Ultimate Guide to Employment in the UAE (for Business Owners)

Hiring employees in the UAE is not just about offering a job — it’s about following a structured legal and compliance framework defined by the UAE Labour Law (Federal Decree-Law No. 33 of 2021) and the Cabinet Decision No. 1 of 2022. 

Whether you operate a mainland company under the Ministry of Human Resources & Emiratisation (MOHRE) or a Free Zone business (e.g., DMCC, DAFZA, IFZA, RAKEZ), the process, contracts, and obligations vary slightly — but the fundamentals remain the same. 

This guide explains everything employers need to know: hiring rules, contracts, visas, gratuity, payroll, and compliance. 

Hiring Employees in the UAE 

All companies registered in the UAE must follow official employment and visa procedures before an employee can legally begin work. 

UAE Nationals 

Employers can hire UAE nationals directly through the MOHRE’s Tawteen or NAFIS platforms, which support Emiratisation initiatives. 

Expatriate Employees 

Non-UAE nationals must obtain: 

• A work permit from MOHRE (mainland) or the relevant Free Zone authority, and 

• A valid residence visa sponsored by the company. 

If an employee already holds a UAE residence visa (for example, from a previous employer or as a dependent), a work permit or visa transfer must still be processed before they can legally start work. 

The process ensures every employee works legally, with their details registered in the UAE’s labour system. 

Employment Contracts: Types and Key Clauses 

Under the UAE Labour Law (Federal Decree–Law No. 33 of 2021, as amended by Decree–Law No. 14 of 2022), every employee must have a written employment contract issued and registered through the MOHRE (for mainland companies) or the relevant Free Zone authority before starting work. 

Limited-Term Contract 

All employment contracts in the UAE are now limited-term, replacing the previous “unlimited” format.
A limited-term contract: 

• May be signed for up to 3 years and renewed or extended for any agreed period. 

• Must specify the start and end date of employment. 

• Can be terminated early by either party, provided there is a valid reason and written notice of 30–90 days, as stated in Article 43 of the law. 

• If neither party terminates upon expiry, the contract automatically renews on the same terms. 

Each employment contract should clearly specify: 

• Job title and description of duties 

• Work location 

• Basic salary, total salary, and allowance breakdown 

• Working hours and weekly rest day 

• Probation period (up to 6 months maximum) 

• Annual leave and other entitlements 

• Notice period for termination 

• End-of-service gratuity reference (per Article 51) 

• Signature of both employer and employee 

Free Zone Exceptions 

Some Free Zones such as DIFC and ADGM operate under their own employment laws, which differ from MOHRE rules. Employers within those zones must issue contracts in accordance with their respective authorities. 

Work Visa and Residency Procedures 

Employers are responsible for sponsoring their employees’ UAE residence visas. The process includes: 

1. Applying for an Establishment Card (company registration with MOHRE or the relevant Free Zone). 

1. Issuing a Job Offer and Work Permit. 

1. Applying for an Entry Permit. 

1. Completing medical tests and Emirates ID registration. 

1. Residence Visa Stamping : Once the above steps are complete, the residence visa is stamped in the employee’s passport or issued electronically via the ICP system.
   Visa validity is generally: 

Mainland: 2 years for private sector employees. 

Free Zones: 1 to 3 years, depending on the authority. 

All employees must also be registered in the Wage Protection System (WPS) before they can receive salaries. 

Payroll and Wage Protection (WPS) 

The Wage Protection System is a mandatory government platform that ensures employees are paid accurately and on time through approved UAE banks. 

✅ Employer Obligations: 

• Pay salaries at least once every 30 days. 

• Use an approved WPS agent or bank. 

• Employers must maintain salary records and payslips for a minimum of 2 years as per MOHRE regulations.
  (Many firms retain records for 7 years for audit and compliance purposes.) 

🚫 Non-Compliance: 

• Delayed or missing payments automatically trigger MOHRE system alerts and warnings. 

• Continued non-compliance can result in:
  Suspension of new work permits
  Downgrading of company classification (impacting fees and quotas)
  Administrative fines ranging from AED 5,000 to AED 50,000 per violation
  Freezing of the company file in severe or repeated cases 

Employee Leave and Benefits 

Annual Leave 

• 30 calendar days after one year of continuous service. 

During the first year, employees accrue two days of leave per month. 

• Leave pay is based on the full salary (basic salary + regular allowances). 

• Unused leave may be carried forward or encashed in accordance with company policy and MOHRE rules.

• If an employee does not take their accrued annual leave, they are entitled to encash the unused days based on their basic salary at the time of payment. 

Sick Leave 

• Up to 90 days per year (first 15 days full pay, next 30 days half pay, remaining 45 unpaid). 

Maternity Leave 

• 60 days total (45 days full pay + 15 half pay). 

• Additional unpaid leave of 45 days may apply in case of medical complications. 

Paternity Leave 

• 5 paid days within six months of the child’s birth. 

Public Holidays 

• As per UAE Cabinet announcements, generally 13–15 days annually. 

End of Service Gratuity (EOSB) 

When an employee leaves, they’re entitled to end-of-service benefits, calculated based on basic salary only (excluding allowances). 

• First 5 years of service: 21 days’ basic salary per year. 

• After 5 years: 30 days’ basic salary per year. 

This payment is due within 14 days of the employee’s final working day. 

Free Zones such as DIFC and ADGM operate alternative schemes — typically Employer Savings Plans (DEWS) — instead of the traditional gratuity system. 

Termination, Resignation & Notice Periods 

Resignation 

Employees must give 30–90 days’ written notice, depending on their contract. 

Termination by Employer 

Employers can terminate for valid reasons (e.g., poor performance or redundancy) with proper notice.
Immediate dismissal is allowed for serious misconduct under Article 44 of the Labour Law. 

Final Settlements 

Employers must: 

• Cancel the employee’s residence visa. 

• Issue an experience certificate (free of charge). 

• Settle outstanding wages, leave pay, and gratuity. 

• Ensure the final settlement is processed within 14 days from the employee’s last working day, as per MOHRE regulations. 

Emiratisation Requirements 

To promote national employment, the UAE introduced Emiratisation quotas for mainland companies with 50 or more employees. 

• Employers must increase their Emirati workforce by 2% each year until reaching 10%. 

• Non-compliance results in annual fines starting at AED 96,000 per missing Emirati employee (increasing yearly). 

Free Zones currently have different or no Emiratisation requirements, depending on their respective authorities. 

Employment Compliance & Audits 

• To remain compliant and avoid penalties, employers should: 

• Keep employee files (contracts, IDs, visas, payroll, and leave records). 

• Update WPS files monthly. 

• Maintain internal HR policies (disciplinary, grievance, and leave). 

• Renew visas, licences, and permits before expiry. 

• Conduct annual HR compliance reviews. 

The MOHRE and Free Zone authorities regularly inspect companies for compliance — keeping documentation in order avoids warnings or fines. 

Common Employment Mistakes to Avoid 

❌ Hiring without an active trade licence or establishment card.
❌ Paying salaries in cash instead of through WPS.
❌ Using outdated contract templates.
❌ Failing to calculate gratuity correctly.
❌ Ignoring Emiratisation requirements.
❌ Letting visas expire without cancellation or renewal.