When hiring workers in the UAE, understanding employment contracts is crucial to ensure compliance with local labour laws and regulations.
Employment contracts in the UAE define the terms and conditions of work, ensuring clarity for both employers and employees. These agreements, regulated by UAE employment contract law, outline key elements such as working hours, benefits, termination policies, and probation periods. Companies can choose between fixed-term and indefinite contracts, with temporary employment contracts commonly lasting one to two years.
Employers must follow proper procedures when creating, enforcing, or terminating an employment contract, as non-compliance can result in legal and financial consequences. A standard employment contract differs from an offer letter, as the latter only provides an initial outline of job terms, while the formal contract is a binding agreement.
To streamline the hiring process, businesses often use a UAE employment contract template that aligns with labour regulations. Ensuring clear and transparent contract terms reduces disputes and strengthens employer-employee relationships.
Work arrangements, working hours, and termination policies are key aspects of employment contracts that employers must carefully define. Regulations specify standard and overtime hours, probationary periods, and severance entitlements, ensuring compliance with UAE employment contract requirements. Whether using a fixed-term contract or an indefinite agreement, businesses must provide clear terms on leave entitlements, notice periods, and renewal conditions. Proper documentation, such as a standard employment contract, helps mitigate risks and maintain transparency, creating a structured and legally sound work environment.
In this section, we will explore everything you need to know about employment contracts in the UAE, including the different types of employment contracts, working hours, remote work, and more.
The UAE offers a dynamic and well-regulated employment landscape for businesses. Understanding the employment policies and procedures of companies in the UAE is essential for ensuring compliance and maintaining a positive work environment.
Employers operating outside of free zones must issue a Ministry of Human Resources and Emiratisation (MOHRE) standard offer letter, detailing the essential terms and conditions of employment. Employees are required to sign a government-approved MOHRE employment contract before obtaining a work permit or employee ID card. For non-UAE/GCC nationals, a residence visa is also required.
The MOHRE employment contract must be bilingual (English and Arabic) and reflect the terms of the original offer letter. Any amendments must be approved by both the MOHRE and the employee, and changes are generally accepted only if they benefit the employee. Employers operating within free zones are typically required to use a bilingual free zone standard form employment contract, supplemented with additional terms and conditions reflecting the employer’s policies.
Employers must establish clear employment policies and procedures to align with UAE labour laws. Although disciplinary policies technically require submission to MOHRE, many employers do not submit them in practice. Employees should be provided with an updated staff handbook, including policies covering workplace conduct, working hours, official holidays, and disciplinary actions.
Ensuring compliance with health and safety standards is a legal requirement. Companies with 50 or more employees must implement regulations covering work instructions, workplace safety, penalties, promotions, and termination procedures. Additionally, health insurance policies are mandatory for all employees in Dubai, DIFC, and ADGM, while in Abu Dhabi, employers must extend coverage to an employee’s immediate family (spouse and up to three dependent children under 18).
Probation periods are permissible under UAE labour laws but must not exceed six months. During this period, employment may be terminated with a 14-day notice. If an employee resigns to join another UAE employer, the notice period increases to 30 days.
In DIFC, probation periods are similarly capped at six months unless the employment contract is for a fixed term of six months or less, in which case the probation period cannot exceed half the contract duration. Employees with less than three months of continuous service must provide seven days’ notice before resigning. In ADGM, probation periods are limited to six months, and either party can terminate the contract with one week’s notice during this time.
If an employee leaves during probation, the previous employer may seek to recover recruitment costs from the new employer, depending on the circumstances.
Employers registered with MOHRE must submit the government employment contract to obtain a work permit and residence visa for employees. Most free zone authorities have their own standard employment contract formats, which must also be lodged to secure employee permits. Some free zones allow companies to submit their own contracts alongside the standard agreement.
Despite the requirement for MOHRE and free zone contracts, many employers issue supplemental agreements detailing additional terms and conditions beyond the standard contracts. In free zones, hiring new employees typically requires approval from the free zone authority before onboarding can proceed.
The UAE has a structured legal framework for employment, ensuring clarity and compliance for businesses. Understanding the various employment terms and contract types is crucial for employers operating in the region.
