A Dubai business with a mainland licence and a DIFC subsidiary is running two employment laws at once. Different notice rules. Different end-of-service mechanics. A different court if a claim lands.
The rules have moved fast since February 2022, when Federal Decree-Law No. 33 of 2021 replaced the 1980 law. Penalties moved with them. Under the 2024 amendments, fines run from AED 5,000 to AED 1,000,000 and multiply by the number of workers affected. The fine is rarely the worst part. Non-compliance also brings MOHRE complaints, suspended work permits and a classification downgrade that raises the cost of every visa you issue afterwards.
The most important HR policies for UAE compliance are employment contracts aligned to Federal Decree-Law No. 33 of 2021, working hours and overtime, leave entitlements covering annual, sick, maternity and parental leave, end-of-service gratuity, termination and notice, workplace conduct and anti-discrimination, and occupational health and safety. Mainland companies with 50 or more skilled employees also need an Emiratisation policy tied to the December 2026 target. DIFC and ADGM sit outside the federal law, so groups operating across both need two sets of human resource management policies and procedures.
Which employment law applies to your company
Federal Decree-Law No. 33 of 2021
The federal law covers mainland employers and most free zones, including JAFZA, DMCC and DAFZA, where the zone handles permits but the substantive law is federal. It took effect on 2 February 2022 and has been amended twice, in 2023 and 2024. Every contract must now be fixed-term. Unlimited contracts are gone, and the original three-year ceiling was removed.
Free zone laws: DIFC and ADGM
DIFC runs on Employment Law No. 2 of 2019. Since February 2020 it has replaced gratuity with DEWS, a funded savings plan taking monthly employer contributions of 5.83% of basic salary for the first five years and 8.33% after. ADGM kept gratuity but reshaped it in 2024: payable from one year of service regardless of how employment ended, with the two-year cap gone.
What MOHRE enforces
MOHRE registers contracts, issues permits, runs the Wage Protection System and tracks Emiratisation. Inspections are increasingly data-led. Claims below AED 50,000 can now be settled by MOHRE without court. None of this reaches DIFC or ADGM, which have their own courts.
The HR policies every UAE company needs
Employment contract policy
The MOHRE-registered contract governs, so the offer letter, signed contract and registered version must match. State the term, title, basic salary and allowances separately, working pattern, probation and notice. Probation cannot exceed six months. Changes to pay, title or duties need written consent and a formal amendment through MOHRE.
Working hours and overtime policy
Eight hours a day, 48 a week, cut by two hours daily during Ramadan. Overtime carries a 25% uplift on the basic hourly rate, rising to 50% between 10pm and 4am, capped at two hours a day. Retail, hospitality and security can run nine-hour days with MOHRE approval.
Leave policy
Thirty calendar days of annual leave after one year, and two days per month between six and twelve months. Sick leave reaches 90 days a year after probation: 15 on full pay, 30 on half, 45 unpaid. Maternity leave is 60 days, 45 full and 15 half. Both parents get five working days of parental leave.
End-of-service gratuity policy
Payable after one continuous year: 21 days of basic salary per year for the first five, 30 days for each year after, capped at two years’ pay. Calculated on basic salary only, never on allowances. Resignation no longer reduces it. Settlement is due within 14 days of exit. Cabinet Resolution No. 96 of 2023 allows employers to opt into a savings scheme instead.
Termination and notice period policy
Notice runs 30 to 90 days, and pay in lieu is allowed. Article 44 lists the narrow grounds for dismissal without notice. Everything else needs a valid reason and a written record of how you reached it. Where a court finds dismissal arbitrary under Article 47, compensation of up to three months’ wages follows. The reason in the letter is the reason you defend.
Anti-discrimination and workplace conduct policy
Article 4 prohibits discrimination on grounds including race, colour, sex, religion, national origin and disability, and requires equal pay for equal work. Harassment and coercion are prohibited outright. Employers need a confidential reporting route and a record of what they did about each report. Audit your job adverts: “male preferred” or “under 35” are the easiest violations to spot.
Occupational health and safety policy
Provide a safe workplace, train people on the hazards, supply protective equipment and keep records of all three. Labour-intensive sectors carry the heaviest exposure, including the midday break rule that halts outdoor work between 12:30 and 3pm from mid-June to mid-September.
Emiratisation compliance policy
Mainland companies with 50 or more skilled employees must lift Emirati representation in skilled roles by two percentage points a year to reach 10% by 31 December 2026, in 1% checkpoints each June and December. Companies with 20 to 49 staff in 14 designated sectors face a separate hiring requirement. Shortfall contributions have been running above AED 100,000 per unfilled role per year and rise annually. Confirm your figure with MOHRE.
