TRW & Co · Employment law
UAE Employment Contracts: What the Labour Law Requires
Every employment contract UAE employers issue onshore must be written, fixed-term and renewable, and contain the core particulars set by the Executive Regulations, from job and wage to leave, notice and termination. Here is what the Labour Law requires, which work models you can offer, and how to avoid the drafting gaps that cause disputes.
Key pointThe registered MOHRE contract and any supplementary contract must match, especially on basic wage, because gratuity and leave pay on exit are calculated on the basic wage and inconsistencies are the most common trigger for disputes.
At a glance
Fixed term, renewable
Private-sector contracts are concluded for a specified period and may be renewed; a 2023 amendment removed the earlier three-year cap on the term.
Mandatory particulars
The Executive Regulations require identity details, job, start date, workplace, hours, rest days, probation, term, wage, leave, notice and termination procedure.
Six work models
Full-time, part-time, temporary and flexible work are in the Labour Law; remote work and job sharing are added by the Executive Regulations.
Notice of 30–90 days
After probation, the contract must set a notice period of at least 30 and no more than 90 days, with pay in lieu if not honoured.
Non-compete up to two years
A non-compete is allowed only where the role accesses clients or secrets, limited in time, place and work type, and capped at two years.
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A compliant employment contract UAE employers issue onshore must be in writing, for a fixed term that can be renewed, and contain the core particulars the Executive Regulations list: the parties, job, start date, workplace, hours, rest days, probation, term, wage and allowances, annual leave, notice period and termination procedure. Unlimited contracts are no longer used in the private sector.
This guide explains what the law requires, which work models you can offer, how probation, notice and non-compete clauses work, and how to hire a first team without creating disputes later. It covers mainland and most free zone employers under the federal Labour Law, and flags where the DIFC and ADGM apply their own employment regimes.
The short answer: what an employment contract UAE law requires
- Written, in two copies. The Labour Law requires a written contract, with one copy for each party, in the form the Ministry of Human Resources and Emiratisation (MOHRE) specifies.
- Fixed term, renewable. Contracts are concluded for a specified period and can be renewed. A 2023 amendment removed the earlier three-year maximum, so the parties agree the term.
- Mandatory particulars. The Executive Regulations list the details every contract must contain, from identity and job title to wage, leave and termination procedure.
- Statutory floor. Any term less favourable to the employee than the law is void, unless the law expressly allows it. Better terms are permitted.
- Separate regimes in the DIFC and ADGM. Employers in those financial centres follow their own employment laws, not the federal Labour Law.
The legal framework and who it covers
Private-sector employment onshore is governed by Federal Decree-Law No. 33 of 2021 Regulating Labour Relations, in force since 2 February 2022 and amended several times since, including by Federal Decree-Law No. 20 of 2023 and Federal Decree-Law No. 9 of 2024. MOHRE publishes a consolidated text with amendments. Detail sits in the Executive Regulations issued by Cabinet Resolution No. 1 of 2022.
Most free zones also apply the federal Labour Law, sometimes with their own registration and visa processes. The two financial free zones are different: the DIFC applies its own Employment Law and the ADGM its own Employment Regulations, each with its own contract, leave and end-of-service rules.
| Where the employer is licensed | Governing law | Registration and permits |
|---|---|---|
| Mainland (any emirate) | Federal Labour Law and Executive Regulations | MOHRE work permit and contract |
| Most free zones (for example DMCC, JAFZA, IFZA) | Federal Labour Law, plus free zone rules | Free zone authority processes |
| DIFC | DIFC Employment Law | DIFC Registrar and DIFC visa processes |
| ADGM | ADGM Employment Regulations | ADGM Registration Authority processes |
If you are setting up in a financial centre, see our guides to DIFC employment law and ADGM employment regulations.
