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Employment · UAE

UAE employment law guidance

Clear answers on gratuity, notice, probation, dismissal, non-compete clauses and labour disputes for private-sector employers and employees, based on Federal Decree-Law 33 of 2021 as amended.

  • Gratuity worked out on the basic wage
  • Notice, probation and dismissal rules explained
  • Guidance only. Court disputes need a lawyer

Estimate end-of-service gratuity

Completed servicefull-time, continuous
7 years
AED33,00021 days of basic wage for each of the first five years, then 30 days for each year after.
First five yearsAED 21,000
Years after fiveAED 12,000

A guide for full-time foreign employees in the private sector. Part years count in proportion after the first year, unpaid absence is excluded, and the total cannot exceed two years of wage.

21Days' basic wage a year, first 5 years
30–90Days of written notice
6Months of probation at most
AED50,000Claim size MOHRE can decide itself
In brief

UAE employment law, in brief.

UAE private-sector employment is governed by Federal Decree-Law 33 of 2021, as amended by Federal Decree-Law 20 of 2023, together with its Implementing Regulation. It sets the rules on probation, notice, dismissal, end-of-service gratuity, non-compete clauses and labour disputes.

Employers and employees of private-sector companies across the UAE use it, including most Freezone staff. My Eloah Business Hub explains which rule applies to your situation and works through the figures with you; this is guidance and is not legal advice.

Law
Federal Decree-Law 33 of 2021, as amended
Applies to
Private sector across the UAE; Freezone employees are generally covered
Excluded
DIFC and ADGM, which run their own employment laws
Authority
Ministry of Human Resources and Emiratisation (MOHRE)
Quick check

Find the rule

What do you need to know?

Find the rule

What do you need to know?

21 days, then 30 days a year

A full-time foreign worker with one year or more of continuous service earns 21 days' basic wage for each of the first 5 years and 30 days' basic wage for each year after that. It is calculated on the last basic wage and the total can never exceed two years' wage.

First 5 years
21 days' basic wage a year
Each year beyond 5
30 days' basic wage a year
Maximum
Two years' wage

This is general guidance under Federal Decree-Law 33 of 2021 and is not legal advice; a contested dismissal or a claim above AED 50,000 needs a lawyer.

End-of-service gratuity

The gratuity formula, line by line.

Article 51 sets the end-of-service gratuity for a full-time foreign worker who has completed one year or more of continuous service. The basic wage is the starting point, so a package made up mostly of allowances produces a smaller gratuity.

RuleWhat the law says
Who qualifiesA full-time foreign worker with one year or more of continuous service
First 5 years21 days' basic wage for each year
Each year beyond 530 days' basic wage for each year
Wage usedThe last basic wage the worker was entitled to
Part yearsCounted in proportion, once the first full year is complete
Unpaid absenceUnpaid absence days are excluded from the service term
CapTotal gratuity can never exceed two years' wage
DeductionsThe employer may deduct amounts payable under law or a judgment
Payment deadlineWithin 14 days of the contract ending, with all other wages and entitlements

Worked example: basic wage AED 6,000 and 7 years of service. First 5 years: 6,000 divided by 30, times 21, is AED 4,200 a year, so AED 21,000. Years 6 and 7: AED 6,000 a year, so AED 12,000. Total gratuity AED 33,000. UAE nationals fall under the pension and social security regime and do not receive gratuity.

Starting and ending

Probation, notice and non-compete limits.

Three clauses appear in almost every employment contract. Each has a limit set by law.

Article 9

Probation: 6 months at most

An employer ending the contract during probation gives 14 days' written notice. A worker moving to another UAE employer gives 1 month's written notice, and the new employer compensates the first for recruitment costs unless agreed otherwise.

Article 43

Notice: 30 to 90 days

Notice must be in writing and the same length for both parties, unless the difference favours the worker. The worker is paid in full during notice and, if the employer ended the contract, may take one unpaid working day a week to look for work on 3 days' prior notice.

Article 10

Non-compete: 2 years at most

The clause must be specified in time, place and type of work, and limited to what protects legitimate business interests. It is void if the employer terminated the contract unlawfully.

Termination

Ending a contract, by the article.

The law treats four situations differently. The procedure matters as much as the reason.

