United Arab Emirates Labor Law Guide for Hiring Employees and Contractors
This labor law guide for United Arab Emirates has important information for businesses looking to hire employees or contractors in the country. United Arab Emirates is a country in the middle east.
The United Arab Emirates (UAE) has continued to showcase robust economic growth in 2023. As a key financial hub in the Middle East, the UAE’s economy is diversified with substantial contributions from various sectors, including oil and gas, tourism, aviation, real estate, and financial services. The country has also seen significant investment in technology and innovation, aligning with its Vision 2021 plan.
The currency used in the United Arab Emirates is the UAE Dirham (AED).
Minimum Wage
None
Overtime Wage
125% of regular pay, 150% for holiday
Meal Breaks
1 hour
Rest Breaks
2 breaks of 15 minutes each
Working hours
8 hours/day, 48 hours/week
Salary Payment Cycle
Monthly
Payroll Taxes
None
Paid Vacation
30 days
Overtime Hours
Over 48 hours/week or 8 hours/day
Night Shift Hours
125% of normal wage
Holidays
11
No Work Days
Friday
When hiring workers in the UAE, businesses must adhere to several key regulations:
A business must register locally to hire workers, typically by establishing a business entity in one of the UAE’s free zones or mainland jurisdictions.
Setting up a business entity can cost between AED 20,000 to AED 50,000 and may take approximately 2-4 weeks, depending on the type of entity and location.
Employers must sign written contracts with employees, including key clauses such as job description, salary, working hours, duration of contract, leave entitlements, and termination terms.
UAE labor laws differentiate between employees and contractors. Employees are subject to labor law protections, while contractors typically fall under civil law.
Guidelines for minimum wages for some category of workers in the UAE:
- University Graduates: AED 12,000
- Technicians: AED 7,000
- Skilled Workers: AED 5,000
Employers are obliged to pay salaries as agreed in the employment contract without a federal mandated rate.
Holiday pay is mandatory for all employees, regardless of their wage status.
The standard work hours are 8 hours a day, 6 days a week, amounting to 48 hours weekly.
Overtime pay is 125% of the standard pay rate, and 150% if the overtime is during a holiday.
Employees working between 9 PM and 4 AM receive an additional 25% of their normal wage.
The minimum age for employment is 15 years old, and stringent laws protect against child exploitation.
Employers are responsible for registering employees with relevant authorities and ensuring compliance with labor law mandates. However, no payroll taxes are applicable in the UAE.
There are no personal income taxes in the UAE, hence no tax tables apply.
- Paid Leave: Vacation: 30 calendar days of paid vacation annually. Maternity leave: 45 days with full pay. Paternity leave: 5 days.
- Unpaid Leave: Sick leave beyond 90 days in a year may be unpaid.
| Holiday Name | Date |
|---|---|
| New Year’s Day | January 1 |
| Eid Al Fitr | Varies (Lunar calendar) |
| Eid Al Adha | Varies (Lunar calendar) |
| Islamic New Year | Varies |
| Prophet Muhammad’s Birthday | Varies |
| Commemoration Day | November 30 |
| National Day | December 2-3 |
- Gratuity: End-of-service gratuity calculated based on length of service.
- Healthcare: Mandatory health insurance coverage for all employees.
- Annual Bonus: Not mandatory, but common in many sectors.
The UAE does not adhere to “At Will Employment” laws. Termination must follow due process as prescribed by labor laws:
- Notice Period: Typically, a 30-day notice period is required.
- Termination Benefits: Entitled to end-of-service gratuity, payment for unused leave, and any due salary.
- Legal Challenges: Employees can file complaints with the Ministry of Human Resources and Emiratisation.
Conditions for Termination
- Gross misconduct
- Non-performance
- Violation of employment contract terms
- Redundancy or downsizing
Termination must be substantiated with valid reasons to avoid penalties or legal disputes.