UAE Labour Law for Employers in 2026: Contracts, Probation, Leave and Notice

Who does the UAE Labour Law cover in 2026?

Federal Decree-Law No. 33 of 2021 covers every private-sector employer and employee in the UAE, Emirati or foreign, and has applied since 2 February 2022. Federal and local government staff, the armed forces, police and domestic workers are excluded. Its detail sits in the Executive Regulations, Cabinet Resolution No. 1 of 2022. The latest amendment, Federal Decree-Law No. 9 of 2024, took effect on 31 August 2024; the UAE Legislation portal listed none later as at 8 October 2026.

The financial free zones are outside this guide: DIFC applies DIFC Law No. 2 of 2019, and ADGM its Employment Regulations 2024, in force since 1 April 2025. In other free zones, the authority sponsors employees and issues its own employment regulations, but the UAE Government portal says contract terms must still accord with the Labour Law, so its minimums are the baseline. Mainland employers deal with the Ministry of Human Resources and Emiratisation (MoHRE).

Employment contracts: fixed terms, work models and probation

Every UAE employment contract must be for a fixed term, renewable by agreement, with no legal maximum. If both sides keep performing after expiry, it is renewed on the same terms, and renewals count as continuous service. Unlimited contracts under the 1980 law had to be converted, by a deadline MoHRE extended to 31 December 2023. Mainland contracts use MoHRE’s approved templates, and no one may start work before MoHRE issues a work permit.

Six work models are recognised: full-time; part-time for one or more employers; temporary, for a set period or task; flexible, where hours or days vary with the workload; remote, wholly or partly outside the workplace; and job sharing, where duties are divided by prior agreement. Probation lasts up to 6 months, carries no paid sick leave, and its notice depends on who ends it.

A non-compete clause does not apply when a contract ends during probation.

Working hours, overtime and leave entitlements

Normal hours are capped at 8 a day or 48 a week, 2 hours a day less in Ramadan. Overtime is limited to 2 hours a day and total hours to 144 in any 3 weeks. Each overtime hour earns the hourly basic wage plus at least 25%, or 50% between 10 pm and 4 am (shift workers excepted). Work on a rest day or public holiday earns a substitute day off, or the day’s pay plus at least 50% of the basic wage.

One Cabinet list of paid holidays applies to both sectors: New Year’s Day, Eid Al Fitr (up to 4 days), Arafah Day, Eid Al Adha (3 days), Hijri New Year, the Prophet’s birthday and National Day on 2 and 3 December. Up to half of annual leave can be carried forward, and an employer may not block its use for more than 2 years. The table compares each statutory leave.

Wages, WPS, minimum wage and mandatory insurance

Every MoHRE-registered establishment must pay salaries through the Wage Protection System (WPS). Under Ministerial Resolution No. 340 of 2026, which law firms report took effect on 1 June 2026, the previous month’s salary is due on the 1st of each month, and at least 85% of wages due must be paid on time. MoHRE sends alerts from day 2 of a delay, suspends new work permits from day 5, and fines and downgrades repeat offenders from day 11; from day 16 and day 21 come labour disputes, travel bans and possible prosecution.

The law sets no general minimum wage, though Article 27 lets the Cabinet set one. The only minimum in force is AED 6,000 a month for Emiratis in the private sector, from 1 January 2026. Deductions are allowed only on listed grounds, including interest-free loans with written consent, overpayments (up to 20% of the wage), disciplinary fines (up to 5%) and court-ordered debts (up to a quarter), never above 50% in total. Employers may not charge staff recruitment costs.

Two insurances are compulsory. The Involuntary Loss of Employment (ILOE) scheme has been mandatory since 1 January 2023 for private-sector employees other than owner-investors, domestic workers, temporary-contract staff, under-18s and pensioners. Premiums are up to AED 5 a month on a basic salary of AED 16,000 or less and AED 10 above it; the employee’s AED 400 fine for not subscribing can be deducted from WPS wages or gratuity. Since 1 January 2025, employers in every emirate must provide health insurance before residence is issued or renewed; the basic package costs AED 320 a year.

How to end a UAE employment contract: notice, dismissal and non-compete

Either party may end a contract for a legitimate reason with written notice of 30–90 days, as the contract sets. The employee earns full wage during notice; a party that skips notice owes a notice allowance at the last wage. During employer notice, the employee may take one unpaid day a week to job-hunt. Contracts also end by written agreement, expiry, death or permanent disability, closure, bankruptcy or a prison sentence of 3 months or more.

Dismissal without notice needs an Article 44 ground, such as forgery, serious loss caused by the employee, disclosing secrets, intoxication or assault at work, or unexcused absence of more than 20 non-consecutive days a year or 7 in a row, plus a written investigation. Dismissal because the employee made a serious MoHRE complaint, or brought a lawsuit proved valid, is arbitrary: the court can award up to 3 months’ wage. Ill health ends employment only after sick leave is used up. Foreign full-time staff with a year’s service also earn gratuity of 21 days’ basic wage a year for the first five years and 30 days after that.

A non-compete must be limited in time, place and type of work to what protects legitimate business interests, and cannot exceed 2 years after the contract ends. It is void if the employer ended the contract unlawfully, and it falls away if compensation of up to 3 months’ wage is paid to the former employer with its written approval. The employer must sue within one year of discovering a breach. For any termination, follow these steps.

1. Confirm the ground: a legitimate reason with notice, or an Article 44 ground with a written investigation and reasoned decision.
2. Check for protection: a recent MoHRE complaint or lawsuit, unused sick leave, or probation, where notice is 14 days.
3. Serve written notice of 30–90 days, or pay the notice allowance at the last wage.
4. Calculate final dues: salary to the last day, untaken leave and gratuity at basic wage, and any notice allowance, less lawful deductions only.
5. Pay everything within 14 days of the contract ending.
6. Cancel the work permit and residence, and remind the employee that an ILOE claim must be filed within 30 days.
7. Keep the file for at least 2 years, the claims period.