Employers in the UAE can choose between fixed-term contracts and unlimited term employment contracts. Fixed-term contracts, commonly lasting one or two years, specify a start and end date and can be renewed upon mutual agreement. They outline benefits such as annual leave, sick leave, and end-of-service gratuity. If renewed multiple times, these contracts may eventually be treated as unlimited term employment contracts under UAE labour law.
Unlike some jurisdictions, the UAE does not explicitly distinguish between employees and independent contractors. The concept of a ‘contractor’ or ‘self-employed’ individual is not expressly recognised under UAE labour law. However, certain free zones offer a freelancer visa, allowing individuals to work independently. Additionally, professionals can establish their own consultancy company and operate within the terms of their trade license. Despite these options, such arrangements remain limited, and employers should carefully structure contracts to ensure compliance.
The New Labour Law introduced a variety of flexible working models, including part-time, temporary, and freelance arrangements. Employees can also work remotely with employer approval. This flexibility helps businesses adapt to changing workforce needs while ensuring compliance with local regulations.
Employers should ensure that all contracts—whether fixed-term or unlimited term employment contracts in the UAE—are in line with MOHRE regulations. Standard contracts must be bilingual (English and Arabic) and accurately reflect the terms agreed upon. If changes are made, they must be approved by the MOHRE and should benefit the employee to be accepted.
For those looking to draft agreements, using an unlimited term employment contract template in the UAE that complies with MOHRE guidelines can simplify the process. Employers should also familiarise themselves with notice periods and termination conditions associated with different contract types.
By understanding these employment terms and ensuring compliance with UAE labour laws, businesses can create structured and legally sound employment arrangements that benefit both employers and employees.
The UAE’s employment system requires businesses to manage contract extensions and renewals in compliance with legal standards. Whether renewing an employment agreement or engaging independent contractors, employers must follow the appropriate procedures to avoid potential legal disputes.
Employment contracts in the UAE are typically issued on a fixed-term basis, often lasting one or two years. These contracts can be renewed by mutual agreement, provided the terms remain in line with UAE labour laws. If a contract is renewed multiple times, it may eventually be treated as an unlimited term employment contract under local regulations.
Employers who do not wish to renew an employee’s contract in the UAE must provide a notice for non-renewal of an employment contract. This notice period should be in accordance with the contract terms and UAE labour law to ensure a smooth transition. A formal non-renewal letter of employment contract should be issued, clearly outlining the last working day and any relevant details regarding final payments and benefits. In these cases, using a non-renewal letter of employment contract sample as a guideline can help maintain consistency and clarity in communication.
In the UAE, employment contracts with independent contractors can be issued for a fixed duration, not exceeding three years. Unlike standard employment contracts, these agreements do not offer the same benefits or protections under UAE labour laws. However, certain free zones provide freelancer visas, enabling individuals to work independently within the confines of their trade license.
Employers working with contractors should ensure that agreements clearly define the scope of work, payment terms, and duration. While independent contractor arrangements can offer flexibility, businesses must be aware of any limitations within their specific industry or free zone regulations.
Managing contract extensions, renewals, and non-renewals effectively helps businesses maintain compliance and operational efficiency. Employers should ensure all documentation aligns with MOHRE guidelines and labour laws to mitigate any legal risks while fostering transparent employer-employee relationships.
In the UAE, fixed-term contracts are widely used as employment arrangements, which offer a structured timeframe with a clear start and end date. These contracts, typically lasting one or two years, define key employment terms such as benefits, notice periods, and termination conditions. They can be renewed upon mutual agreement and, in some cases, may eventually be treated as indefinite contracts under the country’s labour law for fixed-term contracts.
Probationary periods for fixed-term employees must not exceed six months. During this period, the contract may be terminated with a notice period of at least 14 calendar days. If the employee is leaving to join another UAE employer, the notice period increases to 30 days. Employers should ensure compliance with MOHRE regulations to avoid potential disputes.
Employees on fixed-term contracts in the UAE are entitled to benefits similar to those on indefinite contracts. These include annual leave, sick leave, and end-of-service benefits. If a contract is renewed multiple times, local labour regulations may reclassify it as an unlimited term employment contract depending on the emirate.
