TRW & Co · Employment & Immigration
Employment Contracts in the UAE
Employment contracts in the UAE are fixed-term, registered with MOHRE or a free zone, and read against a Labour Law that employers cannot contract out of. The financial centres run separate codes. Probation, notice, gratuity, bonus and non-compete terms decide what an exit costs, so the contract signed at hiring shapes the whole relationship.
Key pointSince the 2023 amendment removed the three-year cap, mainland fixed-term contracts can run longer, but the registered MOHRE contract must still match the commercial deal: where documents conflict, the employee can rely on whichever term favours them.
At a glance
Fixed term, no cap
Article 8 requires fixed-term contracts on the mainland; Federal Decree-Law No. 20 of 2023 removed the original three-year maximum, and contracts remain renewable.
Six-month probation
Probation may last up to six months, and an employer ending employment during probation must give 14 days' written notice.
Notice of 30 to 90 days
Notice periods must be at least 30 and no more than 90 days, and the contract cannot reduce statutory minimums.
Two-year non-compete
A post-employment non-compete may last up to two years and must be limited by place, time and type of work to protect legitimate interests.
ADGM paperwork rule
ADGM contracts must be written in English and signed by both parties within one month of the start date under the 2024 regulations.
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What employment contracts in the UAE must cover
Employment contracts in the UAE do more than record a salary. On the mainland, the contract is registered with the Ministry of Human Resources and Emiratisation (MOHRE), linked to the work permit and the residence visa, and read against a Labour Law whose minimum protections cannot be contracted out of. In the DIFC and ADGM, the contract sits under separate common-law style employment codes. Getting the structure right at hiring decides how easily the relationship can be changed, ended or enforced later.
Most legal questions arise at three points: at offer stage, when the business decides on fixed pay, bonus, probation and restrictive covenants; mid-employment, when a promotion, relocation, secondment or pay change needs a contract update; and at exit, when notice, gratuity, unused leave and non-compete terms are tested. Each of these turns on what the contract actually says and whether it matches the version registered with the authorities.
This page focuses on private sector employees. Government employees, domestic workers and members of the armed forces follow separate regimes, and Emirati nationals have additional rights linked to pensions and Emiratisation that should be checked separately.
The legal framework for employment contracts in the UAE
The governing statute is Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relations, in force since 2 February 2022, with Executive Regulations issued by Cabinet Resolution No. 1 of 2022. The UAE government portal lists the principal amendments, including Federal Decree-Law No. 20 of 2023, and Federal Decree-Law No. 9 of 2024 later changed dispute resolution and penalties. A consolidated text is published by MOHRE.
Fixed-term contracts only
Under Article 8, every mainland contract must be for a fixed term, renewable by agreement. The 2021 law originally capped the term at three years; the 2023 amendment removed that ceiling, so employers may now agree longer fixed terms. Older unlimited contracts had to be converted, and any employer still relying on a pre-2022 unlimited-term document should treat it as a priority fix.
Recognised work models
The law recognises full-time, part-time, temporary, flexible, remote and job-sharing models. A part-time employee may work for more than one employer with the right permits. The work model chosen affects the permit type, how hours and overtime are calculated and how entitlements are pro-rated, so it belongs in the contract, not just the offer letter.
The mandatory floor
Any term that gives the employee less than the Labour Law guarantees is void to that extent, while more generous terms are enforceable. This means a contract cannot reduce annual leave below 30 days for a full year of service, shorten notice below 30 days, or waive end-of-service gratuity. A choice of foreign governing law does not displace these protections for an employee working in the UAE.
Free zones, DIFC and ADGM
Most free zones apply the federal Labour Law but register contracts and issue visas through the free zone authority, sometimes with their own contract templates. The DIFC applies the DIFC Employment Law (DIFC Law No. 2 of 2019, as amended), under which most employees are enrolled in the DIFC Employee Workplace Savings (DEWS) scheme rather than receiving a federal-style gratuity. The ADGM Employment Regulations 2024, in force since 1 April 2025, require a written contract in English signed by both parties within one month of the start date.
