UAE Labour Law 2025 Explained: Contracts, Gratuity & Leave in Simple Terms
The UAE Labour Law 2025 (Federal Decree-Law No. 33 of 2021) sets clear rules for contracts, working hours, leave, and gratuity.
- End-of-service gratuity = 21 days’ basic salary per year (first 5 years)
- Then 30 days per year after 5 years
- Capped at 2 years’ wage, payable within 14 days of exit
🔗 Use our calculator to see your exact figure.
What is the UAE Labour Law 2025?
The UAE Labour Law 2025 (Federal Decree-Law No. 33 of 2021) sets the main rules for private-sector jobs in the UAE. It came into force on 2 February 2022, replacing the old 1980 law, and was designed to modernize contracts, protect workers, and align employment practices with global standards.
The law applies to mainland companies and most free zones. However, it does not cover:
- Domestic workers – regulated under a separate Domestic Workers Law (No. 9 of 2022, amended by No. 21 of 2023).
- DIFC (Dubai International Financial Centre) – governed by its own Employment Law and the DEWS savings scheme.
- ADGM (Abu Dhabi Global Market) – covered by the ADGM Employment Regulations 2024, which set different gratuity rules.
👉 Rule of thumb: Mainland + most free zones = Labour Law 33/2021.
Financial free zones + domestic workers = separate frameworks.
This guide explains the UAE Labour Law 2025 in plain English with practical examples.
Key Employment Rules
Fixed-Term Contracts
Under the UAE Labour Law 2025 (MOHRE regime covering mainland and most free zones), all employment contracts must be fixed-term (unlimited contracts were phased out). DIFC and ADGM are exceptions with their own laws, where contracts may be fixed-term or indefinite.
Probation & Notices
Probation may last up to 6 months. Notice requirements are:
- Employer terminating during probation → 14 days’ notice.
- Employee resigning to join another UAE company → 30 days’ notice.
- Employee resigning to leave UAE → 14 days’ notice.
Working Hours, Overtime & Weekly Rest
The normal limit is 8 hours/day or 48 hours/week. Employees get at least one weekly rest day (any day set by contract/policy). Overtime may not exceed 2 hours per day, and in all cases total working hours (including OT) must not exceed 144 hours in any 3 consecutive weeks. Baseline OT premiums: +25% (day) and +50% (10:00 pm–4:00 am; special rules may apply to shift workers). If work is required on the weekly rest day, the employer must grant a substitute rest day or +50% pay.
Leave Entitlements
Employees are entitled to different types of leave under the UAE Labour Law 2025.
Annual Leave
The UAE Labour Law 2025 gives employees the right to paid annual leave after six months of service:
- 30 days of paid annual leave after completing one year of service.
- 2 days per month if employed for more than six months but less than one year.
Carry-forward or encashment:
By agreement, you may carry forward up to half of your annual leave balance to the following year or receive cash in lieu, calculated on your basic salary.
If your contract ends with unused leave, payment for those days must be included in your final settlement.
Maternity & Special Support
- 60 days: 45 fully paid + 15 half paid.
- Miscarriage/stillbirth covered.
- Nursing break: 1 hour/day for 6 months after birth.
- Extra 30 days fully paid + 30 days unpaid if child has a disability.
Parental Leave
Both parents get 5 working days (paid), usable within 6 months of birth.
Sick Leave
90 days/year after probation: 15 full pay, 30 half pay, 45 unpaid.
Hajj Leave
30 days unpaid, once per employer.
Umrah Leave
Not mandatory; up to employer policy.
Study Leave
10 days/year, after 2 years’ service, for UAE-based study.
Job-Search Leave
If the employer terminates the contract, the worker is entitled to 1 unpaid day per week during the notice period to attend interviews, provided the worker notifies the employer at least 3 days in advance.
Compassionate Leave
- 5 days for spouse’s death.
- 3 days for close family member.
