Employment & Labour Law
The New UAE Labour Law introduced sweeping changes to modernise the workforce, abolishing unlimited contracts and introducing new work models.
Fixed-Term Contracts
Under the previous law, companies could issue 'unlimited' contracts. The new law mandates that all employment contracts must be fixed-term, initially capped at 3 years, though this was later amended to allow any mutually agreed duration.
End of Service Gratuity (EOSG)
The UAE does not have a state pension scheme for expatriates. Instead, employees receive an end-of-service gratuity payout upon termination or resignation.
- Less than 1 year: No gratuity entitlement.
- 1 to 5 years: 21 days of basic salary for each year of service.
- Over 5 years: 30 days of basic salary for each additional year.
Note: Gratuity is calculated strictly on the basic salary, excluding allowances like housing or transport. Hence, many companies structure salaries as 60% basic / 40% allowances to manage EOSG liabilities.
Termination & Notice Periods
Notice periods must be a minimum of 30 days and a maximum of 90 days. "Arbitrary dismissal" compensation is now capped at 3 months' salary, down from the previous ambiguity, and is generally only awarded if termination is due to an employee filing a valid complaint against the employer.