UAE Employment Contracts Guide: Decree-Law 33/2021

All UAE employment contracts have been fixed-term since Federal Decree-Law No. 33 of 2021, with a maximum duration of three years and unlimited renewals, and the old distinction between limited and unlimited contracts has gone. That change matters financially: gratuity is now calculated the same way whether an employee resigns or is dismissed, subject to completing one year of service. A probation period may last up to six months, notice periods run from 30 to 90 days, and an employer must give 14 days' notice to end a contract during probation. Annual leave is 30 calendar days once a year of service is complete. An employer that ends a fixed-term contract early owes compensation of up to three months' wages, and the employee owes half that for leaving early.

The UAE's employment landscape underwent a fundamental transformation on February 2, 2022, when Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations came into effect, replacing the previous 1980 labor law. Understanding these rules is essential for evaluating UAE salary offers and negotiating your employment terms. The new law introduced fixed-term contracts as the only contract type, modernized working arrangements, strengthened employee protections, and aligned the UAE's labor framework with international standards. This guide covers everything you need to know about UAE employment contracts and labor law in 2026.

The New Labor Law: Key Changes

Federal Decree-Law No. 33/2021 brought several landmark changes:

• End of unlimited contracts: All employment contracts must now be fixed-term (maximum 3 years, renewable). Existing unlimited contracts were required to be converted by December 31, 2023.
• New work models recognized: The law now covers full-time, part-time, temporary, flexible, and remote work arrangements.
• Anti-discrimination provisions: Discrimination based on race, color, sex, religion, national origin, social origin, or disability is prohibited.
• Sexual harassment protections: The law explicitly prohibits sexual harassment in the workplace.
• Maternity leave expansion: Maternity leave increased from 45 to 60 days.
• Paternity leave introduced: 5 working days of paid paternity leave (within the first 6 months of the child's birth).
• Non-compete clause regulation: Non-compete clauses are now explicitly regulated and limited to 2 years.

Contract Types

Fixed-Term Contracts (Limited Contracts)

Since February 2022, all UAE employment contracts must be fixed-term. Key provisions:

• Maximum duration: 3 years per term.
• Renewal: Contracts can be renewed for equal or shorter periods by mutual agreement. Renewal can be automatic if both parties continue the employment relationship after the contract expires.
• Written requirement: The contract must be in writing, in Arabic (bilingual contracts are common but the Arabic version prevails in disputes). It must be registered with MOHRE.
• Minimum contents: Employer name and address, employee name and nationality, job title, date of commencement, contract duration, place of work, working hours, remuneration and payment frequency, annual leave entitlement, notice period, and termination provisions. For tips on negotiating these terms, see our salary negotiation guide.

Recognized Work Models

The new law recognizes several work models:

• Full-time: Standard employment for one employer during official working hours.
• Part-time: Employment for one or more employers for a specified number of hours or days. Each part-time engagement requires a separate work permit.
• Temporary work: Employment for a specific task or period, with the contract ending upon completion.
• Flexible work: Hours and days vary based on employer demand. Common in gig-economy roles.
• Remote work: Work performed entirely or partially outside the employer's premises, including from home or abroad.

Probation Period

The maximum probation period under UAE law is 6 months. Key rules:

• The probation period must be specified in the employment contract.
• During probation, either party can terminate the contract with 14 days' written notice.
• An employee cannot be placed on probation more than once by the same employer.
• If the employee resigns during probation to leave the UAE, the 14-day notice period applies.
• If the employee resigns during probation to join another UAE employer, the new employer must compensate the original employer for recruitment costs, unless the employment contract states otherwise.
• If the employee has been recruited from abroad, the original employer can request that the new employer reimburse recruitment and relocation costs.

Working Hours and Overtime

Standard Working Hours

• Normal hours: 8 hours per day or 48 hours per week.
• Ramadan hours: Reduced by 2 hours per day for all employees, regardless of religion. Effectively 6 hours per day during the holy month.
• Rest breaks: Employees must not work more than 5 consecutive hours without a break of at least 1 hour. Breaks do not count as working hours.
• Weekly rest: Employees are entitled to at least 1 day off per week (usually Friday, though Saturday-Sunday weekends are now standard for federal government and many private sector companies).

