Hiring in UAE

Federal Decree-Law No. 33 of 2021 replaced the previous labor code and took effect on February 2, 2022. This law applies to all private-sector employees on the UAE mainland and introduced sweeping changes to contract types, termination rules, and worker protections. All employment contracts must now be limited-term (fixed-term) with a maximum duration of 3 years, renewable. Employers who previously used unlimited contracts had until February 2023 to convert them. The law covers all seven emirates for mainland companies, while free zone authorities such as DIFC and ADGM maintain their own employment regulations.

Termination requires written notice of 30 to 90 days depending on the contract terms. Either party can terminate during probation (up to 6 months) with 14 days written notice. End-of-service gratuity remains a core entitlement: employees earn 21 calendar days of basic salary per year for the first 5 years and 30 calendar days per year for each year beyond that, capped at 2 years total salary. Gratuity applies after completing at least 1 year of continuous service. Employers must pay all final dues within 14 days of the last working day.

Annual leave stands at 30 calendar days per year for employees with more than 1 year of service and 2 days per month during the first year. The UAE observes at least 10 paid public holidays annually, including Eid Al Fitr (3-4 days), Eid Al Adha (3-4 days), Islamic New Year, Prophet's Birthday, National Day (December 2-3), and New Year's Day. Sick leave entitlement covers 90 days per year: the first 15 days at full pay, the next 30 at half pay, and the remaining 45 unpaid.

Maternity leave is 45 calendar days at full pay plus an additional 15 days at half pay. Paternity leave is 5 working days within the first 6 months of the child's birth. The 2022 law also introduced parental leave of 5 working days for either parent within the first 6 months. These provisions apply to both mainland and most free zone employees.

The Wage Protection System (WPS) requires all employers to pay salaries through approved banks and exchange houses, ensuring the Ministry of Human Resources and Emiratisation (MOHRE) can monitor timely payment. Employers must register with MOHRE and obtain work permits and residency visas for foreign employees. The UAE has no personal income tax, making it attractive for international hires, though a 5%% VAT applies to most goods and services. Corporate tax of 9%% on profits above AED 375,000 took effect in June 2023 but does not apply to employment income.

Free zones such as JAFZA, DMCC, and DAFZA operate under their own labor regulations, which often mirror federal law but may differ on dispute resolution, visa sponsorship, and contract terms. DIFC and ADGM, the two financial free zones, follow common-law frameworks with separate employment laws, courts, and dispute resolution bodies. Employers expanding into the UAE must determine whether they will operate on the mainland or within a specific free zone, as this choice affects licensing, visa allocation, and which employment rules apply.