Labour Law in UAE: A Complete Guide for 2025

The Labour Law in UAE is a crucial aspect of the country’s legal framework that governs the relationship between employers and employees. As one of the leading business hubs in the Middle East, the UAE offers a unique combination of progressive business policies, modern infrastructure, and attractive employment opportunities. However, understanding labour law in UAE is essential for both employers and employees to ensure smooth operations, avoid legal pitfalls, and ensure compliance with the country’s laws.

In this guide, we will provide an in-depth overview of the Labour Law in UAE in 2025, covering its key provisions, recent updates, and practical implications for businesses and workers in the region.

What is Labour Law in UAE?

The Labour Law in UAE is primarily governed by the latest Federal Decree-Law No. 33 of 2021, also known as the UAE Labour Law. It regulates the relationship between employers and employees in private sectors excluding DIFC and ADGM, which have their own laws. The law applies to all employees in the UAE, including those working in free zones.

The Labour Law in UAE ensures that the rights and obligations of both employers and employees are clearly defined. This includes areas like employment contracts, wages, working hours, overtime, benefits, leave entitlements, health and safety, and dispute resolution.

Key Features of the UAE Labour Law in 2025

The UAE has consistently updated its labour law to reflect global best practices and evolving business needs, accordingly the latest labour law is governed by Federal Decree-Law No. 33 of 2021 effective from February 2022. Here are the key features of the Labour Law in UAE as it stands in 2025:

1. Employment Contracts

A written employment contract is mandatory under the Labour Law in UAE. Contracts must be signed by both the employer and the employee and should clearly outline terms such as:

• Job title and duties
• Salary and benefits
• Working hours
• Probationary period
• Termination conditions

The contract can be fixed-term only and are renewable.

2. Working Hours and Overtime

The UAE Labour Law regulates the maximum working hours and overtime pay:

• The standard working hours are 8 hours per day or 48 hours per week. For some sectors, such as retail or hospitality, working hours may vary, and employees may work longer hours but must be compensated with overtime pay.
• Overtime is payable at 125% of the regular wage for overtime hours, and 150% if the overtime is during night hours or on public holidays.
• If the circumstances require that the worker works on the weekend specified in the employment contract or work regulation, he shall be compensated with another day off or he shall be paid the wage of that day according to the wage established for normal working days, plus an increase of not less than (%50) fifty percent of the basic wage for that day. A worker shall not be instructed to work for more than two consecutive weekend days, except for day workers (Each worker receiving a daily wage).

3. Annual Leave and Public Holidays

Employees are entitled to annual paid leave after completing one year of service:

• Annual leave is 30 calendar days per year.
• Employees are entitled to paid leave on official public holidays recognized by the government, such as National Day, Eid Al Fitr, and Eid Al Adha etc.
• If an employee is required to work during these public holidays, they are entitled to additional compensation or additional days off.

4. End of Service Benefits (Gratuity)

One of the significant benefits under the UAE Labour Law is the end-of-service gratuity:

• Employees are entitled to a gratuity payment if they complete at least one year of continuous service.
• The gratuity is calculated based on the employee’s last drawn salary and their length of service:
  • 21 days’ salary for each year of the first five years of service.
  • 30 days’ salary for each additional year beyond five years.

Gratuity is not paid if the employee is terminated for reasons such as misconduct or violating company policy.

5. Maternity Leave

Female employees in the UAE are entitled to maternity leave under the Labour Law:

• The employee is entitled to 60 days of maternity leave(45 with full pay plus 15 days with half wage).

The female worker may, after using the maternity leave, be absent from work without a wage for a period not exceeding continuous or intermittent (45) forty-five days. After returning from maternity leave and for a period of not more than (6) six months from the date of delivery, the female worker shall be entitled to one or two breaks per day to breastfeed her child, provided that the two breaks do not exceed an hour.

6. Sick Leave and Medical Insurance

Under the Labour Law in UAE, employees are entitled to sick leave under certain conditions:

• The worker shall not be entitled to a paid sick leave during the probationary period. However, the employer may grant him a sick leave without pay, based on a medical report issued by the medical entity that stipulates the necessity of granting the leave.
• Employees are entitled to 90 days of sick leave per year, which is paid at full pay for the first 15 days, half pay for the next 30 days, and no pay for the remaining 45 days.
• Employers are required to provide medical insurance for their employees in Dubai and Abu Dhabi. This health coverage ensures that employees can access medical services and treatment at no or minimal cost.

7. Termination of Employment

Termination of employment in the UAE is regulated by the Labour Law. Both the employer and employee can terminate the contract under certain conditions:

• Employee’s Rights upon Termination: Employees are entitled to receive the salary and benefits owed to them up until the last day of employment, including any unused annual leave or overtime.
• Employer’s Rights to Terminate: Employers can terminate employees for valid reasons, such as misconduct or poor performance. However, employers must follow due process and give notice as stipulated in the employment contract (typically between 30 days to 90 days).
• Resignation by the Employee: If an employee resigns, they must give notice as per the contract and may not be entitled to the gratuity or certain benefits depending on the circumstances of the resignation.

8. Equal Pay and Non-Discrimination

The UAE Labour Law promotes gender equality in the workplace. Employers cannot discriminate against employees based on gender, nationality, or religion. The law mandates that both men and women are entitled to equal pay for equal work. This has been especially crucial for the UAE’s global workforce, where both expat and local talent contribute to the economy.

Recent Updates to the Labour Law in UAE (2025)

The UAE Labour Law underwent significant updates in recent years to better support both employees and employers. Lately, the following changes were introduced:

• Flexi-working Hours: Employers are now permitted to implement flexible working hours and remote work policies, especially in light of the global trend towards more flexible working arrangements.
• Notice period must be a minimum of 30 days and a maximum of 90 days. Early termination must be mutually agreed.
• Increased Protection for Domestic Workers: Domestic workers, who were previously outside the ambit of Labour Law, are now provided with certain rights regarding working hours, pay, and rest periods.

How Labour Law in UAE Affects Employers and Employees

For employers in the UAE, understanding labour law in UAE is crucial for:

• Ensuring compliance with local employment regulations to avoid fines or penalties.
• Structuring fair and transparent employee benefits and compensation packages.
• Implementing dispute resolution processes that adhere to the law.

For employees, the Labour Law in UAE provides strong protection against unfair treatment, including rights to fair wages, job security, and benefits.

Conclusion

The Labour Law in UAE serves as a foundation for maintaining a balanced relationship between employers and employees, ensuring that both parties understand their rights and obligations. In 2025, the UAE continues to evolve its labour laws to match global standards, incorporating changes that benefit both businesses and workers alike.

Whether you’re an employer or an employee in the UAE or Employer looking to set up business in UAE, understanding these regulations is essential to ensure smooth operations, avoid disputes, and build a harmonious and productive working environment. If you’re looking for detailed guidance on specific aspects of UAE’s labour law, we at Stratrich are there to help you.