Federal Decree-Law No. 33 of 2021 did not merely update the UAE's employment regulations — it fundamentally rewrote them. Every employment contract, termination procedure, gratuity calculation, and non-compete clause in the country is now governed by a framework that demands significantly more from employers than its predecessor.
The Contract Revolution
The single most significant structural change was the elimination of unlimited-term contracts. All employment relationships must now be documented in fixed-term written contracts with a maximum duration of three years, renewable by mutual agreement. The contract must specify: job title and description, commencement date, place of work, working hours, remuneration and benefits, probation period (maximum six months), and notice period (minimum 30 days, maximum 90 days).
Every contract must be registered with MOHRE. Employers who maintain unregistered contracts — or operate without written contracts entirely — face administrative penalties and, more significantly, adverse presumptions in any employment dispute.
Leave, Overtime, and Working Hours
Standard working hours are eight hours per day or 48 hours per week, reduced to six hours during Ramadan. Overtime is payable at 125% for regular overtime and 150% for overtime between 10 PM and 4 AM. Annual leave entitlement is 30 calendar days after one year of service. Sick leave entitlement is 90 days per year: 15 days at full pay, 30 days at half pay, and 45 days unpaid.
End-of-Service Gratuity
Employees completing one year or more of continuous service are entitled to end-of-service gratuity: 21 days' basic salary for each of the first five years, and 30 days' basic salary for each subsequent year, capped at two years' total basic salary. The calculation uses the last basic salary and excludes allowances — a distinction that frequently generates disputes when employers have structured compensation packages with low basic salaries and high allowances.
The UAE's labour law framework has reached a level of sophistication that requires employers to treat HR compliance with the same seriousness they apply to financial and regulatory compliance. Casual approaches carry material legal and financial risk.
Non-Compete Clauses
Non-compete provisions are enforceable but bounded: maximum duration of two years, reasonable geographic scope, and necessity to protect legitimate business interests. Courts will void provisions deemed excessively restrictive. Employers should draft non-competes with enforcement in mind — overly aggressive clauses are more likely to be struck down entirely than judicially modified.
Polaris advises on employment structuring, payroll compliance, and PRO services. Contact us at info@polaris.ae.