Fixed-term contracts may be terminated before the agreed-upon end date under specific conditions such as mutual agreement, performance concerns, or company restructuring. If termination occurs without a valid reason, the terminating party may be liable for compensation.
For employees, whose contracts will not be renewed, a notice for non-renewal of an employment contract in the UAE should be provided in accordance with the agreed-upon notice period. Employers must issue a formal non-renewal letter of employment contract, outlining the employee’s final working day and any remaining entitlements. Referring to a non-renewal letter of employment contract in the UAE sample can help maintain clarity and legal compliance.
Employees on fixed-term contracts in the UAE are eligible for end-of-service gratuity, provided they have completed at least one year of continuous service. The gratuity is calculated based on the employee’s last basic salary and depends on the duration of employment. Employers must ensure severance pay is calculated in line with UAE labour law for fixed-term contracts to guarantee fair compensation.
By structuring fixed-term contracts in the UAE correctly and adhering to legal requirements, businesses can ensure compliance, maintain workforce stability, and foster positive employer-employee relationships.
In the UAE, working hours are governed by labour laws that establish standard schedules, overtime rules, and special provisions for certain employee groups. Employers must comply with these regulations to ensure fair and legal working conditions.
The legal working hours in the UAE are set at eight hours per day and a maximum of 48 hours per week, typically from Monday to Friday. Certain industries, such as hospitality and retail, may have different schedules depending on operational needs. During Ramadan, working hours in the UAE are reduced by two hours daily for all employees, regardless of religion.
Government employees follow a different schedule, with the new working hours in the UAE reducing their workweek to four and a half days, with weekends from Friday afternoon to Sunday. Employees are also entitled to breaks, usually from 08:00 to 13:00, followed by an afternoon session from 16:00 to 19:00.
Previously, Friday was the designated weekly rest day, but as of 2022, most private sector companies have transitioned to a Monday to Friday schedule. However, employers must provide flexibility for employees who wish to attend Friday prayers, either through extended breaks or remote work options.
Certain employees have additional working hour regulations. For example, working hours for pregnant employees in the UAE may be adjusted based on medical recommendations to ensure their well-being.
Overtime is regulated under UAE labour law for working hours, requiring additional compensation for extra work beyond the standard schedule. The key overtime regulations include:
Employers must ensure compliance with UAE labour laws to avoid penalties and foster a productive, legally compliant workplace.
Employers in the UAE can offer remote work arrangements based on mutual agreement with employees. According to Article 5(1)(a) of Cabinet Resolution No. 1 of 2022, employers and employees may establish a remote work model, subject to the provisions of Article 7 of Federal Decree Law No. 33 of 2021. This flexibility allows businesses to adopt work-from-home policies that align with operational needs and employee preferences. Additionally, Article 10(3) of Cabinet Resolution No. 1 of 2022 permits employees to shift from one work model to another upon agreement with their employer.
Remote working jobs in UAE have become more prevalent, with both private and government sectors adopting hybrid and fully remote work models. Companies must ensure that their remote work policies comply with UAE labour laws, covering aspects such as working hours, overtime compensation, and employee welfare. Employees who work remotely in the UAE should also be provided with clear guidelines on their responsibilities, performance expectations, and data security measures.
The UAE has introduced a remote work visa to attract international talent and support companies in implementing flexible work arrangements. This initiative enables foreign professionals to reside in the UAE while working remotely for overseas employers.
To qualify for the UAE remote working visa, applicants must meet specific criteria, including proof of employment with a minimum monthly salary requirement. The UAE remote working visa requirements typically include:
Employers looking to support their employees in obtaining a remote work visa in the UAE should guide them through the application process and ensure compliance with visa regulations. Those wondering how to apply for a remote work visa in the UAE can do so through the UAE government’s official immigration portals or authorised visa service providers.
Every country has its own employment regulations, and the UAE is no exception. Failing to comply can lead to serious legal consequences for your business.
Our experienced team specialises in drafting customised, fully compliant employment contracts in the UAE and over 100+countries. When you partner with CXC, we will ensure you stay compliant so you can focus on growing your business.
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