Leave Entitlements Matrix
| Leave Type | Eligibility | Duration | Paid/Unpaid | Notes |
|---|---|---|---|---|
| Annual | ≥6 months | 30 days/year | Paid | 2 days/month if 6–12 months |
| Maternity | All female staff | 60 days | 45 full + 15 half | Nursing 1h/day for 6m |
| Parental | Mother or father | 5 working days | Paid | Within 6 months of birth |
| Sick | Post-probation | 90 days | 15 full + 30 half + 45 unpaid | Medical certificate required |
| Hajj | Once per employer | 30 days | Unpaid | One-time only |
| Umrah | Employer policy | – | Unpaid | Not statutory |
| Study | ≥2 years service | 10 days | Varies | UAE institute |
| Job-search | During notice | 1 day/week | Unpaid | To attend interviews |
| Compassionate | All staff | 3–5 days | Paid | 5 spouse; 3 family |
All these leave entitlements are guaranteed under the UAE Labour Law 2025.
Termination, Suspension & Disciplinary Rules
- Notice: 30–90 days depending on contract. The old tiered 30/60/90 by service years no longer applies.
- Suspension: Employers may suspend up to 30 days on half pay during investigation. If cleared, back-pay is required.
- Discipline: Penalties include written warnings, salary deductions (max 5 days/month), suspension (≤14 days), denial of increment/promotion, and termination.
Gratuity (End-of-Service Benefits)
Employees who complete at least 1 year of service are entitled to gratuity:
- First 5 years: 21 days’ basic salary per year.
- After 5 years: 30 days’ basic salary per year.
- Cap: Maximum 2 years’ wage.
- Payment deadline: Within 14 days of last working day.
- Fractional years: Calculated pro-rata (e.g., 2 years 3 months = 2.25 years).
Worked Example:
Many authorities demonstrate EOSB as basic monthly salary × (21/30) × years for the first five years; e.g., AED 10,000 × 0.7 × 4 = AED 28,000. For exact figures under your circumstances, Calculate Your Gratuity Now
Free-Zone Variations
- Most free zones (e.g., JAFZA, DMCC): Follow the UAE Labour Law gratuity method (21/30-day formula; statutory cap = 2 years’ wage). You can check your payout instantly with our Free Zone gratuity calculator. If you are working in JAFZA, see our detailed JAFZA gratuity calculation guide for worked examples and clarifications.
- ADGM: Uses the **standard UAE formula but with no cap under the ADGM Employment Regulations 2024. Daily rate = basic ÷ 365; payable regardless of termination reason.
- DIFC: No lump-sum gratuity; employers fund DEWS monthly (5.83% for service < 5 years; 8.33% for ≥ 5 years) + investment returns, per DIFC Employment Law Art. 66. For full details, see our DIFC gratuity calculation guide.
Salary, WPS & Payment Rules
- Salaries must be paid via the Wages Protection System (WPS).
- Payment must be in AED or any other agreed currency written in the contract.
- Employers must pay on time, with penalties for delays.
Workplace Rights & Protections
- No discrimination based on gender, race, religion, nationality, or disability.
- Equal pay for equal work is required.
- Employers cannot dismiss staff for being pregnant or on maternity leave.
- Harassment, bullying, or violence are prohibited.
- Midday break: Outdoor work banned from 12:30–3:00 pm, June 15–September 15.
New Employee Benefits
Unemployment Insurance (ILOE)
- Mandatory for private sector and most free zones.
- DIFC and ADGM are exempt.
- Benefit: 60% of basic salary (max AED 20,000/month) for up to 3 months.
- Requires at least 12 months of subscription.
Health Insurance
Abu Dhabi: The Employer must provide health insurance for employees and eligible dependents; cost cannot be passed on. Dubai: The Employer must insure every employee (EBP at minimum). MOHRE reiterates employer responsibility for private-sector health insurance.
EOSB Security
Employers must either:
- Provide a bank guarantee of AED 3,000 per employee, or
- Enroll in the Taa-meen insurance system (covers unpaid wages, EOSB, tickets).
UAE Public Holidays (Private Sector)
Private-sector employees get paid leave on official holidays, announced annually by MOHRE. Islamic holidays (Eid, Hijri New Year) vary by moon sighting.