Key terms and how to approach them
The table below compares how the main terms of employment contracts in the UAE work under the federal regime and in the two financial centres. It is a starting point, not a substitute for checking the current text.
| Term | Mainland and most free zones (federal Labour Law) | DIFC and ADGM |
|---|---|---|
| Contract type | Fixed term, renewable; no three-year cap since the 2023 amendment | Written contract required; fixed or open-ended per the centre's code |
| Probation | Up to six months; employer gives 14 days' notice to end it | Up to six months in the ADGM; DIFC sets its own rules |
| Notice | 30 to 90 days as agreed | Set by the centre's code and the contract |
| End-of-service | Gratuity after one year: 21 days' basic wage per year for the first five years, 30 days thereafter | DIFC: DEWS contributions for most employees; ADGM: gratuity payable after one year's service, including on termination for cause |
| Non-compete | Permitted up to two years, limited by place, time and type of work | Assessed under the centre's law and common-law reasonableness |
| Disputes | MOHRE first; MOHRE decides claims up to AED 50,000; courts thereafter | DIFC Courts or ADGM Courts |
Basic pay and allowances
Mainland gratuity is calculated on basic wage, so the split between basic salary and allowances has a long-term cost effect. Employers often keep basic salary low and allowances high; that is lawful but must be transparent and consistent with the MOHRE contract. In the ADGM, basic salary must be at least half of total salary for gratuity purposes. Wages are paid through the Wage Protection System on the mainland and may be paid in a currency other than dirhams by agreement.
Bonus, commission and equity
Variable pay should be described as discretionary or contractual, with clear rules on eligibility, timing and treatment on resignation or dismissal. Ambiguous bonus wording is a frequent source of claims. Equity awards usually sit in a separate plan governed by foreign law; the employment contract should cross-refer to it and confirm that awards do not form part of wage for gratuity purposes.
Probation
Article 9 allows a probation period of up to six months. The employer must give 14 days' written notice to end employment during probation. An employee who resigns during probation to join another UAE employer must give one month's notice, and 14 days if leaving the country; the original employer may recover recruitment costs from the new employer in some cases. Our article on probation periods under the Labour Law covers the detail.
Non-compete and confidentiality
Article 10 permits a non-compete of up to two years after employment ends, provided it is limited to what is needed to protect legitimate business interests by place, time and type of work. The Executive Regulations allow the restriction to fall away in specified cases, including written agreement, compensation of up to three months' wages paid to the former employer with its consent, and termination during probation. Confidentiality and IP assignment clauses should be drafted separately. See restrictive covenants in the UAE for enforcement strategy.
The registered contract is the one the authorities will read first. Side letters and offer letters that contradict it rarely help the employer and often help the employee.
From offer to registered contract: the process
On the mainland, the contract is part of the immigration process. The steps below are typical for a new overseas hire; inside-country transfers and free zone hires follow a similar pattern with different authorities.
- Structure the package. Agree job title, work model, basic salary and allowances, probation, notice, bonus, leave and any restrictive covenants. Check the job title against the permit category and any Emiratisation implications.
- Issue the offer. MOHRE's process requires a job offer in its prescribed form, signed by the candidate before the permit is issued. Make sure it matches the commercial terms the business has agreed.
- Apply for the work permit. The employer applies to MOHRE (or the free zone authority) with the signed offer, passport and qualifications as required. See employment permits and work authorisations.
- Entry, medical and Emirates ID. The employee enters on an entry permit, completes the medical test and biometrics, and the residence visa is stamped or issued electronically.
- Sign the MOHRE contract. The standard contract is generated from the offer and signed electronically. Additional terms in a supplementary agreement are permitted if they do not conflict with the Labour Law.
- Enrol in payroll and insurance. Register the employee on the Wage Protection System, health insurance and, for eligible employees, confirm enrolment in the federal unemployment insurance scheme.
- Diarise renewals. Track the contract end date, visa expiry and probation end in one place so renewals and decisions are made on time.
Draft the supplementary employment agreement so it expressly incorporates the MOHRE contract and states that, where they differ, the term more favourable to the employee applies. This mirrors how a court will read them anyway, and it avoids the employer relying on a clause the authorities will disregard.
Documents to assemble and keep
A complete contract file protects both parties. For each employee, keep:
- the signed MOHRE offer letter and contract, or the free zone, DIFC or ADGM equivalent, with all amendments;
- any supplementary employment agreement, bonus plan rules, commission scheme and equity award documents;
- signed confidentiality, IP assignment and restrictive covenant terms, if separate;
- the employee handbook version in force at signing and the acknowledgement; see employment policies in the UAE;
- qualification attestations and permit documents used in the application;
- payroll and Wage Protection System records showing basic salary and allowances;
- records of leave taken, overtime approved and any unpaid leave, which affect gratuity calculations.
When an employment ends, all dues, including gratuity, must be paid within 14 days of termination. Having an accurate file at that point avoids late-payment complaints and supports the final settlement.
Risks and common mistakes
The disputes we see most often around employment contracts in the UAE arise from a small number of avoidable errors.