Worked example: overtime, leave pay and notice pay on AED 24,000 a month

Take a basic wage of AED 18,000 a month plus AED 6,000 of housing and transport allowances, a total wage of AED 24,000. The law defines the basic wage as excluding allowances and the wage as basic plus allowances and benefits, and each payment uses one of the two. The law fixes no daily rate, so this example divides the month by 30 and the day by 8 hours.

1. Hourly basic rate: AED 18,000 ÷ 30 ÷ 8 = AED 75.
2. Overtime, 10 hours at 25% (basic wage, Article 19): AED 75 × 1.25 × 10 = AED 937.50.
3. The same 10 hours between 10 pm and 4 am, at 50%: AED 75 × 1.5 × 10 = AED 1,125.
4. 30 days of annual leave taken (wage, Article 29): AED 24,000 ÷ 30 × 30 = AED 24,000, the normal monthly pay.
5. 30 untaken days paid out on exit (basic wage, Executive Regulations Article 19): AED 18,000 ÷ 30 × 30 = AED 18,000.
6. Pay in lieu of 30 days’ notice (last wage, Article 43): AED 24,000 ÷ 30 × 30 = AED 24,000.
7. Arbitrary dismissal ceiling (wage, Article 47): 3 × AED 24,000 = AED 72,000.
8. ILOE: basic above AED 16,000 means the AED 10 category; the benefit is 60% × AED 18,000 = AED 10,800 a month for up to 3 months, under the AED 20,000 cap.

Spreading the AED 216,000 annual basic wage over 365 days gives overtime of AED 924.66. Pick one method, put it in your HR policy and apply it to everyone.

What changed for UAE employers from 2024 to 2026?

Since mid-2024 the changes have tightened enforcement rather than entitlements: probation, hours, leave and notice rules are as they were in 2022. The changes concern disputes, fines, salary payment dates, health insurance and Emirati pay, listed below by the date each took effect. As at 8 October 2026, the UAE Legislation portal showed no amendment to the decree-law itself after 2024.

Penalties, fines and labour disputes

Article 60, as amended in 2024, sets fines of AED 100,000–1,000,000 for employing without a work permit, recruiting workers and not giving them work, misusing permits, closing a business without settling workers’ rights, and employing juveniles unlawfully. Fictitious employment, including fake Emiratisation, carries the same range multiplied by the number of workers; MoHRE may settle for at least 50% of the minimum fine plus repaid incentives. MoHRE has also imposed administrative fines of AED 20,000–100,000 per fake Emiratisation case.

Disputes start with a MoHRE complaint and a settlement attempt. MoHRE decides claims up to AED 50,000, and any claim where a party ignored an earlier settlement; either side can file in the Court of First Instance within 15 working days, which suspends the decision. Larger claims go to court, and workers pay no court fees on claims up to AED 100,000. MoHRE can order wages paid for up to 2 months during a dispute. The deadlines below carry the most risk.

Employer compliance checklist for 2026

An employer should hold these records for every employee, because most labour claims turn on documents the employer cannot produce when MoHRE asks. Review the file whenever a contract is renewed, a salary or job title changes or someone leaves, and keep it for at least 2 years after the employment ends, the period in which a claim can still be brought.

• MoHRE work permit issued before the start date.
• Signed MoHRE-template contract with a fixed term, probation of 6 months or less and notice of 30–90 days.
• Health insurance before the residence application or renewal.
• ILOE cover for every non-exempt employee.
• WPS payroll paying salaries by the 1st of each month.
• Basic wage and allowances shown separately in contracts and payslips.
• Overtime records within 2 hours a day and 144 hours every 3 weeks.
• Leave balances, carry-forward and the exit settlement.
• A written policy on the daily-rate method, overtime approval and discipline.

Common mistakes UAE employers make

The most common mistakes are using the wrong wage base, missing a payment deadline and skipping a step the law requires before dismissal. Each of the errors below can turn a routine resignation or dismissal into a MoHRE claim, and most can be avoided by fixing the method once in a written HR policy and applying it to every employee.

• Paying notice in lieu on basic salary, when Article 43 uses the last wage.
• Calculating overtime on total pay, or allowing more than 2 hours a day.
• Paying salaries on the 10th or 15th: under Resolution No. 340 of 2026 they are due on the 1st.
• Running probation past 6 months, or ending it without 14 days’ notice.
• Dismissing without notice and without a written investigation.
• Ending employment for ill health before sick leave is used up.
• Deducting more than 5% for a disciplinary fine or 50% in total.
• Charging staff for visas or recruitment, which Article 6 prohibits.

Glossary of UAE employment terms

These terms appear in the UAE Labour Law, the Executive Regulations and MoHRE’s online systems, and in most UAE employment contracts and offer letters. The distinction between basic wage and wage matters most, because it decides how overtime, annual leave, notice pay, dismissal compensation and gratuity are calculated, and getting it wrong is a frequent cause of underpaid final settlements.

• MoHRE: the Ministry of Human Resources and Emiratisation, which issues mainland work permits and decides smaller claims.
• Basic wage: the contract wage without allowances; used for overtime, untaken leave and gratuity.
• Wage: basic wage plus cash allowances and benefits; used for leave taken, notice pay and dismissal compensation.
• WPS: the Wage Protection System for paying salaries electronically.
• ILOE: the Involuntary Loss of Employment scheme, the UAE’s unemployment insurance.
• Notice allowance: pay owed by the party that does not serve the agreed notice.
• Arbitrary dismissal: termination because the employee complained to MoHRE or brought a valid lawsuit.