Overtime

• Maximum overtime: 2 hours per day (or 144 hours per 3 weeks).
• Daytime overtime rate: 125% of the basic hourly rate.
• Nighttime overtime rate: 150% of the basic hourly rate (for work between 10 PM and 4 AM).
• Friday/rest day work: If the employee works on their weekly rest day, they are entitled to a compensatory rest day or payment at 150% of the basic rate.
• Exceptions: Senior management positions, certain maritime and oil sector roles, and employees in businesses with fewer than 5 workers may have different rules.

Leave Entitlements

Annual Leave

• After 1 year of service: 30 calendar days of fully paid annual leave per year.
• After 6 months (before 1 year): 2 days per month (prorated).
• During first 6 months: No statutory annual leave entitlement (though some employers offer it).
• Annual leave cannot be replaced by cash compensation while employed (except for accrued days exceeding 30).
• Employers must allow employees to take their leave within 2 years. Unused leave beyond 2 years may be forfeited unless the employer agrees to carry it forward.

Sick Leave

Employees who have completed their probation period are entitled to:

• First 15 days: Full pay
• Next 15 days: Half pay
• Additional 15 days: No pay
• Total: Up to 45 consecutive days of sick leave per year.

Sick leave requires a medical certificate from a licensed healthcare provider. If the illness is caused by the employee's misconduct (e.g., alcohol abuse), the employer is not obligated to pay sick leave.

Maternity and Paternity Leave

• Maternity leave: 60 days total: 45 days at full pay, 15 days at half pay. Can be taken before or after delivery. Employees may take up to 45 additional unpaid days if they have an illness related to pregnancy or childbirth (certified by a doctor).
• Paternity leave: 5 working days of paid leave within the first 6 months of the child's birth.
• Nursing breaks: Female employees are entitled to 2 paid nursing breaks of 30 minutes each per day for 6 months following birth.

Other Leave Types

• Bereavement leave: 5 days for spouse's death, 3 days for parent, child, sibling, or grandparent.
• Hajj leave: 30 days unpaid, once during employment.
• Public holidays: The UAE has approximately 10-14 public holidays per year. If an employee works on a public holiday, they are entitled to a compensatory rest day or payment at 150% of their basic rate.
• Study leave: 10 days per year for employees enrolled in approved educational programs (after completing 2 years of service).

Termination and Notice Periods

Notice Periods

• Minimum notice: 30 days.
• Maximum notice: 90 days.
• The specific notice period must be stated in the employment contract.
• During the notice period, the employee is entitled to full salary and benefits.
• If the employer terminates, the employee gets 1 paid day off per week during the notice period to search for new employment.
• Either party may pay compensation in lieu of the notice period (equal to the salary for the notice period).

Lawful Termination Grounds

An employer may terminate a contract for legitimate reasons including:

• Mutual written agreement
• Expiry of the contract term (with proper notice)
• Gross misconduct (Article 44), including assuming a false identity, committing a serious error causing substantial loss, violating safety instructions, assaulting the employer or coworkers, being absent for more than 20 non-consecutive days or 7 consecutive days without justification in a year, or divulging confidential information
• Redundancy or restructuring (with proper notice and gratuity payment)

Illegal Termination (Arbitrary Dismissal)

Termination is considered arbitrary if it is not for a legitimate reason. In cases of arbitrary dismissal, the court may order the employer to pay compensation of up to 3 months' remuneration (based on the last salary). This is in addition to any outstanding gratuity, notice period compensation, and other entitlements.

Non-Compete Clauses

Article 10 of the new labor law regulates non-compete clauses:

• Must be in writing as part of the employment contract.
• Limited to a specific geographic area, type of work, or both.
• Maximum duration of 2 years from the date of contract termination.
• Must be proportionate and necessary to protect the employer's legitimate business interests.
• Courts can modify or void unreasonable clauses.
• Not enforceable if the employer terminated the contract illegally or failed to fulfill contractual obligations.

