Key Takeaways:
- Fines for serious labor violations run from AED 100,000 to AED 1,000,000 under the 2024 amendments, with a two-year window for employees to file claims after termination.
- Employers must plan for end-of-service gratuity from day one: 21 days of basic salary per year for the first five years, then 30 days per year, capped at two years’ wages.
- Salaries must flow through the Wage Protection System; missing the 15-day grace window triggers automatic work-permit suspensions.
The United Arab Emirates (UAE) is a popular hiring region for companies expanding their global teams. Salaries land in employees' accounts, untouched by income tax. Visa processing is typically quick, provided that the documents check out. The local talent base is genuinely international — walk into any office in Dubai, and you'll hear five languages before lunch. What brochures often gloss over is the level of detail required when hiring in the UAE.
The Ministry of Human Resources & Emiratisation (MoHRE) oversees employment relationships, including work permits, contract registration, WPS payroll monitoring, and dispute resolution.
In recent years, MoHRE has taken a stricter approach with employers who treat compliance as a box-checking exercise. A single serious violation can now cost up to one million UAE dirhams (approximately USD 273,000).
Before you make a single hire in the UAE, it’s important to understand the labor laws and regulations that should guide your employment practices.
The UAE Labor Law Framework
The UAE’s labor code under MoHRE defines the country’s labor laws around contracts, working hours, leave, end-of-service benefits, and termination — the full spectrum of the employment relationship. It was rewritten from scratch in 2021 and amended twice — once in 2022 and again, more sharply, in 2024. The most recent decree didn't touch the framework much; it went after enforcement instead.
Penalty tiers for the worst employer offenses moved up to AED 100,000–1,000,000. The window to bring a claim after termination doubled to two years. And in disputes worth AED 50,000 or less, MoHRE can now issue binding decisions itself rather than passing the file to a court, which has dragged many mid-sized cases out of years-long litigation and into a much faster ministry process.
Who the Law Covers
Most private-sector workers fall within the law's reach — anyone working under an employer's direction, drawing a regular wage, and accruing statutory benefits.
Some categories of workers fall outside its scope, including:
- Independent contractors
- Government employees
- Members of the armed forces
- Domestic workers (governed separately)
This also includes anyone employed within the Dubai International Financial Centre (DIFC) or Abu Dhabi Global Market (ADGM), which operate under their own employment laws separate from the federal system.
However, for mainland hiring, MoHRE is the only ministry that matters.
Employment Contracts
Previously, unlimited contracts were allowed, but now all private sector contracts must be fixed-term. While contracts can be renewed or extended by mutual agreement, each renewal resets the contract term.
Written contracts are mandatory and must be registered with MoHRE. They need to spell out:
- Job title and responsibilities
- Working hours
- Salary
- Pay schedule
- Leave entitlements
- Contract term
- Notice period
- Nationality
- Start date
- Place of work
- Probation period (if applicable)
Probation can last up to six months. If the relationship ends during that time, notice periods shift to 14 days if the employee is leaving the country, or 30 days if they’re moving to another UAE employer.
Working Hours and Overtime
The standard workweek is eight hours a day, or 48 hours a week. Some industries, such as hospitality, security, and retail, can extend the day to nine hours, as long as the weekly total remains within limits.
Ramadan changes the math. For all private-sector employees, regardless of religion or whether they fast, daily working hours are reduced by two. This isn't a courtesy — Article 17(4) and Cabinet Resolution No. 1 of 2022 require it, and employers who quietly maintain a normal schedule end up owing both MoHRE penalties and overtime pay for every hour worked beyond the reduced day.
Overtime itself is capped at two hours per day in normal circumstances. Pay rates:
- Standard overtime: 25% above the basic hourly wage
- Night overtime (10 p.m. to 4 a.m.): 50% above the basic hourly wage
- Work on a contractual rest day: either a substitute day off or a 50% premium
Senior managers, board members, and certain shift-based roles can be exempt under the Executive Regulations.
The Wage Protection System
You must pay your employees in the UAE through the Wage Protection System (WPS). Run jointly by MoHRE and the UAE Central Bank, the WPS routes private sector salaries through approved banks and exchange houses, with each pay cycle backed by a Salary Information File submitted through the system.
Wages are due on the first of the month following the pay period in the contract. Miss that date by 15 days, and the payment is considered officially late.
Enforcement is automatic from there. Cross enough days past the due date, and MoHRE suspends new work permits across the entire establishment — no hiring, no renewals, no transfers. For companies with 50 or more employees, persistent non-compliance escalates to public prosecution. Submitting false wage data can lead to fines of up to AED 50,000, particularly when multiple employees are involved.
One advantage is the flexibility to pay salaries in UAE dirhams or in any other currency agreed upon by the employer and the employee.
Minimum Wage
There’s no set minimum wage across the general private sector. In most cases, pay is agreed between the employer and employee and written into the contract, based on the role and the market.
Some exceptions exist: Emirati nationals in skilled private-sector roles are subject to a minimum salary, and some emirate-level rules apply to certain categories. Otherwise, pay is set by market rates.
Leave Entitlements
Employers must provide several types of legally mandated leave entitlements.
Annual Leave
During their first six to twelve months, employees accrue two days of leave per month. After one year of continuous service, employees are entitled to 30 calendar days of paid annual leave.
One detail that often trips employers up: those 30 days are calendar days, not working days. Get this wrong in your payroll setup, and you could end up granting more leave than required.
