Employment contracts govern every private-sector working relationship in UAE, yet contract errors regularly cost employers between AED 100,000 and AED 500,000 in penalties and compensation. We have seen employers pay six-figure sums because probation clauses violated statutory limits, and face substantial claims when termination provisions failed to meet Federal Decree-Law requirements.

Federal Decree-Law No. 33 of 2021 (as amended) establishes strict requirements for employment contracts. Contracts must be fixed-term, registered electronically with MOHRE, contain specific mandatory clauses, and comply with Arabic-language requirements. This guide examines contract drafting requirements, clauses that cause disputes, and mistakes that expose employers to liability.

Note: This article covers UAE mainland employment regulated by MOHRE. DIFC and ADGM free zones operate under separate employment regimes with different requirements.

Quick Compliance Checklist

Before finalizing any UAE employment contract, verify:

  • ✓ Contract specifies fixed-term duration (unlimited-term contracts no longer permitted)
  • ✓ Probation period maximum 6 months (non-extendable)
  • ✓ Notice periods between 30-90 days for standard termination
  • ✓ Working hours state maximum (8 hours/day, 48 hours/week)
  • ✓ Basic salary separately identified for gratuity calculation
  • ✓ Payment through Wages Protection System (WPS) specified
  • ✓ Annual leave minimum 30 days stated
  • ✓ Non-compete clause limited to 2 years maximum
  • ✓ Contract in Arabic or bilingual with Arabic controlling
  • ✓ Registered with MOHRE before employee starts work

Federal Law Requirements for Employment Contracts

Fixed-Term Contracts in UAE: What Replaced Unlimited Contracts

Article 8 of Federal Decree-Law No. 33 of 2021 requires all private-sector employment contracts to be fixed-term. Unlimited-term contracts no longer exist under UAE law (with the exception of DIFC and ADGM free zones which maintain separate employment regimes).

Key requirements:

Contracts must specify a definite term that is renewable by mutual agreement. While earlier versions capped contracts at three years, Federal Decree-Law No. 14 of 2022 removed this maximum duration limit—parties may now agree to any fixed term. The contract becomes a tacit extension on the same terms if both parties continue performing after expiry without express renewal.

Practical impact:

Employers must actively manage contract renewals. Passive continuation creates uncertainty about renewal terms, salary adjustments, and documentation requirements. MOHRE requires updated contract registration for each renewal, and failure to register within specified timeframes can result in penalties.

Overseas employers often assume UAE contracts work like "at-will" employment. They do not. Terminating a fixed-term contract before expiry without legitimate cause requires compensation equal to the employee's wage for the remaining contract period (capped at three months' salary).

MOHRE Registration Requirements

Cabinet Resolution No. 1 of 2022 requires electronic contract registration through the MOHRE platform. Employers submit contracts including employer trade license details, employee passport and Emirates ID information, job classification codes, and salary structure. MOHRE reviews contracts for compliance before approval.

Registration creates the legal basis for work permits and residence visas. Employees cannot legally work without registered MOHRE contracts—operating without registration creates immigration violations and penalties. Contracts must be in Arabic or bilingual (Arabic/English), with Arabic controlling in interpretation disputes.

Mandatory Contract Particulars

Article 8 of Federal Decree-Law No. 33 and Cabinet Resolution No. 1 of 2022 specify required contract terms:

Employer details: Full legal trade name, trade license number, address, contact information

Employee identification: Full legal name, nationality, passport number, Emirates ID number, date of birth, qualifications, profession code

Position details: Job title matching MOHRE classification, job description, work location

Contract term: Start date, fixed duration, renewal provisions

Working hours: Daily and weekly hours (max 8 hours/day, 48 hours/week), rest days, Ramadan reduction (2 hours daily)

Compensation: Basic salary, allowances (housing, transportation), total monthly compensation, payment method (WPS compliance)

Leave entitlements: Annual leave (minimum 30 days after one year), sick leave, public holidays

Probation period: Duration (maximum 6 months), notice requirements (14 days by employer; 1 month by employee moving to another UAE employer; 14 days leaving UAE), benefits during probation

Notice period: Termination notice duration (minimum 30 days, maximum 90 days)

End-of-service gratuity: Calculation method per Article 51, which provides 21 days' basic salary per year for the first five years, 30 days' basic salary per year thereafter.

