The UAE private sector is governed by Federal Decree-Law No. 33 of 2021, in force since 2 February 2022, which replaced the 1980 labour law and abolished unlimited and limited contracts in favour of a single fixed-term model. MOHRE regulates mainland and standard free zone employment; DIFC and ADGM run their own separate employment regimes. If your last research on UAE employment law predates February 2022, treat everything you read then as historical rather than current.
This guide is written for someone orientating into the UAE for the first time as an employer, not someone already navigating a live dispute. It covers what changed, who the law actually covers, what your contract can and can’t say, and where to go for the detail on leave, hours, termination, and gratuity.
What Federal Decree-Law No. 33 of 2021 Replaced — And Why Your 2019 Research Is Now Wrong
From 2 February 2022, Federal Decree-Law No. 33 of 2021 repealed Federal Law No. 8 of 1980 in its entirety for the private sector. This wasn’t an amendment layered on top of the old law — it’s a full replacement, with its own article numbering, and every article number you might recall or find in an older source no longer refers to the same provision.
The practical consequence for a foreign employer: any HR policy, contract template, or internal guidance note written before 2022 needs to be re-checked line by line, not lightly updated. The two changes with the widest reach:
- Unlimited and limited contracts were abolished. Every private-sector employment contract in the UAE is now a fixed-term contract.
- The resignation penalty that used to reduce an employee’s gratuity if they resigned before five years of service no longer applies. Full details are in our gratuity guide.
The law has also been amended since 2022, so even guidance written in 2022 or 2023 may not reflect the current position on every point — contract duration limits being one area that has shifted since the law’s original text. Treat this article as an orientation point, and verify anything time-sensitive against current MOHRE guidance before you rely on it.
Who the Law Covers: Mainland, Free Zone, DIFC and ADGM Are Not the Same Regime
This is the single most expensive assumption a UK employer makes: that “free zone” automatically means a special employment regime. It doesn’t. Federal Decree-Law No. 33 of 2021 applies to all private-sector establishments across the UAE, including the vast majority of free zones (JAFZA, DMCC, Dubai Internet City, and similar) — with two specific exceptions.
- Mainland: Governed by Federal Decree-Law No. 33 of 2021. Regulator is MOHRE. Disputes go through MOHRE’s conciliation process and, if unresolved, the UAE civil courts.
- Standard free zones (non-DIFC/ADGM): Also governed by Federal Decree-Law No. 33 of 2021, regulated by MOHRE, with the free zone authority handling licensing and visas but not employment law itself.
- DIFC (Dubai International Financial Centre): Governed by its own DIFC Employment Law, not the federal law. Disputes go through the DIFC Courts. End-of-service benefits run through the DEWS workplace savings scheme rather than the standard gratuity formula.
- ADGM (Abu Dhabi Global Market): Governed by its own ADGM Employment Regulations, with its own courts. End-of-service treatment has moved toward a savings-scheme model alongside the traditional gratuity option.
If your UAE hire sits inside DIFC or ADGM, the federal law you’ll find described everywhere else — including most of this article — simply doesn’t apply to them. Confirm which regime your entity and employee actually sit under before you draft anything. We go deeper on this distinction, including the leave, notice and end-of-service differences between the four regimes, in our guide to free zone versus mainland versus DIFC/ADGM employment.
The Fixed-Term Contract: What Replaced Unlimited and Limited Contracts
Before 2022, employers chose between an unlimited contract (open-ended, with graduated notice and gratuity treatment) and a limited contract (fixed term, historically capped at two years). Federal Decree-Law No. 33 of 2021 abolished both in favour of a single fixed-term contract model, and employers were given until 2 February 2023 to convert existing unlimited contracts across.
A few practical points for a foreign employer setting up a UAE contract for the first time:
- Every contract must specify a term, in writing, registered electronically with MOHRE.
- The contract can be renewed or extended for a further similar term, or a shorter one, by agreement.
- The original law capped fixed terms at three years; subsequent amendments have relaxed aspects of this, so don’t assume a hard three-year ceiling still applies without checking current guidance.
- Probation is capped at six months, and an employee can only be put on probation once with the same employer.
