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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
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.
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)
Find the rule
What do you need to know?
Find the rule
What do you need to know?
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.
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.
| Rule | What the law says |
|---|---|
| Who qualifies | A full-time foreign worker with one year or more of continuous service |
| First 5 years | 21 days' basic wage for each year |
| Each year beyond 5 | 30 days' basic wage for each year |
| Wage used | The last basic wage the worker was entitled to |
| Part years | Counted in proportion, once the first full year is complete |
| Unpaid absence | Unpaid absence days are excluded from the service term |
| Cap | Total gratuity can never exceed two years' wage |
| Deductions | The employer may deduct amounts payable under law or a judgment |
| Payment deadline | Within 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.
Probation, notice and non-compete limits.
Three clauses appear in almost every employment contract. Each has a limit set by law.
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.
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.
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.
Ending a contract, by the article.
The law treats four situations differently. The procedure matters as much as the reason.
| Situation | Rule | Key condition |
|---|---|---|
| Termination with notice (Article 43) | Either party may end the contract for a legitimate reason | Written 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 work | A written investigation first, then a written and justified decision handed to the worker |
| Absence (Article 44) | Dismissal is allowed for absence without a legitimate reason | More 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 consent | For 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 unlawful | Court 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 leave | Any 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.
Four errors that cost money.
These are the points where employers and employees most often lose out.
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.
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.
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.
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.
Six steps in a labour dispute.
Federal Decree-Law 20 of 2023 changed the dispute route, so older guidance is often out of date.
Start on WhatsApp →Check the date
A claim cannot be heard more than one year after the right fell due, so confirm the date before anything else.
File with MOHRE
The employer, the worker or the worker's beneficiaries raise the dispute with the Ministry of Human Resources and Emiratisation.
Amicable settlement
MOHRE reviews the complaint and attempts an amicable settlement between the two sides.
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.
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.
Referral to court
Larger or unresolved claims go to the competent court with a MOHRE memorandum summarising the dispute, the arguments and its recommendations.
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.
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.