Mandatory Contract Clauses: Compliance Reference Table

Contract Element Statutory Requirement Common Error Consequence of Non-Compliance
Contract Type Fixed-term only (Art. 8) Using "unlimited term" or "permanent" Registration rejected; treated as fixed-term by default
Contract Duration Any fixed period, renewable by agreement (amended 2022) Stating "indefinite" or omitting end date Flagged during registration; ambiguity in renewal
Probation Period Max 6 months, non-extendable (Art. 9) Stating 9-12 months or "extendable" Excess period void; employee confirmed after 6 months
Probation Notice - Employer 14 days minimum "No notice required" or less than 14 days Must pay 14 days' salary as notice compensation
Probation Notice - Employee (UAE transfer) 1 month if moving to another UAE employer "14 days" or "no notice" Employee owes full 1 month notice or compensation
Probation Notice - Employee (leaving UAE) 14 days if leaving UAE Omitting this distinction Ambiguity in notice obligations
Standard Notice Period 30-90 days (Art. 42) "1 week" or "as employer decides" Statutory 30-day minimum applies regardless
Working Hours Max 8 hrs/day, 48 hrs/week (Art. 17) "As required" without maximum Overtime claims; administrative penalties for excessive hours
Ramadan Hours Reduce by 2 hours daily No mention of reduction Non-compliance with statutory reduction requirement
Overtime Rate (Day) 125% of regular wage "Regular pay" or omitting rate Must pay statutory 125% minimum
Overtime Rate (Night) 150% of regular wage (9pm-4am) Not distinguishing night work Employee entitled to statutory 150%
Annual Leave 30 calendar days after 1 year (Art. 29) "20 days" or "2 weeks" Void; statutory 30 days applies
Basic Salary Must be stated separately for gratuity calculation Only showing "total package" Disputes over gratuity calculation base
Payment Method WPS mandatory (Cabinet Res. 1/2022) "Cash" or "cheque" Administrative penalties; employee complaint rights
Language Arabic or bilingual; Arabic controls (Art. 8) English only Registration rejected
MOHRE Registration Electronic registration required Operating without registration Immigration violations; work permit processing delays
Non-Compete Duration Max 2 years post-employment (Art. 10) "5 years" or "indefinitely" Unenforceable; void for excess period
Non-Compete Scope Limited to same work type and geographic area "Any industry" or "worldwide" Unenforceable as unreasonably broad
End-of-Service Gratuity 21 days/year (yrs 1-5), 30 days/year (yr 6+) based on basic salary (Art. 51) Attempting to eliminate or calculate on allowances Statutory calculation applies regardless
Termination During Contract Compensation = remaining wages, max 3 months (Art. 43) "No compensation for early termination" Void; statutory compensation applies
Job Description Specific title per MOHRE classification "Various duties" or "as assigned" Registration delays; disputes over scope
Employee ID Details Passport, Emirates ID, nationality, DOB Missing or incomplete identification Registration cannot proceed
Employer License Details Trade license number, legal entity name Using trading name or abbreviation Entity mismatch causes registration rejection

How to use this table: Review existing contracts against each requirement in the left column. If your contract contains the "common error" from column three, you face the consequence listed in column four. Contracts with multiple violations compound liability exposure—each non-compliant clause creates separate grounds for employee claims or MOHRE penalties.

Contract Clauses That Cause Disputes

Probation Period in UAE: Maximum Length and Notice Rules

The maximum probation period is six months. This limit is mandatory and cannot be extended, even with employee consent. Yet contracts regularly include probation clauses that violate statutory requirements.

Common violations:

A technology company included a clause stating "probation period may be extended by mutual agreement for an additional three months." When the company attempted to extend an employee's probation to nine months, the employee challenged the extension. Ministry of Human Resources ruled the extension void—the employee was considered a confirmed employee after six months, entitled to full notice rights for any termination.

Notice during probation:

Federal Decree-Law No. 33 sets specific notice requirements during probation that many contracts fail to state correctly:

If employer terminates during probation: 14 days' notice required.

If employee resigns during probation to work for another UAE employer: 1 month's notice required (the new employer may reimburse recruitment costs to compensate the current employer).

If employee resigns during probation to leave UAE: 14 days' notice required.

Contracts that state "either party may terminate during probation without notice" are incorrect and unenforceable. The statutory notice periods apply regardless of contract language.

