compliant without the headache.

Keep reading to learn more. And if you need expert guidance to understand compliance in the UAE or support registering your team with WPS, don’t hesitate to contact us.

1. Hiring & Onboarding: Key Considerations

Before you start building your team and hiring, it’s essential to understand your obligations around the UAE’s Emiratisation laws.

Emiratisation: Supporting the Local Workforce.

The UAE’s Emiratisation initiative is designed to boost employment opportunities for Emirati nationals in the private sector. To support this, specific hiring quotas have been set for private companies. Companies with 20-49 employees in targeted sectors had to hire at least one UAE national in 2024. For 2025, this target of Emiratisation in the UAE has increased—you'll now need at least two additional Emirati employees.

Larger mainland companies registered with MOHRE (those with over 50 employees) must achieve an annual increase of 2% in their Emirati workforce. Here’s how it breaks down clearly:

• Companies with exactly 50 skilled workers: at least 1 Emirati employee.
• Companies with 51-100 skilled workers: at least 2 Emirati employees.
• Companies with 101-150 skilled workers: at least 3 Emirati employees.
• Companies with more than 151 skilled workers: at least 1 Emirati employee for every 50 employees.

What You Need to Do as an Employer:

• Register on the Nafis platform to access resources and support for hiring Emiratis.
• Make sure all your Emirati employees are registered with pension, retirement, and social security systems.
• Pay all salaries through the Wage Protection System (WPS).

Penalties for Missing the Emiratisation Target:

• AED 96,000 fine per unfilled quota for 2024 (collected January 2025).
• AED 108,000 fine per unfilled Emiratisation target 2025 (to be collected January 2026).

On the flip side, staying compliant doesn’t just keep you out of trouble—it can also earn you discounts on MOHRE fees and priority consideration for government procurement opportunities.

UAE Work Permits & Contracts

In the UAE, it’s important for employers to clearly define employment terms right from the start. That means issuing work permits and signing contracts outlining salaries, benefits, and job responsibilities—so everyone is aligned and knows exactly what's expected.

Types of Employment Contracts in the UAE

Previously, the UAE Labour Law allowed two types of employment contracts: limited-term and unlimited-term. But now, under Federal Decree Law No. 33 of 2021, all contracts must be limited-term.

Unlike before, these limited-term contracts don't have a maximum duration (they used to be capped at four years). Employers and employees can renew or extend these contracts as needed, offering more flexibility for everyone involved.

What is a Limited-Term Contract?

A limited-term contract is a fixed-duration agreement or simply an employment agreement with a set duration, usually matching an employee’s UAE residency visa period (typically 2-3 years). Once the contract ends, it automatically expires unless both parties agree to renew it.

This kind of contract works especially well for project-based roles or roles with clear timelines.

When setting up your limited-term contract, both parties can agree on a notice period for termination—usually between 30 and 90 days. The notice period should not exceed ninety days and must not be less than thirty days.

How Can a Limited-Term Contract End?

• It naturally ends when the agreed duration is reached, unless renewed.
• Employers can end the contract early for serious misconduct under specific legal conditions.
• Employees can also resign early under conditions clearly defined by the labour law.

If an employer chooses to end the contract early, they're required to compensate the employee with either three months’ salary or pay for the remaining contract period—whichever is shorter.

What Should a Limited-Term Contract Include?

Every contract should clearly outline:

• Agreement date
• Job start date
• Job description
• Workplace location
• Salary details
• Contract duration

Limited-term contracts offer a win-win scenario, making it simpler for employers to attract and keep talented employees. Clear terms and flexible notice periods also ensure smoother transitions, stability in the job market, and fewer misunderstandings down the road.

Types of Work Arrangements in UAE

Under the UAE Labour Law (Federal Decree Law No. 33 of 2021), employers can hire workers under various work models to suit business needs. These include full-time, part-time, temporary, flexible, remote, and job-sharing contracts.

• Full-time: The employee works exclusively for one employer on a full-time basis.
• Part-time: The employee works for fewer hours or days than full-time staff and may work for more than one employer, provided they have a valid permit.
• Temporary: The employee is hired for a specific project or assignment, and the contract ends upon completion.
• Flexible work: Work hours or days vary based on the employer’s operational needs.
• Remote work: Tasks are completed fully or partially outside the traditional workplace.
• Job sharing: Two or more employees share the responsibilities of one role, with terms aligned to part-time work regulations.