End-of-Service Gratuity

All employees who complete at least 1 year of continuous service are entitled to end-of-service gratuity upon termination. The gratuity is calculated based on the employee's basic salary (excluding allowances):

• First 5 years: 21 days' basic salary per year of service.
• After 5 years: 30 days' basic salary per year of service (for each additional year beyond 5).
• Maximum: Total gratuity cannot exceed 2 years' salary.
• Pro-rata: Gratuity is calculated pro-rata for partial years.

Calculate your exact gratuity entitlement using our UAE Gratuity Calculator. For a detailed breakdown of how gratuity interacts with your total compensation, see our UAE salary guide.

Wage Protection System (WPS)

The UAE's Wage Protection System requires all registered employers to pay employee salaries through approved financial channels (banks and exchange houses). Key provisions:

• Salaries must be paid no later than 15 days after the due date.
• Cash payments to circumvent the WPS are prohibited.
• MOHRE monitors salary payments in real time and can flag non-compliant employers.
• Penalties for WPS violations include fines and suspension of the company's ability to issue new work permits.

Frequently Asked Questions

Are unlimited contracts still valid in the UAE?

No. All contracts must be fixed-term since February 2022. Existing unlimited contracts were required to be converted by December 31, 2023, and are now deemed automatically converted. A fixed-term contract runs for up to three years and renews automatically unless a party objects, so in practice the change affects the paperwork more than job security. Continuous service from the original hiring date is preserved, which matters for gratuity, notice and annual leave entitlements.

What is the maximum probation period in the UAE?

6 months. During probation, either party can terminate with 14 days' written notice. An employee cannot be placed on probation more than once by the same employer. If the employee leaves during probation to join another employer in the UAE, the new employer owes the former one compensation equal to the recruitment cost, up to two months' salary. An employee leaving the country during probation must give fourteen days' notice and cannot return on a new permit for three months.

How much annual leave are employees entitled to?

30 calendar days per year after completing 1 year of service. 2 days per month for employees with 6 months to 1 year of service. Leave is paid at the basic salary plus the housing allowance, and the employer must give at least one month's notice of the dates. Up to half of the untaken balance may be carried into the following year; anything beyond that is paid in cash when the contract ends.

What working hours does the UAE labour law set?

8 hours per day or 48 hours per week. During Ramadan, hours are reduced by 2 hours per day. Overtime is paid at 125% (daytime) or 150% (nighttime, 10 PM-4 AM). Total overtime cannot exceed two hours a day except in specific cases, and an employee required to work on the weekly rest day is entitled to a replacement day or 150 percent of the normal rate. Senior managers and crews in certain sectors are excluded from these limits by ministerial decision.

What is the notice period for termination in the UAE?

Between 30 and 90 days, as specified in the contract. Either party can pay compensation in lieu of serving the notice period. The salary and all benefits continue during the notice period, and the employee may take one unpaid day a week to attend interviews. Resigning without serving notice exposes the employee to a claim for the corresponding salary, while dismissal without notice is only lawful in the cases listed in Article 44.

Are non-compete clauses enforceable?

Yes, but with limitations. They must be written, geographically or industry-limited, and cannot exceed 2 years. Courts can modify or void unreasonable clauses. The clause does not apply if the employer terminated the contract in breach of the law, and it can be lifted by written agreement or by the new employer compensating the former one. In practice, courts require the employer to prove a legitimate interest and an actual risk of harm before enforcing it.

Related Guides

• UAE Gratuity Calculator | Calculate Your End-of-Service Benefits
• UAE Work Visa & Residency Guide 2026
• UAE Salary Guide 2026
• Cost of Living in the UAE 2026
• Total Compensation Package Calculator

Sources

• Ministry of Human Resources and Emiratisation (MOHRE)
• Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations
• Cabinet Resolution No. 1 of 2022: Implementing Regulations of Federal Decree-Law No. 33/2021
• UAE Government Portal: Labour Law
• Ministerial Resolution No. 46 of 2022 on Work Permits
• Ministerial Resolution No. 47 of 2022 on Employment Contracts and Records