SituationRuleKey condition
Termination with notice (Article 43)Either party may end the contract for a legitimate reasonWritten notice of 30 to 90 days, as the contract states
Dismissal without notice (Article 44)Allowed in ten listed cases, including forged documents, assault, disclosing a work secret, and being drunk or under narcotics at workA written investigation first, then a written and justified decision handed to the worker
Absence (Article 44)Dismissal is allowed for absence without a legitimate reasonMore than 20 intermittent days in a year, or more than 7 consecutive days
Worker resigns without notice (Article 45)The worker keeps full end-of-service rights if the employer breached its obligations, in cases of assault, violence or harassment, grave danger to health or safety, or fundamentally different work without written consentFor an employer breach, the worker notifies MOHRE 14 working days before leaving. Assault or harassment is reported within 5 working days
Unlawful termination (Article 47)Termination that follows a serious MOHRE complaint or lawsuit proven valid is unlawfulCourt compensation capped at 3 months' wage, on top of notice allowance and end-of-service benefits
Health unfitness (Article 46)The employer may not terminate for lack of health fitness before the worker has used accrued leaveAny agreement that says otherwise is void

Where a mistake causes gross physical loss, the employer must inform MOHRE within 7 working days of becoming aware of it.

Common mistakes

Four errors that cost money.

These are the points where employers and employees most often lose out.

Gratuity

Calculating on gross salary

Gratuity is worked out on the basic wage only. A package that is 40% basic and 60% allowances gives a much smaller gratuity than many people expect, and that is lawful.

Dismissal

Skipping the written investigation

Without a written investigation and a written, justified decision, an Article 44 dismissal is not valid. The employer ends up paying notice and gratuity, with exposure to an unlawful termination claim.

Time limit

Waiting more than one year

A claim cannot be heard more than one year after the right fell due. Unpaid wages or gratuity left for longer than that can no longer be claimed.

Penalties

Hiring and leaving a worker idle

Recruiting a worker and leaving him without work, employing someone not permitted to work for you, or using work permits for other purposes carries a fine of AED 50,000 to AED 200,000.

How it works

Six steps in a labour dispute.

Federal Decree-Law 20 of 2023 changed the dispute route, so older guidance is often out of date.

  1. Check the date

    A claim cannot be heard more than one year after the right fell due, so confirm the date before anything else.

  2. File with MOHRE

    The employer, the worker or the worker's beneficiaries raise the dispute with the Ministry of Human Resources and Emiratisation.

  3. Amicable settlement

    MOHRE reviews the complaint and attempts an amicable settlement between the two sides.

  4. MOHRE decision

    MOHRE issues a final decision where the claim is AED 50,000 or less, or at any value where a party does not comply with an amicable settlement decision.

  5. Appeal

    Either party may appeal to the Court of Appeal within 15 working days of notification; a hearing is set within 3 working days and the case is decided within 15 working days.

  6. Referral to court

    Larger or unresolved claims go to the competent court with a MOHRE memorandum summarising the dispute, the arguments and its recommendations.

Questions

UAE employment law, answered.

Ask anything else on WhatsApp and we will answer for your company.

How is end-of-service gratuity calculated in the UAE?

Gratuity is 21 days' basic wage for each of the first 5 years of service and 30 days' basic wage for each year after that. It uses the last basic wage, counts part years in proportion once the first year is complete, and can never exceed two years' wage.

Is gratuity calculated on basic salary or total salary?

Gratuity is calculated on the basic wage only. For example, a basic wage of AED 6,000 and 7 years of service gives AED 21,000 for the first 5 years plus AED 12,000 for years 6 and 7, a total of AED 33,000.

What is the notice period under UAE labour law?

The notice period is at least 30 days and at most 90 days, as agreed in the contract, and it must be given in writing. A party that does not give notice pays an allowance equal to the wage for the full or remaining notice period, even if no damage was caused.

How long can probation last in the UAE?

Probation can last a maximum of 6 months from the start date. An employer who ends the contract during probation must give 14 days' written notice, and the same worker cannot be put on probation twice by the same employer.

Can an employer dismiss an employee without notice?

Yes, in the ten cases listed in Article 44, and only after a written investigation with a written and justified decision given to the worker. The cases include forged documents, assault, and absence of more than 7 consecutive days or more than 20 intermittent days in a year without a legitimate reason.

How do I file a labour complaint in the UAE?

You file the complaint with the Ministry of Human Resources and Emiratisation (MOHRE), which first tries to settle it amicably. MOHRE can issue a final decision on claims of AED 50,000 or less, and either party can appeal to the Court of Appeal within 15 working days.

Is there a time limit for a labour claim in the UAE?

Yes, one year. A claim cannot be heard more than one year after the right fell due, so unpaid wages or gratuity should be claimed promptly.

Do I need a lawyer for a labour dispute?

You need a lawyer for a contested dismissal or a claim above AED 50,000. My Eloah Business Hub gives guidance on the rules, which is not legal advice. Worker claims of up to AED 100,000 are exempt from judicial fees at all stages.

Ready when you are

Get the rule right before you act

Send us your question on WhatsApp and we will tell you which rule applies and what the figures look like.