Foreign companies must establish a legal entity to hire staff in the UAE before being able to offer Emirati employment contracts. The typical choice is to open a limited liability subsidiary. The Labour Law governs the company’s relationship with its employees at the federal level (Federal Law No.8 Organisation of Labour Relations, 1980). Some areas were amended by the Federal Decree-Law No. 33, which came into force in February 2022 and is referred to as the “New Labour Law”.
The New Labour Law specifically changed the points relating to employment contracts. This is among the key considerations to be dealt with during hiring, onboarding and drawing up contracts with new staff. However, thanks to our Professional Employer Organisation (PEO) and Employer Of Record (EOR) solutions, we can provide compliant labour contracts for your employees in the UAE, including local benefits. Our team keeps track of Emirati laws and regulations daily to be duly aware of updates that can be implemented in working contracts and to ensure a smooth entry for your business into the Emirati economy.
Employment legislation in the private sector is covered at the federal level by the Labour Law, amended by Federal Decree-Law No. 33 in February 2022, with additional benefits for employees and some safeguards for employers. Further interpretations and amendments can apply through ministerial decrees and resolutions.
Two free zones, the Abu Dhabi Global Market and the Dubai International Financial Centre, apply their own legal system and employment legislation. Other FTZs usually follow the federal Labor Law, although some implement different rules regarding the employment of foreigners, salary payments, health and safety and termination of contracts.
Open-ended, indefinite employment contracts are no longer permitted under the New Law. Existing open-ended contracts must be transferred to fixed-term by February 1, 2023. Employees leaving during this period retain notice periods of 30 days for up to five years of service, 60 days between five and ten years, and 90 days for more than ten years.
Fixed-term employment contracts became mandatory from February 2022 for a maximum of three years each, renewable as part of the continuous service period with the employer. Employer amendments to the official Ministry of Human Resources and Emiratisation (MOHRE) template are now permitted. Notice periods are between 30 and 90 days. Employers can opt out of renewing a contract without paying additional end-of-service gratuities.
The maximum six-month probation period still applies under the New Law. Amendments require the employer to give 14 days’ notice of termination. Employees must provide 14 days’ notice when resigning to leave the UAE or one month when resigning to join another UAE employer.
Before February 2022, all employment was considered full-time. The New Law allows for additional employment frameworks, including part-time for one or more employers, temporary, flexible, remote working and job sharing. All employees have the same benefits, with some entitlements adjusted pro rata.
Note: Under the New Labour Law, companies employing more than 50 workers must institute internal workplace policies regarding issues such as health and safety, working hours, promotion, awards and disciplinary procedures.
General considerations include:
Employers hiring non-Emirati or GCC citizens face other requirements, including:
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