UAE Labor Law 2026: Key Regulations Every Dubai Business Owner Must Know

The UAE has one of the most business-friendly labor frameworks in the region, and significant reforms since 2022 have modernized the system further. Whether you’re hiring your first employee or managing a team of 50, understanding UAE labor law is essential for every employer.

The Legal Framework

UAE employment is governed by Federal Decree-Law No. 33 of 2021 (the New Labour Law), which replaced the 1980 legislation and came into effect February 2, 2022. Free zone employees may be subject to their free zone authority’s specific regulations, though federal law sets the baseline.

Key Employment Contract Requirements

The new law mandates fixed-term contracts only (max 3 years, renewable). All contracts must include:

• Job title, duties, and work location
• Basic salary and allowances
• Working hours and leave entitlements
• Probation period (max 6 months)
• Notice period (minimum 30 days for employees with <5 years service)

Working Hours & Overtime

• Standard: 8 hours/day or 48 hours/week
• Ramadan: 6 hours/day for Muslim employees
• Overtime: 25% premium (daytime); 50% premium (evening/holidays)
• Weekly rest day: Minimum 1 day (Friday is customary)

Annual Leave & Public Holidays

• Annual leave: 30 calendar days after 1 year of service
• Sick leave: 90 days per year (15 full pay, 30 half pay, 45 unpaid)
• Maternity leave: 60 days (45 full pay, 15 half pay) — extended to 6 months with newborn illness
• Paternity leave: 5 days
• UAE public holidays: 11–15 days per year

End of Service Gratuity (EOSB)

Every employee completing 1+ years of service is entitled to gratuity calculated as follows:

• 1–5 years: 21 days’ basic salary per year
• 5+ years: 30 days’ basic salary per year (for years beyond 5)
• Maximum gratuity: 2 years’ total basic salary

WPS — Wage Protection System

All UAE private sector employers must pay salaries via the Wage Protection System (WPS) through authorized banks or exchange houses. Failure to comply results in fines, suspension of new visa issuance, and potential blacklisting. Salaries must be paid within 10 days of the due date.

Employee Termination Rules

• Notice period: 30–90 days based on contract and tenure
• Arbitrary dismissal: Compensation of 3 months’ salary
• Redundancy: EOSB plus notice period compensation
• During probation: 14 days’ notice required from either party