Dual contracts that do not match
Employers sometimes register a MOHRE contract with a lower salary or a different job title than the private agreement, often to manage visa categories or costs. In a dispute, the employee can rely on whichever terms favour them, and the mismatch can also be treated as providing incorrect information to the authorities. Since the 2024 amendments, fines for permit misuse and related violations can be substantial. Keep the registered terms and the commercial terms aligned and update the MOHRE contract whenever pay or role changes materially.
Over-broad non-compete clauses
A clause banning an employee from working for any competitor anywhere in the GCC for two years is unlikely to be enforced in full. Courts look at whether the restriction protects a real interest, such as client relationships or confidential information, and whether its scope in place, time and activity is reasonable. Tie the restriction to the employee's actual role and markets, consider shorter non-solicitation covenants instead, and remember that a covenant can fall away if the employer itself breaches its obligations or ends employment during probation.
Bonus and commission wording
Phrases like "guaranteed bonus" in an offer and "discretionary bonus" in a handbook create a dispute waiting to happen. Courts and MOHRE may also treat regular payments as part of wage even where the employer intended them to be discretionary. Draft variable pay with clear eligibility, performance measures, payment timing and leaver rules, state whether it counts towards gratuity, and keep the plan rules consistent across all documents.
Failing to renew or replace an expired fixed term
Fixed-term contracts on the mainland are renewable, but if both parties continue the relationship after expiry without formal renewal, the terms continue and service is treated as continuous for gratuity. Problems arise when the employer assumes it can simply let the contract lapse to end employment, or when visas and contracts fall out of sync. Track expiry dates, decide early whether to renew, and document the decision in writing.
Misreading the DIFC or ADGM regime
Moving staff into a DIFC or ADGM entity changes the governing employment code. Contracts carried across from a mainland template may cite the wrong law, promise a gratuity where DEWS applies, or omit terms the centre's code requires. Under the ADGM regulations, pay in lieu of notice generally needs the employee's written consent and employees are entitled to written reasons for termination. Re-paper transfers properly; our articles on the DIFC Employment Law and the ADGM Employment Regulations explain the differences.
Changing and ending the contract
Pay, role and location changes generally need the employee's written agreement, and material changes should be reflected in an amended MOHRE contract. Unilateral reductions in pay are a common trigger for complaints. Where a business needs to restructure, it should consult early, document the business reason and consider whether redundancy terms or a negotiated settlement are more appropriate.
Termination is governed by Articles 42 to 47. Either party may end a fixed-term contract on notice, which must be at least 30 days and no more than 90. Article 44 lists the cases in which an employer may dismiss without notice, such as serious misconduct, and Article 47 allows compensation of up to three months' wages where a dismissal is arbitrary. End-of-service gratuity under Article 51 is capped at two years' wages. Our page on termination and end-of-service benefits sets out the calculations.
If a dispute arises, the employee files a complaint with MOHRE, which attempts amicable settlement and can decide claims up to AED 50,000. Larger or unresolved claims go to the competent court, and claims must be filed within two years of the end of employment. In the financial centres, claims go to the DIFC Courts or ADGM Courts. See employment disputes in the UAE for strategy.
Cross-border hires, secondments and senior executives
Many UAE employees are hired by, seconded from or report to a foreign parent. A UK or Singapore group may want to keep an executive on a home-country contract while they work in Dubai; the UAE will still require a local permit and registered contract, and UAE mandatory protections will apply to work done here. Split or dual-employment structures need careful drafting so that pay, benefits and termination rights are not duplicated or contradictory.
For employees recruited from Bangladesh, India and other South Asian countries, home-country emigration and recruitment rules can impose their own contract requirements and attestation steps, and recruitment fees must not be charged to the worker. Saudi Arabia and other GCC states run separate nationalisation and labour regimes, so a regional role based in Dubai but travelling across the Gulf should state where the employee is based and how business travel is treated.
For senior hires, the contract often has to coordinate with equity plans, clawback rules, regulatory approvals for approved persons in the DIFC and ADGM, and immigration routes such as the Golden Visa. Our page on executive employment in the UAE covers those additional layers.
How TRW & Co helps with employment contracts in the UAE
We advise employers and senior employees on drafting, negotiating and enforcing employment contracts in the UAE across the mainland, free zones and both financial centres. Where representation before UAE onshore courts or the DIFC or ADGM Courts is required, we work alongside locally licensed advocates and registered practitioners.
Template suites
We prepare supplementary employment agreements and offer templates for mainland, free zone, DIFC and ADGM entities that align with the registered contract and the employee handbook.
Executive packages
We negotiate and draft senior contracts, including bonus, equity, clawback, garden leave and restrictive covenants, for employers and for executives joining or leaving UAE businesses.