Job Levels & Skilled Worker Criteria
MOHRE classifies jobs into 9 levels: from managers (Level 1) to basic occupations (Level 9).
A “skilled worker” must:
- Earn at least AED 4,000/month.
- Hold an attested educational certificate above high school.
- Work in Levels 1–5 categories.
FAQs
Myths vs Facts — UAE Labour Law 2025
| Myth | Fact | Official Source |
|---|---|---|
| “ADGM gratuity is capped at two years.” | No cap under the ADGM Employment Regulations 2024. Gratuity = 21 days (first 5 years) then 30 days/year; daily rate = Basic ÷ 365; payable regardless of reason for termination. | ADGM Rulebook §61 |
| “Overtime is capped at 144 hours per year.” | The cap is 144 hours in any 3 consecutive weeks; also max 2 OT hours/day. Baseline OT premiums: +25% (day) / +50% (10pm–4am). | Federal Decree-Law 33/2021, Art. 19 · Cabinet Resolution 1/2022 (Exec. Regs) |
| “DIFC pays standard 21/30 gratuity.” | DIFC uses the funded DEWS plan, not lump-sum gratuity. Employer contributes 5.83% (<5y) then 8.33% (≥5y) of basic pay, plus investment returns. | DIFC Employment Law (Art. 66) |
Official & Primary References (tap to expand)
Core Law & Executive Regulations
- Federal Decree-Law No. 33 of 2021 (main labour law) — OT (Art. 19), Probation (Art. 9), Gratuity (Art. 51), Final dues (Art. 53)
- Cabinet Resolution No. 1 of 2022 (Executive Regulations) — annual leave carry-forward/encashment; wage rules
- u.ae — Working hours & overtime overview
- MOHRE News (20 Dec 2022): conversion to fixed-term contracts by 31 Dec 2023
Free Zones (Financial & Non-financial)
- ADGM Employment Regulations 2024 | ADGM Rulebook §61 — End-of-Service Gratuity (no cap; daily rate = basic ÷ 365)
- DIFC Employment Law | PDF — Article 66(7): DEWS contributions 5.83% / 8.33%
- JAFZA — Gratuity calculation guide (applies UAE Labour Law formula)
- DMCC — Employment FAQs (aligns with Federal Law No. 33 of 2021) | DMCC — EOSB calculation guide (method illustration)
Other Official Guidance
- MOHRE — Worker protection insurance (Taa-meen) vs AED 3,000 bank guarantee | u.ae — Insurance system for private-sector employees
- Abu Dhabi Health Insurance Law (employer must provide; cost cannot be passed on) | Dubai DHA / ISAHD — employer must insure employees
- MOHRE — Summer midday break (15 June–15 September, 12:30–3:00 pm)
Conclusion
The UAE Labour Law 2025 modernizes work rules for contracts, leave, and workplace rights. Most importantly, it guarantees fair and timely end-of-service gratuity. By following the UAE Labour Law 2025, employees and employers can avoid disputes and ensure compliance.
To make sure you get the right numbers and guidance for your situation:
- Use our UAE Gratuity Calculator if you are a mainland employee.
- If you find the process confusing, watch our Video Tutorial for a step-by-step walkthrough.
- For domestic workers, see our dedicated Domestic Worker Gratuity Guide.
- For unique situations like secondment, legacy unlimited contracts, maternity leave, or unusual contract changes, read our Special Cases Guide.
- If your company is closing, or you are facing challenges such as absconding or suspension, don’t miss our article on Gratuity Rights in UAE 2025 – Company Shutdown, Absconding, Suspension.
About the Authors
This guide was prepared by Omar Haddad (LL.M., UAE Employment Law Specialist), a practising lawyer with 15+ years’ experience in contracts, workplace disputes, and end-of-service settlements, with support from Noor Al Emarat (CIPD-Certified HR Specialist), who has a decade of expertise in HR compliance and gratuity calculations.
Their aim is to make complex UAE labour laws simple and practical for employees and employers.
All content has been fact-checked and reviewed by the UAE Gratuity Calculator Editorial Team for accuracy under the latest MOHRE and free zone regulations.