If a fixed-term contract expires and is not formally renewed but work continues, the agreement is automatically considered renewed on the same terms and conditions.

2. Employee Compensation & Benefits

Unemployment Insurance Scheme: Financial Security for Employees

One major support introduced in recent years is the UAE is the Unemployment Insurance Scheme. This programme offers financial help to employees who unexpectedly lose their jobs, helping ease the transition until they’re back on their feet.

Who’s Eligible?

• Employees who’ve contributed to the scheme for at least 12 consecutive months.
• Employees who were let go for reasons other than disciplinary actions or fraud.
• Note: Employees who voluntarily change jobs aren’t eligible for this coverage.

How Much Does It Cover?

• Qualified employees can receive 60% of their basic salary for up to three months, capped at AED 20,000 per month.
• The insurance coverage remains active for a maximum of 12 months.
• However, some groups, like investors and domestic workers, aren’t included.

Learn more here.

Voluntary Savings Scheme: A New Way to Save

The new Voluntary Savings Scheme is a modern alternative to traditional end-of-service gratuity. Instead of a lump sum at the end, employees can now invest their gratuity into accredited funds—building financial stability over time.

Key Benefits of the Voluntary Savings Scheme:

• Choose from multiple investment options, including Shari’a-compliant funds.
• Employees can contribute extra savings voluntarily—up to 25% of their salary.
• Switching jobs? No worries—your savings can easily move with you.

The Voluntary Savings Scheme replaces traditional end-of-service benefits for private sector workers. Employees can invest their end-of-service gratuity into accredited investment funds.

3. Working Hours, Overtime & Leave: Know Your Rights

Getting familiar with your working hours, overtime pay, and leave entitlements helps ensure employees are treated fairly and can balance work with life outside the office.

Working Hours & Overtime

• Regular Work Hours: You shouldn’t work more than 8 hours per day or 48 hours per week.
• Ramadan Adjustment: During Ramadan, your daily working hours are reduced by 2 hours.
• Overtime Pay: If you're asked to stay late, you're entitled to 25% extra pay on top of your regular salary. If that overtime falls between 10 PM and 4 AM, the extra pay bumps up to 50%.

Annual Leave in UAE

• You're entitled to 30 calendar days of paid leave or 22 working days per year.
• Didn't take all your leave? No worries—it can either be rolled over or paid out when you leave the job.
• Special Leave: Additional leave options include bereavement, parental, and study leave.

Maternity Leave

Under UAE Labour Law (Federal Decree-Law No. 33 of 2021, Article 30), female employees in the private sector receive a maternity leave of 60 days, broken down as follows:

• 45 days at full pay
• 15 days at half pay

If, after these 60 days, you or your baby experience health issues linked to childbirth that keep you from returning to work, you can take another 45 days unpaid leave (continuously or intermittently). Just make sure you have a valid medical certificate from a licensed medical provider. This unpaid period doesn't count towards your end-of-service benefits or pension.

Your employer cannot terminate you because of pregnancy or while you're on maternity leave, and working for another company during this time could lead to salary deductions.

Once you return to work, you're also entitled to breastfeeding breaks of up to one hour daily for six months after childbirth.

Federal Government Employees:

If you're employed full-time by federal government entities, you receive 90 days of fully paid maternity leave, according to Federal Law by Decree No. (49) of 2022. Note that this paid leave cannot be combined with additional unpaid leave.

Paternity Leave

Fathers working in the UAE’s private sector are entitled to five working days of paid parental leave. You can take this leave anytime within the first six months after your child’s birth, giving you the flexibility and time you need to support your growing family.

Parental Leave

In the UAE, employees, whether mothers or fathers, are entitled to five working days of paid parental leave to care for their newborns. This leave can be taken all at once or spread out within six months from the date of birth.

4. Termination & End-of-Service: What You Need to Know

At some point, either the employer or employee may end the working relationship. Here’s what both parties should know:

Termination:

Employers can place employees on a probation period of up to 6 months, and during this time, either party may terminate the contract with 14 days' notice. If an employee wishes to leave after probation, they must provide one month’s notice unless specified otherwise in the contract.

Key End-of-Service Benefits:

Employees are entitled to an end-of-service gratuity upon contract termination, provided they have completed one year of service. The gratuity is calculated based on the total years of service.

• Employees are entitled to a pro-rata gratuity for the first 5 years of service and a full gratuity for any years beyond that.
• The gratuity is based on the last salary, excluding allowances such as transportation and housing.