Contract audits
We review existing contracts against the current Labour Law, identify gaps between registered and private terms, and plan a remediation programme with HR.
Exits and settlements
We advise on notice, gratuity, restrictive covenant enforcement and settlement agreements, and on strategy for MOHRE complaints and court claims.
To discuss a template project or an individual contract, contact our team or see our practices.
Checklist for decision-makers
- Is every employee on a fixed-term contract that matches the version registered with MOHRE or the free zone?
- Are basic salary and allowances split deliberately, and is the gratuity cost understood?
- Is probation within six months and are the notice rules for probation reflected?
- Is the notice period between 30 and 90 days and consistent across all documents?
- Are non-compete and non-solicitation clauses limited to real interests by place, time and activity?
- Do bonus, commission and equity terms state eligibility, leaver treatment and gratuity effect?
- Have DIFC and ADGM employees been given contracts under the correct code?
- Is there a calendar for contract and visa renewals, and a process for amending registered terms?
Well-drafted employment contracts in the UAE cost little at hiring and save a great deal at exit. Review templates at least annually, and whenever the law, the business structure or the employee's role changes.
Frequently asked questions
01Are unlimited employment contracts still allowed in the UAE?
Not on the mainland. The Labour Law requires fixed-term contracts, and existing unlimited contracts had to be converted. Since Federal Decree-Law No. 20 of 2023, there is no longer a three-year maximum, so the parties can agree a longer term, and contracts can be renewed. If both parties carry on after expiry without formal renewal, the relationship continues on the same terms and service counts as continuous for gratuity. DIFC and ADGM rules differ and should be checked separately.
02Does the MOHRE contract override our own employment agreement?
Both documents can apply together. The MOHRE contract sets the registered terms, and a supplementary agreement can add terms such as bonus, confidentiality and restrictive covenants. Where the two conflict, the term more favourable to the employee generally prevails, and any term below the Labour Law's minimum is void. Keep salary, title and key terms identical in both and amend the registered contract whenever they change materially.
03How is end-of-service gratuity calculated?
For mainland and most free zone employees with at least one year of continuous service, gratuity is 21 days' basic wage for each of the first five years and 30 days' basic wage for each additional year, capped at two years' wages. It is based on the last basic wage, not total pay, which is why the basic and allowance split matters. DIFC employees are generally covered by DEWS contributions instead, and ADGM has its own rules, including payment on termination for cause.
04Can a non-compete clause stop an employee joining a competitor?
It can if it is reasonable. Article 10 allows a non-compete of up to two years, limited by place, time and type of work to what is needed to protect the employer's legitimate interests. The restriction may fall away in specified cases, including agreement, payment of up to three months' wages to the former employer with its consent, or termination during probation. Courts are sceptical of broad region-wide bans, so tailor the clause to the role.
05Can we change an employee's salary or role without consent?
Generally no. Pay and other material terms are contractual and changes usually require the employee's written agreement, with the registered MOHRE contract updated to match. A unilateral pay cut can lead to a MOHRE complaint and, since the 2024 amendments, MOHRE can order wages to continue during a salary dispute. Where business needs change, consult the employee, document the reason and consider whether a negotiated variation or exit is the better route.
06What happens if an employee resigns during probation?
An employee who resigns during probation to join another UAE employer must give one month's written notice; one leaving the UAE must give 14 days. If the employee joins another UAE employer, the original employer may in some cases claim recruitment costs from the new employer. Employers ending employment during probation must give 14 days' notice. A non-compete may not be enforceable where the employer ends employment during probation.
07Which law governs an employee in the DIFC or ADGM?
DIFC employees are governed by the DIFC Employment Law (DIFC Law No. 2 of 2019, as amended), and ADGM employees by the ADGM Employment Regulations 2024 in force since 1 April 2025. Both set their own rules on contracts, leave, notice and end-of-service, and disputes go to the DIFC Courts or ADGM Courts rather than MOHRE. Contracts transferred from a mainland entity should be re-papered under the correct code.
Sources and official materials
- Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relations — UAE Labour Law
- Labour Law and its amendments (consolidated) — Consolidated text published via the UAE portal
- Employment laws and regulations in the private sector — Official overview including Federal Decree-Law No. 20 of 2023
- Ministry of Human Resources and Emiratisation — Work permits, contracts and complaints
- ADGM rules and regulations — ADGM Employment Regulations 2024
- Dubai International Financial Centre — DIFC Employment Law and DEWS
General information only, current as at 27 October 2026. It is not legal advice and does not create a lawyer–client relationship. UAE law differs between the onshore jurisdiction, the DIFC, ADGM and the free zones, and changes frequently; check current official sources and take advice on the facts of your matter.
