Legal Insight
Navigating Employment Law
Understand your key obligations as an employer in the UAE — contracts, gratuity, WPS, overtime, leave, and anti-discrimination. Fakher & Co helps you stay compliant.
A Guide for Employers: Your Key Obligations Under the UAE Labour Law
The UAE has a comprehensive legal framework designed to protect the rights of employees, and as an employer, it is your legal responsibility to understand and adhere to these laws. Compliance with the UAE Labour Law is not just about avoiding fines and legal disputes; it is about creating a fair, stable, and productive work environment that attracts and retains talent.
This guide highlights some of the key obligations that every employer in the UAE must be aware of. While this is not exhaustive legal advice, it provides a crucial overview of your primary responsibilities.
1. The Employment Contract
Every employee must have a formal employment contract that is registered with the Ministry of Human Resources and Emiratisation (MOHRE) or the relevant free zone authority. The contract must be in a standard format and must specify the key terms of employment.
- Key Obligation: You must provide a legally compliant contract that clearly states the employee’s role, salary (broken down into basic salary and allowances), start date, and the duration of the contract (limited or unlimited).
- Best Practice: Supplement the standard government contract with a more detailed internal contract that includes clauses on confidentiality, intellectual property, and company policies.
2. The Probationary Period
The probationary period allows you to assess a new employee’s suitability for the role.
- Key Obligation: The probationary period cannot exceed six months. During this time, you can terminate the employee with 14 days’ notice. An employee who wishes to resign during probation must also provide notice (which varies depending on their circumstances).
3. Working Hours and Overtime
The law sets clear limits on working hours to protect employees from overwork.
- Key Obligation: The maximum standard working hours are 8 hours per day or 48 hours per week. Any work performed beyond these hours is considered overtime and must be paid at a premium rate (standard hourly wage plus a 25% supplement, or 50% if the overtime is between 10 PM and 4 AM).
4. Leaves and Holidays
Employees are legally entitled to various types of leave.
- Annual Leave: Employees are entitled to 30 calendar days of paid annual leave after completing one year of service.
- Sick Leave: After the probationary period, an employee is entitled to up to 90 days of sick leave per year (the first 15 days are fully paid, the next 30 are half-paid, and the remaining 45 are unpaid).
- Public Holidays: All employees are entitled to paid leave on official public holidays.
5. Wages and Payment
The timely payment of salaries is a critical legal obligation.
- Key Obligation: All employers on the mainland must be registered with the Wages Protection System (WPS), which is an electronic system that ensures salaries are paid on time and in full. Failure to pay salaries on time can result in significant fines and penalties.
6. End-of-Service Gratuity
This is a statutory severance payment that is due to most employees upon the termination of their employment. It is a crucial financial right for employees.
- Key Obligation: For employees who have completed at least one year of service, you must pay an end-of-service gratuity. The amount is calculated based on the employee’s last basic salary: 21 days’ basic salary for each of the first five years of service, and 30 days’ basic salary for each subsequent year.
7. Discrimination and Harassment
The UAE Labour Law expressly prohibits discrimination and harassment in the workplace.
- Key Obligation: You must not discriminate against employees on the basis of race, color, sex, religion, national origin, or disability. The law also prohibits all forms of harassment, including sexual harassment, in the workplace.
Stay Compliant and Protect Your Business
Navigating the nuances of the UAE Labour Law can be complex. The employment law experts at Fakher & Co provide proactive advice and support to ensure your business is always compliant. We can assist with drafting compliant contracts, creating HR policies, and advising on any specific employment issues you may face.