- A contract must be in Arabic, with a parallel translation permitted for the employee’s convenience — the Arabic version is what governs in a dispute.
The MOHRE Standard Contract — What Is Fixed, What You Can Negotiate, What You Cannot Contract Out Of
MOHRE issues a standard employment contract template that must be used for the core terms, though supplementary side letters and company policies can add detail around it. Three categories matter here:
Fixed by law, not negotiable: probation length (maximum six months), the statutory notice band, minimum annual leave (30 calendar days after one year of service), sick leave entitlement (90 days total, split across full pay, half pay, and unpaid tiers), and the gratuity formula itself.
Negotiable within the statutory band: the exact notice period within the permitted range, the basic-salary-to-allowance split (which materially affects gratuity, as covered in our gratuity guide), job title and duties, and any enhanced benefits above the statutory minimum.
What you cannot contract out of, even with the employee’s written agreement — common red flags foreign employers carry across from a home-market contract:
- A clause waiving or capping statutory annual leave below 30 days.
- A notice period set outside the statutory band.
- Payment-in-lieu-of-notice language drafted on a UK model, which doesn’t map cleanly onto the UAE’s notice compensation mechanism.
- A gratuity waiver or a clause stating gratuity is “included” in a higher salary — gratuity cannot be pre-paid or contracted away.
- A non-compete clause with no geographic or time limitation.
- A probation period stated as longer than six months, or a second probation period with the same employer.
- Deductions from final settlement not tied to a specific, lawful, documented basis.
- Contract terms only provided in English with no Arabic version registered with MOHRE.
- Any clause suggesting the employer can unilaterally extend a fixed term without a new agreement.
- Silence on which UAE jurisdiction (mainland, free zone, DIFC, or ADGM) governs the contract, left ambiguous because the template was written for a different country entirely.
Your Statutory Obligations at a Glance
The four areas below each have a dedicated deep guide — this is the orientation summary, not the full detail.
- Leave: 30 calendar days of paid annual leave after one year of service, plus 90 days of sick leave split across full pay, half pay, and unpaid tiers, plus public holidays. Full detail, including part-year accrual and encashment on exit, is in our annual leave and public holidays guide.
- Working hours: A standard 8-hour day / 48-hour week, reduced during Ramadan, with defined overtime premiums for hours worked beyond the standard. Full detail is in our working hours and overtime guide.
- Termination, notice and probation: Notice must fall within the statutory band; specific grounds allow dismissal without notice; arbitrary dismissal compensation is available where a termination is found to be retaliatory or without legitimate cause. Full detail is in our termination, notice periods and probation guide.
- End-of-service gratuity: 21 days’ basic wage per year of service for the first five years, 30 days per year thereafter, capped at two years’ wage. Full detail, worked examples, and an interactive calculator are in our gratuity guide.
- Health insurance: Mandatory in most emirates, with the employer generally required to provide coverage as a condition of visa issuance.
Old Article Number to New Article Number: A Mapping Table
If you’re reading a pre-2022 source, a law firm briefing from before February 2022, or an old contract template, the article numbers it cites no longer correspond to current law. This isn’t an exhaustive cross-reference — a full mapping runs to dozens of provisions — but it covers the numbers people most commonly still search for.
- Probation period: Federal Law No. 8 of 1980, Article 37 → Federal Decree-Law No. 33 of 2021, Article 9. Maximum probation length is unchanged at six months; the new law adds a mandatory 14-day written notice requirement to end employment during probation.
- Summary dismissal without notice (misconduct grounds): 1980 law, Article 120 → 2021 law, Article 44. This is the most-searched old reference on this topic — people still look up “Article 120” five years after it stopped applying. The new law also adds a procedural requirement: a written investigation and two separate warning letters before dismissal on performance grounds, which the old law didn’t require.
- End-of-service gratuity formula: 1980 law, Article 132 → 2021 law, Article 51. The 21-day/30-day formula itself is largely unchanged; what changed is the removal of the graduated resignation penalty, covered in full in our gratuity guide.
- Notice period for standard termination: 2021 law, Article 43. The old law’s equivalent provision used different numbering and a narrower default notice band; if you’re working from a pre-2022 notice clause, don’t assume the old default period still applies.