Benefits during probation:

Contracts stating "no benefits apply during probation" are partially incorrect. While employers may exclude certain discretionary benefits during probation, statutory entitlements cannot be waived. Annual leave entitlements accrue during service, with the statutory minimum of 30 days applying once the employee completes one year of service. Employers may agree with employees to defer taking leave until after probation. The probation period counts toward end-of-service gratuity calculations if the employee completes one full year of service.

Termination and Notice Provisions

Termination clauses frequently contain language that contradicts UAE law or creates ambiguity about termination rights.

Notice period specifications:

Federal Decree-Law No. 33 requires notice periods between 30 and 90 days for terminating fixed-term contracts. Contracts that specify periods outside this range are invalid—the statutory minimum/maximum applies instead.

A logistics company's contract stated "one week notice" for termination. When the employer terminated an employee with one week's notice, the employee claimed 30 days' notice was required. The court agreed, ordering the employer to pay 23 days' additional salary as compensation for inadequate notice.

Termination compensation:

Article 42 addresses early termination of fixed-term contracts. If either party terminates without legitimate cause before the contract term expires, the terminating party must compensate the other for damages. For employees, damages equal the remaining contract period's wages, capped at three months' salary.

Contracts should explicitly reference these provisions. When contracts are silent on early termination compensation or attempt to eliminate it, disputes arise about whether compensation is owed and how much.

Immediate termination provisions:

Article 44 permits employer termination without notice for serious misconduct (assault, gross negligence causing significant loss, disclosure of trade secrets, intoxication at work, etc.). Article 45 permits employee termination without notice in specific circumstances (employer fails to fulfill obligations, sexual harassment, fraud about employment conditions).

Contracts should reference these provisions but cannot modify them. A contract stating "employer may terminate immediately for any reason" is unenforceable—only the grounds specified in Article 44 justify immediate termination.

Working Hours and Overtime

Federal Decree-Law No. 33 sets maximum working hours (8 hours daily, 48 hours weekly) and overtime requirements (125% for daytime, 150% for night work 9pm-4am). Contracts must align with statutory limits.

Common errors: Contracts stating hours are "as required" without maximums create disputes. When employers require extensive overtime without proper compensation, employees claim they weren't informed. Courts examine whether contracts clearly communicated expected hours and proper overtime rates.

Management exemption reality: Not all employees are entitled to overtime under UAE law, but exemptions are narrow. True exemption requires actual managerial authority (hiring/firing decisions, budget control, strategic planning)—not just a management job title. Contracts broadly stating "this position is exempt from overtime" without the role meeting statutory criteria expose employers to claims.

Example: A retail company classified store supervisors as management exempt from overtime. When supervisors working 60-hour weeks claimed overtime, investigation revealed they lacked actual managerial authority—they supervised staff but had no hiring, firing, or budget authority. The employer paid substantial back overtime to five supervisors.

Salary Structure and Allowances

UAE contracts traditionally separate basic salary from allowances (housing, transportation). This affects end-of-service gratuity calculations, which use only basic salary, not total compensation.

Courts examine whether allowance designations are genuine or artificial attempts to reduce gratuity liability. Best practice: Set basic salary at 50-70% of total compensation with genuine allowances. Artificially low basic salaries risk judicial recharacterization.

Non-Compete Clauses in UAE: What Courts Actually Enforce

Article 10 permits non-competition clauses but imposes strict limitations: legitimate business interest protection, maximum two years duration, and geographic limitation to where employee worked.

Courts refuse enforcement when scope exceeds reasonable limits. A technology company's clause prohibiting "any work in the technology industry in the Middle East for five years" was rejected as excessively broad in geography, duration, and scope. Enforceable restrictions are narrowly tailored: "Employee shall not work for direct competitors in the logistics industry serving customers in Dubai Emirate for 18 months following termination."

Arabic Language Requirement

UAE law requires employment contracts in Arabic or bilingual format. If bilingual, Arabic controls in interpretation disputes.

Employers using English contracts must ensure proper Arabic translation. MOHRE reviews contracts in Arabic—English-only contracts face rejection. A construction company's bilingual contract had translation discrepancies in the notice clause. English stated "30 days or payment in lieu," while Arabic stated "30 days' work or equivalent compensation." The court ruled based on Arabic, requiring actual work during notice.

Best practice: Have Arabic text reviewed by legal counsel familiar with Arabic legal terminology to avoid meaning discrepancies.