Sick Leave
Employees are entitled to up to 90 days of sick leave per year after completing probation. It can be taken all at once or spread out over time. Pay gradually decreases as the leave continues:
- The first 15 days are paid in full.
- The next 30 days are at half pay.
- The final 45 days are unpaid.
A medical certificate from a recognized authority is required, and the employee must notify the employer within three days that they are taking sick leave. Termination during sick leave is off the table. If someone uses the full 90 days and still can't return to work, the contract can be terminated — but the employee is entitled to their full end-of-service benefits.
Maternity Leave
Maternity leave is 60 days, split into two pay tiers: 45 days at full pay 15 at half. Eligibility doesn't depend on length of service, so a woman hired three months before giving birth has the same entitlement as one with a decade in their role. Additional unpaid leave is granted if the child is born with a medical condition or experiences postpartum complications.
Paternity Leave
Paternity leave is five working days and can be taken at any point within the first six months after the child’s birth.
Public Holidays
The Cabinet sets the holiday calendar each year, and it applies to both the public and private sectors. Official holidays in 2026 include:
- New Year’s Day
- Eid Al Fitr
- Arafat Day
- Eid Al Adha
- Islamic New Year
- The Prophet Muhammad’s Birthday
- National Day
End-of-Service Gratuity
Another key obligation for employers is end-of-service gratuity, a lump sum paid out when employment ends, which replaces state pensions for most expatriates.
The calculation works as follows:
- 21 days of basic salary for each of the first five years of service
- 30 days of basic salary for each year after that
- Capped at two years’ wages
Employers often get tripped up on two points. First, “basic salary” really means basic. Housing, transport, and other allowances are not included in the calculation. Second, unpaid leave does not count toward service time and must be excluded before applying the formula. The final settlement, including the gratuity, must be paid within 14 days of termination.
There is also an alternative way companies can pay this cost. In late 2023, MoHRE introduced a voluntary Savings Scheme. Instead of accruing gratuity as a future liability, employers who opt in make monthly contributions to an approved investment fund: 5.83% of basic salary for employees with under five years of service, and 8.33% for those beyond. It’s optional, but it can help finance teams manage long-term liabilities.
Tax and Social Security
The UAE does not tax personal income, which is a major reason so much global talent is drawn to the country. But from an employer’s perspective, there are still important social security and insurance requirements to understand.
The rules around social security vary by nationality:
- UAE nationals must be enrolled with the General Pension and Social Security Authority (GPSSA). Total contributions amount to 26% of pensionable salary, split 11% from the employee and 15% from the employer. The government covers an additional 2.5% of the employer's share for nationals earning under AED 20,000.
- GCC nationals working in the UAE follow the social security rules of their home country.
- Expatriates do not make social security contributions.
Federal unemployment insurance and mandatory health insurance also apply.
Termination and Notice Periods
Either party can end the contract, but only with written notice and a valid reason. Notice periods usually range from 30 to 90 days. If someone leaves without giving notice, they’ll owe compensation for the time they didn't serve.
The law determines under what circumstances a contract may be legally terminated. This includes:
- Mutual agreement
- Contract expiration
- The employee’s death or permanent disability
- Employer shutting down or going bankrupt
Only serious misconduct (under Article 44) allows an employer to withhold gratuity. If you dismiss someone without a valid reason, you risk a compensation claim.
Once the relationship ends, there’s a short window to wrap everything up. Employers have 14 days to pay final wages, settle end-of-service gratuity, cancel the work permit and visa, and provide the necessary documentation.
Independent Contractors
Contractors are commonly used for project work, but the bar for genuine contractor status is high. While freelancing gained formal recognition in November 2020, simply labeling someone a contractor is not enough.
In practice, contractors typically operate under a freelance permit, sole proprietorship, or LLC license. They invoice for their work, set their own hours, work with multiple clients, and are not paid through WPS.
When evaluating whether someone is truly functioning as a contractor, MoHRE looks beyond labels to substance. Who controls how the work gets done? Can the worker take on other clients? Whose tools are being used? If the answers point to an employment relationship dressed up as contracting, employers can face backdated benefits, gratuity, social security contributions, and the higher fines introduced in the 2024 amendments.
Hiring in the UAE Without an Entity
If you want to hire employees directly in the UAE, you typically need a local entity. That’s the legal structure that allows you to sponsor employees, run payroll, and operate in the country.
For companies running a small team or testing the market, establishing and maintaining that entity often costs more than the work justifies. Licensing, share capital, banking, and ongoing compliance — none of it is fast.
There is another option. An Employer of Record (EOR) acts as the legal employer in the UAE on your behalf, while you retain control over the employee’s day-to-day work.
How RemoFirst Helps You Hire in the UAE
If you choose to hire through an EOR, the right partner can take on the complexity for you.
RemoFirst handles the mechanics of employing remote workers in the UAE. MoHRE registration, WPS-compliant payroll, gratuity accrual, visa support — all taken care of by us.
With RemoFirst, you can hire in the UAE and 185+ other countries, run compliant payroll, offer benefits including private health insurance through RemoHealth, and get support applying for visas and work permits.
You can also manage and pay contractors on the RemoFirst platform, and we’ll ensure workers meet the threshold for contractor status in the eyes of MoHRE.
Book a demo to see how we can help you employ talent in the UAE and beyond.