- Arbitrary dismissal compensation: 2021 law, Article 47. This concept existed under the old law too, under separate numbering, but the new law caps compensation and ties it more explicitly to retaliation for a lawful complaint or claim.
For anything not listed here — and there is a lot not listed here — verify the current article number against the official text on the u.ae legislation portal rather than relying on a pre-2022 source, however authoritative it looked at the time.
The Twelve Employer Obligations Foreign Companies Miss Most Often
- Assuming a “free zone” employee sits outside federal law, when only DIFC and ADGM actually carve out from it.
- Using a home-market contract template with an unenforceable notice, leave, or gratuity clause.
- Not registering the employment contract electronically with MOHRE, which can affect visa processing and dispute standing later.
- Treating gratuity as a leaving-day calculation rather than an accruing monthly liability that should be provisioned for.
- Structuring compensation with an unusually low basic salary percentage without realising it also lowers the statutory gratuity liability — and can raise questions if it looks designed purely to minimise it.
- Missing the two-warning-letter procedural requirement before a performance-based dismissal.
- Setting a probation period longer than six months, or attempting a second probation period with the same employee.
- Failing to settle final dues — salary, leave encashment, notice pay, and gratuity — within the required window after termination.
- Assuming DIFC or ADGM employees are entitled to standard statutory gratuity, when their end-of-service treatment runs through a different scheme entirely.
- Not accounting for the Ramadan reduction in standard working hours when scheduling shift-based or hourly staff.
- Relying on outdated guidance that still describes the pre-2022 resignation gratuity reduction.
- Not knowing which regulator — MOHRE, the DIFC Courts, or the ADGM Courts — actually has jurisdiction if a dispute arises, and drafting a contract that’s silent on it.
How the Law Changes and How to Keep Track
Federal Decree-Law No. 33 of 2021 has been amended more than once since it took effect, and MOHRE regularly issues Ministerial Resolutions and Cabinet Resolutions that flesh out or adjust how the law is applied in practice, from labour dispute procedures to part-time work arrangements. The annual public holiday list is also reissued by gazette notice each year.
Practically, this means a labour law guide — including this one — has a shelf life. The safest approach for an ongoing UAE presence is to treat any specific figure (notice bands, contract duration limits, leave entitlements) as correct as of the date it was published, and to re-verify anything material against current MOHRE guidance or legal advice before it drives a real decision, particularly around termination and contract duration where amendments have been most active.
FAQ
Does the unlimited contract still exist in the UAE?
No. Federal Decree-Law No. 33 of 2021 abolished both unlimited and limited contracts from February 2022, replacing them with a single fixed-term contract model. Employers had until 2 February 2023 to convert existing unlimited contracts across.
Does UAE labour law apply to free zone employees?
For most free zones, yes — Federal Decree-Law No. 33 of 2021 applies. The two exceptions are DIFC and ADGM, which run their own separate employment law regimes with their own courts and their own end-of-service arrangements.
What happened to Article 120 of the old labour law?
Article 120 of Federal Law No. 8 of 1980, covering grounds for dismissal without notice, is now Article 44 of Federal Decree-Law No. 33 of 2021. The new provision adds a procedural requirement — a written investigation and two warning letters — that the old article didn’t include.
Is a UK employment contract template safe to use for a UAE hire?
Not without significant revision. UK-style clauses on notice, payment in lieu, non-competes, and leave waivers routinely fall outside what UAE law permits, and the contract must be registered with MOHRE in Arabic to be enforceable. Use the MOHRE standard contract as the base and add supplementary terms around it, rather than adapting a foreign template.
SOURCE AUTHORITIES
- Federal Decree-Law No. 33 of 2021 (official published text)
- Federal Law No. 8 of 1980 (repealed) — referenced for the historical article mapping only
- Cabinet Resolution No. 1 of 2022 (Executive Regulations)
- MOHRE — Ministry of Human Resources and Emiratisation (mohre.gov.ae)
- The u.ae government portal
- DIFC Authority — DIFC Employment Law No. 2 of 2019, as amended
- ADGM Employment Regulations 2019
- ICP and GDRFA, for the permit and visa cross-references
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