UAE Labour Law — Employee Rights, Contracts, and Employer Obligations 2026
UAE Labour Law (Federal Decree-Law No. 33 of 2021, effective February 2022) governs employment relationships for all UAE private sector workers, including those in free zones (except DIFC and ADGM which have their own employment laws). This guide covers UAE Labour Law essentials for employers in 2026.
UAE Employment Contract Types (Post-2022)
UAE Labour Law abolished permanent/indefinite contracts in 2022. All new and renewed contracts must be fixed-term:
- Fixed-term contract: 1–3 years (renewable); most common post-2022
- Full-time contract: standard; 8 hours/day, 48 hours/week
- Part-time contract: permitted; pro-rated benefits
- Remote/flexible work contract: permitted; employer-employee agreement on working hours/location
Employee End of Service Gratuity
UAE law mandates end of service gratuity (EOSG) for employees who complete 1+ years of service:
- 1–5 years service: 21 calendar days’ basic salary per year of service
- 5+ years service: 30 calendar days’ basic salary per year of service (for years above 5)
- Calculation base: basic salary only (not housing, transport, or other allowances)
- Capped at: 2 years’ total basic salary
- EOSG liability: accrues on employer’s balance sheet; no mandatory pre-funding (unlike DIFC)
UAE Annual Leave Entitlement
- Standard annual leave: 30 calendar days after 1 year of service
- Under 1 year: 2 days/month (pro-rated)
- Public holidays: 14 UAE public holidays/year (some may be adjusted per lunar calendar)
- Sick leave: 90 days/year (first 15 days full pay; next 30 days half pay; next 45 days unpaid)
UAE Wages Protection System (WPS)
WPS (Wages Protection System) mandates salary payment via UAE banks, exchange houses, or WPS-registered financial institutions. All UAE private sector employers with 5+ employees must pay salaries through WPS. Non-compliance penalties: employer fines; ban on new work permits. DIFC and ADGM have separate WPS-equivalent systems.
DIFC and ADGM Employment Law
DIFC and ADGM have their own employment laws, separate from UAE mainland Labour Law:
- DIFC Employment Law: based on international common law; end of service via DEWS (DIFC Employee Workplace Savings) scheme (mandatory funded gratuity); stronger employee protections
- ADGM Employment Regulations: similar to DIFC model; mandatory funded end of service
- Key difference: DIFC/ADGM employers must make monthly DEWS contributions (mandatory provident fund) rather than accruing unfunded liability