Mandatory terms: what every contract must contain
The Executive Regulations require the contract to set out, at a minimum:
- the employer's name and address, and the employee's name, nationality, date of birth and identification details;
- the job title, start date and workplace;
- working hours and rest days;
- the probation period, if any, and the contract term;
- the wage, including benefits and allowances;
- annual leave entitlement;
- the notice period and termination procedure;
- any other data MOHRE requires.
In practice, mainland employers generate the MOHRE contract through the Ministry's systems during the work permit process, and many also sign a fuller supplementary contract covering confidentiality, intellectual property, bonus, policies and restrictive covenants.
The two documents must be consistent. Where they conflict on wage or core terms, disputes follow, and the Ministry and courts will look closely at the registered contract. Keep the basic wage in both documents identical, because it drives gratuity and leave pay.
The split between basic wage and allowances is one of the most consequential choices in an employment contract UAE employers make. End-of-service gratuity and payment for unused leave on exit are calculated on the basic wage, so a very low basic can look efficient at hiring and then trigger disputes and reputational damage at exit.
Work models you can offer
The Labour Law recognises full-time, part-time, temporary and flexible work, and the Executive Regulations add remote work and job sharing. The Ministry can approve further models. Each must be reflected in the contract and the work permit.
| Model | What it means | Practical points |
|---|---|---|
| Full-time | One employer, full daily or weekly hours | Default model; full statutory benefits |
| Part-time | Agreed reduced hours, possibly for more than one employer | Leave and gratuity calculated pro rata to hours |
| Temporary | Work for a specific task or period that ends on completion | Gratuity does not arise for temporary work under one year |
| Flexible | Hours or days vary with workload | Document how hours are scheduled and recorded |
| Remote | Work performed wholly or partly outside the workplace | Address equipment, data security and working-time records |
| Job sharing | Duties split between workers by prior agreement | Treated under the part-time rules; pay reflects each share |
For more on hours, overtime and rest, see our working time and leave practice page and plan remote arrangements with the same care as office-based roles.
Probation, notice and restrictive covenants
Probation
Probation cannot exceed six months from the start of work and can be used only once with the same employer. Either side can end the contract during probation by giving at least 14 days' written notice, and further notice and cost rules can apply where an employee leaves during probation to join another UAE employer or to leave the country. Our guide to probation periods under UAE labour law covers those details.
Notice period
After probation, the contract must state a notice period of at least 30 days and no more than 90 days. A party that does not give or work the notice must pay the employee's wage for the notice period, or the remaining part of it. Senior roles often use the maximum, coupled with garden-leave wording.
Non-compete and confidentiality
A non-compete is permitted only where the role gives access to clients or business secrets, and it must be limited in time, place and type of work. The period cannot exceed two years after the contract ends. The Executive Regulations provide that it does not apply where the contract ends during probation. See our restrictive covenants page for drafting that is more likely to be enforced.
Pay, hours, leave and exit terms to get right
Beyond the mandatory particulars, the clauses below cause most of the questions we see on an employment contract UAE businesses have already signed. Each sits on a statutory floor that the contract can improve on but not reduce.
Wage and deductions
The wage must be stated in the contract and paid on its due date, in UAE dirhams unless the parties agree otherwise. Deductions are allowed only in the cases the law lists, such as recovering advances or amounts ordered by a court, and total deductions cannot exceed half of the wage.
State clearly which elements are basic wage and which are allowances, whether any bonus is discretionary or contractual, and how commission is calculated. Ambiguity in variable pay is a frequent source of claims.
Working hours and overtime
The contract must state working hours and rest days. The Labour Law sets maximum normal hours, overtime pay and rest rules, with shorter hours during Ramadan announced each year. Senior managers may be treated differently for overtime, so define the role carefully. Our guide to working hours and overtime in the UAE covers the detail.
Leave
Full-time employees are entitled to 30 days' annual leave for each year of service once they complete a year, with pro-rated leave for shorter service after six months, plus public holidays and other statutory leave. The contract can give more but not less. See our guide to annual leave under UAE labour law.
