UAE Labour Law for Free Zone Employees: Rights and Obligations 2026
UAE labour law applies to most UAE free zone employees (with notable exceptions for DIFC and ADGM which have their own employment laws). Understanding UAE Federal Labour Law (Federal Decree-Law No. 33/2021 as amended) is essential for free zone companies employing UAE-based staff. This guide covers key employee rights and employer obligations in 2026.
UAE Federal Labour Law vs Free Zone Employment Law
- Federal Labour Law (MOHRE): applies to all UAE free zones EXCEPT DIFC and ADGM
- DIFC Employment Law: applies only to DIFC-registered companies and their employees
- ADGM Employment Regulations: applies only to ADGM-registered companies and their employees
Types of UAE Employment Contracts 2026
UAE Labour Law 2021 allows only fixed-term employment contracts (maximum 3 years, renewable). Open-ended (unlimited) contracts were abolished. Key implications:
- All employment contracts must be fixed-term, maximum 3 years
- Renewable for additional 3-year periods
- End of service gratuity (EOSG) accrues on all contracts (21 days’ pay per year for first 5 years; 30 days’ pay per year beyond 5 years)
UAE Employee Leave Entitlements 2026
- Annual leave: 30 calendar days per year (after completing 1 year of service); 2 days per month (first year)
- Sick leave: 90 days per year (15 days full pay, 30 days half pay, 45 days unpaid)
- Maternity leave: 60 calendar days (45 full pay, 15 half pay)
- Paternity leave: 5 working days
- Public holidays: UAE gazetted public holidays (typically 11–13 days per year)
- Hajj leave: 30 days unpaid (once in employment lifetime, for qualifying Muslim employees)
UAE End of Service Gratuity
End of Service Gratuity (EOSG) is the UAE mandatory severance payment due to employees on termination (resignation or dismissal). Calculation:
- First 5 years: 21 days’ basic salary per year of service
- After 5 years: 30 days’ basic salary per year of service (for additional years beyond 5)
EOSG is calculated on basic salary (excluding allowances). Employee must have completed 1 year of service to be entitled to EOSG. EOSG is a significant liability for UAE employers — budget for it from employee start date.
DIFC Employment Law — Key Differences from Federal Law
- DIFC DEWS: DIFC Employee Workplace Savings replaces EOSG for post-2020 DIFC employees; employer contributes 5.83–8.33% of monthly basic salary to a Zurich-managed workplace savings account
- Maximum working hours: DIFC has different working hours provisions from federal law
- Flexible working: DIFC employment law has more flexible remote work provisions
- Minimum wage: no UAE minimum wage (for expatriates) under federal law; DIFC has minimum wage provisions for some categories