Compliance requirements by company type
| Mainland | DIFC | ADGM | Other free zones | |
|---|---|---|---|---|
| Governing law | Decree-Law 33/2021 | DIFC Law 2/2019 | ADGM Employment Regulations | Decree-Law 33/2021 |
| Contract type | Fixed-term, MOHRE-registered | Written, no fixed term needed | Written, no fixed term needed | Fixed-term, zone-registered |
| Annual leave | 30 calendar days | 20 working days | 20 working days | 30 calendar days |
| End of service | Gratuity or savings scheme | DEWS, 5.83% then 8.33% | Gratuity from year one | Gratuity or savings scheme |
| Notice | 30 to 90 days | 7 to 90 days by service | Tiered by service | 30 to 90 days |
| Emiratisation quota | Yes, at 50+ skilled staff | No | No | Generally no |
| Disputes | MOHRE, then labour court | DIFC Courts | ADGM Courts | MOHRE, then labour court |
All three regimes changed within the past two years. Check the current text before relying on any row.
Where UAE companies get this wrong
- Contract templates still quoting the three-year cap, or offering unlimited terms
- Gratuity calculated on gross salary instead of basic, or cut for resignation under rules repealed in 2022
- Termination letters that give no reason, leaving exposure under Article 47
- One handbook used across a mainland entity and a DIFC entity
- Annual leave counted in working days, where the mainland law says calendar days
- Emiratisation reviewed each December, after the June checkpoint has already gone
How to build a compliant HR policy framework
Audit what you have against the current law
Pull ten contracts at random across seniority levels and read them against the law as amended, not the version your template came from. Then check the registered copy matches the signed one.
Document everything in one employee handbook
Scattered policies get applied inconsistently, and inconsistency turns a dismissal into a claim. One handbook per jurisdiction, one version number, one acknowledgement signed by every employee.
Update when the law moves
Three amendments in four years is the current pace. Give the review to a named person, twice a year, anchored to the June Emiratisation checkpoint.
Train the managers who apply the policies
Policies fail at the point of use. The line manager holding the absence conversation decides whether you have a documented process or a WhatsApp thread.
A compliance scenario worth learning from
What follows is a composite of cases we see repeatedly, with details changed.
A 60-person mainland engineering firm dismissed a project coordinator after eight months of intermittent no-shows. He filed an arbitrary dismissal claim seeking three months’ compensation.
The employer produced a signed handbook acknowledgement, a written absence procedure, three dated warning letters and minutes from a final meeting where he was given the chance to respond. The claim closed at the MOHRE stage.
The paperwork cost the line manager perhaps four hours across eight months. A near-identical case at a similar firm, where the dismissal came by phone with nothing on file, settled at just under two months’ pay.
Frequently asked questions
What are the mandatory HR policies under UAE Labour Law?
The law prescribes no fixed list of documents. It imposes duties on contracts, hours, leave, wages, gratuity, termination, non-discrimination and safety, which in practice require written policies to apply consistently and to evidence compliance during an inspection.
Do free zone companies follow the same HR laws as mainland companies?
Most do. DIFC and ADGM are the exceptions, with their own legislation, courts and end-of-service mechanics. Other free zones apply the federal law, with the zone authority handling permits and contract registration.
How is end-of-service gratuity calculated in the UAE?
Twenty-one days of basic salary for each of the first five years, then 30 days for each year after, capped at two years’ pay and based on basic salary alone. An employee who resigns after one year receives the full amount.
What happens if a company doesn’t comply with UAE labour law?
Fines under the 2024 amendments range from AED 5,000 to AED 1,000,000, multiplied by the number of workers affected. Employers also face MOHRE complaints, suspension of new work permits and a classification downgrade that raises future permit costs.
Is an employee handbook legally required in the UAE?
No statute requires one. But when MOHRE or a court asks how a decision was made, a signed handbook is usually the only evidence that a process existed and the employee knew about it.
Key takeaways
- Fixed-term, MOHRE-registered contracts are the foundation, and signed-versus-registered mismatches are a common finding
- Gratuity is basic salary only: 21 days a year for five years, then 30, settled within 14 days of exit
- DIFC and ADGM need their own contracts, handbooks and calculations
- Documentation, not intent, decides arbitrary dismissal claims under Article 47
- Emiratisation runs on a June and December cycle, with the 10% target landing on 31 December 2026
Get your HR policies reviewed
Klay HR Consultancy audits contracts, handbooks and people processes against current UAE requirements, then rewrites what needs rewriting. We work with SMEs, startups and enterprise teams across the UAE, Oman and Saudi Arabia.
