Hiring employees in the United Arab Emirates (UAE) requires careful compliance with local labor laws and regulations. Following the sweeping reforms under Federal Decree-Law No. 33 of 2021 (the “New UAE Labour Law”) – which took effect in February 2022 and replaced the 1980 labor law– employers must ensure their hiring practices align with the latest legal requirements. This checklist provides a comprehensive guide for multinational companies, local startups, and HR professionals operating in the UAE (both mainland and free zones) to navigate employment contracts, work permits, Emiratisation quotas, termination rules, wage protection, and mandatory benefits under current laws.
- Employment Contracts
All employment contracts in the UAE must now be limited and renewable, following the abolition of unlimited contracts. Beyond traditional full-time roles, the law now recognizes various flexible work arrangements. Employers can hire part-time, temporary, or flexible-hour employees under the MOHRE’s approved models. Each is subject to specific rules issued by MOHRE or the relevant free zone authority.
Once signed, these contracts must be registered with the appropriate authority, as failing to do so can delay visa processing or incur penalties. Essential clauses in the contract should cover job responsibilities, working hours, salary breakdown, leave entitlements, and termination procedures.
- Work Permits & Visas
It is illegal for any person to work in the UAE without a valid work permit issued through the official channels. In mainland companies, the employer acts as the sponsor, while in free zones, the respective authority often holds that role. The employment process typically includes securing an approved offer letter and entry permit (for foreign hires), completing a medical exam, issuing a digital residence visa, and having an Emirates ID.
The employer is responsible for the costs and process of visa sponsorship, including any required deposits, medical insurance, and visa renewals (typically every 2 or 3 years depending on visa type). Employers must closely monitor expiration dates for both permits and visas to ensure timely renewals. It is strictly prohibited for employees to work under tourist or visit visas, and violations can result in legal penalties.
- Emiratisation Requirements
Emiratisation refers to policies encouraging the employment of UAE citizens in the private sector. It has become a major legal requirement for many companies under recent regulations. The UAE government (through the Nafis program and MOHRE) has set annual Emirati hiring quotas for certain businesses. As of now, all private companies with 50 or more employees must increase their number of UAE national employees in skilled roles by 2% each year, aiming for a total increase of 10% by 2026.
Employers are encouraged to:
- Use the Nafis platform to find suitable Emirati talent
- Register Emirati employees in the national pension system
- Explore financial support options available for salaries and training
Companies that fabricate or mislead authorities about their Emiratisation numbers face steep fines.
Firms failing to meet the 4% Emiratisation requirement must pay AED 84,000 per unfilled position in 2023, with the penalty increasing to AED 120,000 per worker in 2026. Private companies with 20 to 49 employees that do not hire at least one Emirati in 2024 will incur a fine of AED 96,000 (USD 26,000), which will rise to AED 108,000 (USD 30,000) if they fail to employ at least two Emiratis in 2025.
- Probation Periods
Probationary periods in the UAE cannot exceed 6 months by law. Employers may choose a shorter probation (e.g. 3 months), but 6 months is the legal cap, and it cannot be extended beyond that for the same employee. After completion of probation, if the employee continues, their service is counted from the start date (the probation is part of their service). During probation, either party may terminate the contract with appropriate notice:
- 14 days by the employer
- 30 days by the employee if moving to another UAE employer
- 14 days by the employee if planning to leave the UAE entirely
If the employee successfully completes the probation period, best practice is to provide a confirmation in writing (though not legally required). If either party decides to end the contract, termination must be executed before the completion of the six-month probation period. Otherwise, the employee will be considered confirmed, and the standard notice period of at least 30 days will apply thereafter.
- Termination & Notice Periods
In practice, most contracts specify 30 days notice, but senior roles might have 60 or 90 days – in all cases, within the 30–90 day range required by law. Both parties must continue honoring the contract during the notice period (e.g. the employee working and being paid). Any agreement to waive or shorten the notice (such as pay-in-lieu of notice) should be documented by mutual consent, and the employee is still entitled to full pay for the notice period even if waived.
Termination for cause is permissible under Article 44 of the Labour Law, covering scenarios like gross misconduct or unauthorized absences. Employees also have the right to resign, provided proper notice is given.
Final dues must be settled within 14 days after the employee’s last working day, including:
- Unpaid salary
- Accrued leave
- End-of-service gratuity
- Wage Protection & Payroll Compliance
Mainland employers are required to pay salaries through the Wage Protection System (WPS), and many free zones follow similar protocols. Salaries are considered overdue if not paid within 15 days of the scheduled date. Salaries must be paid in UAE Dirhams (AED) unless otherwise agreed. The law allows payment in a different currency if both parties agree in the contract.
Companies that repeatedly violate WPS requirements face monetary fines. For example, if a company is found to have not paid wages and repeats this offense within 6 months, it can incur a fine of AED 1,000 per affected worker, up to AED 20,000 maximum. Additionally, a non-compliant firm’s classification in MOHRE’s system will be downgraded to Category 3, which can affect the cost of work permits and subject the company to more scrutiny.
- Mandatory Employee Benefits
Employers must provide several statutory benefits. End-of-service gratuity is due after one year of continuous service, calculated at 21 days‘ basic salary per year for the first five years and 30 days thereafter, capped at two years’ salary. Annual leave entitlements start at 30 days after completing one year. Additional leave benefits include:
- Sick leave: up to 90 days annually
- Maternity leave: 60 days (45 at full pay, 15 at half pay)
- Parental leave: 5 days
- Health Insurance
- ILOE Insurance
- Mainland vs Free Zone Compliance
Mainland companies fall under the jurisdiction of MOHRE and must comply with the New UAE Labour Law. They are subject to WPS, Emiratisation mandates, and all federal labor schemes.
Free zones operate under their own regulatory authorities, though their employment regulations typically align with federal standards. Two exceptions are DIFC and ADGM, which have their own employment laws and use a defined-contribution savings plan in place of traditional gratuity. While Emiratisation and unemployment insurance requirements may not currently apply to all free zone companies, expansion may be expected in the near future.
Final Tips for Employers
Employers should keep up to date with MOHRE announcements and relevant legal changes. HR records should be maintained for all employment documentation, including contracts and payroll. Ultimately, fostering a compliant, ethical, and transparent workplace culture will support sustainable business growth and employee well-being in the UAE. By following this extended legal checklist, companies can ensure compliant and strategic hiring in the UAE while minimizing risk and strengthening operational integrity.
Given the pace of regulatory updates, it is wise to stay informed through official channels and consult legal experts for complex situations. With the right approach, employers can effectively manage the UAE’s employment landscape and build strong, lawful employment relationships from the outset.
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