The national worker is entitled to end-of-service benefits at the end of his service, by the legislation regulating the pensions and social securities in the UAE.

The full-time foreign worker, who completed a year or more in service, is entitled to end-of-service benefits at the end of his service, calculated according to the basic wage based on the following:

• A wage of (21) twenty one days for each year of the first five years of service;
• A wage of (30) thirty days for each year exceeding such period.

5. Fines & Penalties for Non-Compliance: Stay Compliant

The UAE Labour Law has introduced significant penalties for employers who fail to comply with updated regulations, including:

• Hiring Without Permits: Employers face fines between AED 100,000 to AED 1 million for hiring workers without proper permits.
• Shutting Down Operations: Employers who shut down operations without settling workers' rights could be fined.
• Illegal Employment of Minors: Hiring minors without the proper authorisation results in hefty fines.

It’s critical that employers comply with these requirements to avoid costly penalties.

6. Labour Disputes: Resolving Conflicts Efficiently

Disputes between employees and employers are now handled by the Court of First Instance, instead of the Court of Appeal, for cases involving decisions made by the MOHRE. This shift aims to speed up the dispute resolution process.

Important Notes for Employers:

• Disputes related to termination must be filed within two years of termination.
• Employers can resolve disputes by paying 50% of the minimum fine or repaying financial incentives.

7. The Wage Protection System (WPS)

The Wage Protection System (WPS) ensures timely and full payment of employee wages. Employers must use approved banks to deposit salaries through the system. The WPS UAE was launched by the Central Bank of the UAE and the Ministry of Human Resources and Emiratisation (Mohre).

For 2025, it is important for companies to adhere to WPS regulations. Non-compliance can result in significant fines and legal consequences.

Employers can register their accounts on MoHRE’s official website, using the company details provided by the Ministry.

Employers will need to log in and update their accounts with:

• Bank account information
• List of employees with details of the bank
• The bank or agent an employee has an account with
• The date on which the salary should be paid

How the UAE's WPS System Works

1. Creating and Submitting the Salary Information File (SIF)

• The Salary Information File (SIF) is a digital record containing essential details about employee salaries, benefits, and deductions.
• Employers are required to submit the SIF whenever salaries are processed (excluding bonuses, commissions, and gratuities).
• A WPS agent reviews the file for accuracy before final submission.

2. Salary Verification by MoHRE & the Central Bank

• MoHRE and the UAE Central Bank review the SIF to ensure compliance with WPS regulations.
• Employers must transfer at least 75% of salaries through the WPS system.
• If discrepancies are detected, employers receive an email notification to rectify errors.

3. Approval and Payment Processing

• Upon successful verification, MoHRE and the Central Bank authorise salary payments through a designated WPS agent.
• Any errors must be corrected promptly to avoid fines and delays.

4. Salary Disbursement to Employees

• The WPS agent transfers salaries directly into employees' bank accounts.
• Many banks provide WPS payroll cards, enabling employees to access their wages like a standard debit card.
• Employers should ensure their workforce has active bank accounts for seamless salary withdrawals.

Occupational Health & Safety Obligations in the UAE Labour Law

Under Federal Decree Law No. 33 of 2021, employers in the UAE are legally required to maintain a safe and healthy workplace for all employees. Both employers and workers must follow the occupational health and safety regulations issued by MoHRE and other relevant authorities.

Employer Responsibilities for Workplace Safety

Employers must take proactive measures to prevent work-related injuries and occupational hazards. Key obligations include:

• Ensuring workers are protected from risks that may arise during their duties
• Installing clear safety signage and awareness materials in the workplace
• Providing adequate safety training to employees
• Conducting regular safety assessments to ensure compliance with health and safety standards

Employee Responsibilities

Employees also play a crucial role in maintaining workplace safety. Their responsibilities include:

• Properly using all safety gear and protective equipment provided
• Following the employer’s safety instructions at all times
• Avoiding actions that could pose a risk to themselves or others
• Complying with all health and safety protocols
• Taking care of the tools, equipment, and protective materials issued to them

Creating a culture of safety is a shared responsibility. UAE labour law ensures that both employers and employees are accountable for maintaining a secure working environment.

Still have questions about navigating UAE Labour Law 2025? Our team is here to simplify compliance, answer your questions about Emiratisation, WPS registration, contracts, and more—saving you time and stress.

Book time with our team today.

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