Common Contract Drafting Mistakes

Using Generic International Templates

Standard UK, US, or Australian employment templates contradict UAE law. "At-will employment" clauses are invalid—fixed-term contracts require notice and early termination triggers compensation. Automatic renewal clauses create ambiguity about whether renewal occurred. Benefits below statutory minimums (20 days annual leave, no gratuity) are void and replaced by law.

Incomplete Job Descriptions

MOHRE requires specific job classification codes and detailed duties. Vague descriptions like "general duties as assigned" cause registration issues and disputes about job scope.

Missing Wages Protection System Compliance

Contracts must specify payment through WPS. Stating "salary paid by cash" or "by cheque" is non-compliant and triggers MOHRE penalties.

No Integration with Employee Handbook

Contracts should incorporate company policies: "Employee agrees to comply with the Company's employee handbook and policies as amended from time to time." Without proper incorporation, disputes arise about whether policies are contractually binding.

Free Zone Considerations

DIFC and ADGM maintain separate employment law regimes. DIFC Law No. 2 of 2019 permits unlimited-term contracts, has different notice periods, and different gratuity calculations. ADGM Employment Regulations 2019 similarly differ from mainland requirements. Employers spanning mainland and free zones must use jurisdiction-specific contracts—DIFC templates used for mainland employees are invalid and rejected by MOHRE.

Contract Amendments and Termination

Article 11 of Cabinet Resolution No. 1 of 2022 requires written amendments for salary changes, job title or duty changes, work location changes, or working hours changes. Both parties sign amendments, which the employer submits to MOHRE for registration. Amendments reducing statutory rights (annual leave below 30 days, probation beyond six months) are void.

When employment terminates, employers must provide termination letters, final settlement acknowledgments showing gratuity and leave calculations, experience certificates, and notify MOHRE to cancel work permits.

Dispute Resolution

Federal Decree-Law No. 33 requires MOHRE mediation before labor courts. Employees file complaints through MOHRE's system, which assigns mediators to attempt amicable resolution. Most disputes involve unpaid wages, gratuity calculations, wrongful termination, or contract interpretation.

If mediation fails, parties may escalate to labor courts with jurisdiction over Federal Decree-Law No. 33 disputes. Courts examine contract compliance with statutory requirements, interpret disputed provisions using Arabic text as controlling, and determine appropriate remedies. Contractual arbitration clauses are generally enforced but cannot waive statutory labor rights.

How Kayrouz & Associates Supports Employers and Employees

Our employment and labour law team assists employers and employees with employment contract matters across UAE.

For Employers:

  • Employment contract drafting compliant with Federal Decree-Law No. 33 and MOHRE requirements
  • Contract template review and revision to eliminate non-compliant clauses
  • DIFC and ADGM free zone contract drafting
  • Employee handbook development integrated with employment contracts
  • MOHRE registration support and compliance with WPS requirements
  • Employment contract amendments and renewal documentation
  • Termination procedures and documentation
  • Defense against employee claims and MOHRE complaints
  • Representation in labor court litigation

For Employees:

  • Employment contract review before signing to identify problematic provisions
  • Advice on statutory rights under UAE labor law
  • Resignation procedures and notice requirements
  • End-of-service gratuity calculations and claims
  • Unpaid wages recovery
  • Wrongful termination claims
  • MOHRE complaint filing and representation
  • Labor court litigation

Our employment law practice handles the most common employment disputes: end-of-service gratuity calculation disagreements, notice period violations, probation period extension attempts, working hours and overtime claims, and non-competition clause enforcement actions.

We work with businesses across construction, hospitality, logistics, financial services, and technology sectors to maintain employment contract compliance as UAE labor law continues evolving.

Frequently Asked Questions

Can employment contracts in UAE be verbal?

No. Article 8 requires written contracts registered with MOHRE. Verbal agreements are invalid for visa and work permit purposes and create immigration violations.

What happens if a contract violates UAE law?

Invalid provisions are void and replaced by statutory requirements. For example, if a contract states 8 months probation, the statutory maximum of 6 months applies. The remainder of the contract remains enforceable.

Are non-competition clauses enforceable for all positions?

Courts examine whether clauses protect legitimate employer interests and are reasonably limited. Enforcement is more likely for senior employees with confidential information access than entry-level positions.

Can employers and employees mutually waive statutory rights?

No. Article 3 states that waivers of employee rights are void. Parties cannot contractually eliminate annual leave, gratuity, maximum working hours, or other statutory protections—even with employee consent.

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