Termination and end-of-service
The contract must state the termination procedure. In practice, that means notice, the circumstances in which the employer can dismiss without notice after a written investigation, and how final dues are settled. Wages and other entitlements must be paid within 14 days of the contract ending.
Expatriate employees who complete at least a year of continuous service earn end-of-service gratuity on their last basic wage, unless the employer has joined the alternative savings scheme. A clear exit clause in each employment contract UAE employers issue reduces argument at the point the relationship ends.
Hiring step by step: from offer to first payroll
- Fix the structure. Decide the work model, the term, the basic wage and allowances split, and whether the role needs restrictive covenants.
- Issue the offer. Send an offer letter consistent with the MOHRE contract terms. The employee should accept it before the permit application.
- Apply for the work permit. File through MOHRE or the free zone authority. The occupation must match the licensed activity and the employee must generally be at least 18.
- Sign the contracts. Both parties sign the registered contract and any supplementary agreement, each keeping a copy.
- Complete residence formalities. Arrange entry permit, medical test, Emirates ID and residence visa, and health insurance where the emirate requires it.
- Enrol in payroll. Pay wages through the Wage Protection System where applicable and on the agreed due date. Remind the employee about the unemployment insurance scheme.
- Onboard on policies. Give written policies on leave, conduct, data, IT and grievances, and record acknowledgement.
See our UAE employment contracts practice page for how we draft and review contract suites, Getting the paperwork right at this stage is far cheaper than correcting registered terms later, when any change needs the employee's written consent and a fresh MOHRE transaction.
Illustrative scenario: a startup's first employment contract UAE set-up
This scenario is illustrative only and does not describe a real client or case.
A venture-backed startup licensed in a Dubai free zone hires a senior engineer, a part-time designer and a remote marketing contractor based abroad. For the engineer, it issues a two-year fixed-term contract with a three-month notice period, a twelve-month non-compete limited to direct competitors in the GCC, and an ESOP letter outside the contract.
The designer is hired on a part-time permit, with leave and gratuity pro-rated to contracted hours. The marketing contractor stays outside UAE employment altogether, under a services agreement, because the work is performed abroad and the contractor will not hold UAE residence.
The founders keep the basic wage at a realistic share of total pay, so that end-of-service and leave costs are predictable, and diary each contract's renewal date.
Risks and common mistakes
Inconsistent MOHRE and supplementary contracts
Many disputes start with two contracts that say different things about wage, title or notice. The registered contract is what the Ministry sees first, and an employee will rely on whichever is more favourable. Draft the supplementary contract to sit on top of the registered one, never to contradict it, and update both together when terms change.
Changing terms without consent
An employer cannot unilaterally move an employee to fundamentally different work or cut the wage. Material changes need the employee's written agreement and, where relevant, an updated registered contract. Assigning substantially different work without written consent can entitle the employee to leave without notice while keeping end-of-service rights.
Letting the term expire silently
If both sides keep working after the fixed term ends without a new agreement, the contract is treated as extended on the same terms, and the extension counts towards continuous service. That is rarely fatal, but it can leave outdated terms in place. Diary expiry dates and renew deliberately.
Over-broad non-competes
A worldwide, multi-year non-compete for a junior role is unlikely to be upheld. The law requires the restriction to protect legitimate interests and be limited in time, place and type of work, capped at two years. Narrow, role-specific covenants are more likely to be enforced and easier to justify.
Misclassifying contractors
Treating someone working full-time in the UAE under your direction as a freelancer can expose the business to fines for employment without a permit. The Labour Law penalties were raised in 2024. Use genuine services agreements only where the relationship really is independent, or use the appropriate permit.
Ignoring free zone and financial centre differences
An employment contract UAE template built for the mainland will not fit the DIFC or ADGM, where leave, end-of-service and termination rules differ. Group employers often use one template across entities; that is a common source of error.
Cross-border hires and a final checklist
Executives seconded from London, Singapore, Dhaka or Mumbai often keep a home-country contract alongside a UAE one. Make sure the UAE contract meets local requirements on its own terms, and align the two on notice, restrictive covenants, governing law and tax. Mandatory UAE protections apply to work performed here regardless of what the home contract says.
Before issuing any employment contract UAE employers should confirm:
- which regime applies: mainland, free zone, DIFC or ADGM;
- the work model and contract term;
- all mandatory particulars, with the basic wage stated consistently;
- probation, notice and any restrictive covenants within statutory limits;
- policies on leave, conduct and data, acknowledged in writing.
TRW & Co drafts and reviews contract suites, policies and executive terms, and advises on employment disputes when they arise. Where representation before UAE onshore courts or the DIFC/ADGM Courts is required, we work alongside locally licensed advocates and registered practitioners. Contact us at info@trw.co or +971 58 942 1012.
Frequently asked questions
01Are unlimited employment contracts still allowed in the UAE?
No, not in the onshore private sector. Under the Labour Law, contracts are concluded for a specified period and can be renewed. Employers had to move legacy unlimited contracts onto fixed-term contracts within a transition period that has now ended. A 2023 amendment removed the earlier three-year maximum, so the parties can agree the length of the term. If the parties keep working after expiry without a new agreement, the contract is treated as extended on the same terms.
02What must a UAE employment contract include?
The Executive Regulations require the employer's name and address; the employee's name, nationality, date of birth and identification; job title; start date; workplace; working hours and rest days; probation; contract term; wage including benefits and allowances; annual leave; notice period; termination procedure; and any other data MOHRE requires. Many employers add a supplementary agreement covering confidentiality, intellectual property, bonuses and restrictive covenants, which must be consistent with the registered contract.
03How long can probation be in the UAE?
Probation cannot exceed six months from the start of work and can be used only once with the same employer. Either party can end the contract during probation with at least 14 days' written notice. Additional notice and cost rules can apply when an employee leaves during probation to join another UAE employer or to leave the country, so employers should spell out the position in the contract and check the current rules before acting.
04Is a non-compete clause enforceable in the UAE?
It can be, within limits. The Labour Law allows a non-compete only where the role gives access to clients or business secrets, and the restriction must be limited in time, place and type of work, for no more than two years after the contract ends. The Executive Regulations also provide that it does not apply where the contract ends during probation. Narrow, role-specific clauses are more likely to be upheld than broad ones. The DIFC and ADGM apply their own rules.
05Does the federal Labour Law apply in free zones?
In most free zones, yes: employers apply the federal Labour Law, with the free zone authority handling registration and visas. The exceptions are the DIFC and ADGM, which have their own employment laws covering contracts, leave, termination and end-of-service benefits. Group employers with entities in several zones should use separate contract templates for each regime rather than a single group form.
06Can I hire part-time or remote staff in the UAE?
Yes. Part-time, temporary, flexible and remote work, and job sharing, are recognised work models, provided the correct permit is used and the contract reflects the model. Part-time employees accrue leave and end-of-service benefits pro rata to their contracted hours. Remote work should address equipment, data security and how working time is recorded. Workers who are based entirely abroad may be better engaged under a services agreement than a UAE employment contract.
Sources and official materials
- Federal Decree-Law No. 33 of 2021 Regulating Labour Relations — Official record and amendments
- Federal Decree-Law No. 33 of 2021 and its amendments (MOHRE consolidated text) — Contract term, probation, notice and non-compete provisions
- Cabinet Resolution No. 1 of 2022 (Executive Regulations) — Contract particulars, work models and non-compete rules
- Ministry of Human Resources and Emiratisation — Work permits, contracts and labour services
- Dubai International Financial Centre — DIFC Employment Law framework
- Abu Dhabi Global Market — ADGM Employment Regulations
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.
