Labour law in the UAE has seen major developments over the past few years, with the most recent reforms introduced in 2025 representing a significant evolution in employer-employee relations. Whether you’re a business owner managing a team or a professional working in the private sector, understanding the latest legal changes is essential to ensure compliance and protect your rights.
These updates reflect the UAE’s broader vision to enhance competitiveness, support talent, and create a more balanced work environment. In this guide, we break down the most important changes introduced in the 2025 labour law update and what they mean for employers and employees alike.
Employment Contracts: More Flexibility, Clearer Terms
One of the most notable changes in the 2025 labour law update is the complete phasing out of unlimited-term contracts. All employment contracts are now required to be fixed-term, with durations not exceeding three years—although they can be renewed upon mutual agreement.
This change aims to standardize employment relationships and reduce ambiguity around job security, notice periods, and contract termination. It also supports workforce mobility by ensuring that contract terms are reviewed and updated more frequently.
Employers must ensure that new contracts clearly define the duration, job role, salary, benefits, and grounds for termination. Any existing unlimited contracts must be converted to fixed-term agreements within the specified legal timeframe.
Working Hours and Overtime
The standard working week remains at 8 hours per day and 48 hours per week, but new regulations allow more flexibility for remote work and alternative schedules. With hybrid work models becoming more common, the law encourages businesses to adopt schedules that balance productivity with employee well-being.
Overtime rules remain in place, requiring compensation for work beyond the standard hours. Employers must now maintain clearer records of employee working hours to ensure accurate calculation of overtime wages and compliance with legal limits.
Annual Leave and Public Holidays
Annual leave entitlements have been preserved, with employees continuing to receive 30 calendar days of paid leave after completing one year of service. However, the 2025 reforms clarify that employees are encouraged to take leave during the same calendar year to avoid accumulation and staffing issues.
Public holidays remain aligned with UAE’s national calendar, but clearer guidelines have been issued on how holiday pay is calculated for shift workers and part-time employees. Employers must now also provide alternative rest days or pay compensation when employees are required to work on public holidays.
End-of-Service Benefits: A New Optional System
A major shift in the 2025 labour law is the introduction of a voluntary alternative to end-of-service gratuity: the UAE Savings Scheme. Under this scheme, employers can opt to contribute a monthly percentage of an employee’s salary to a regulated savings fund, instead of the traditional lump-sum gratuity payment.
This change gives employees more control over their financial futures and allows them to grow their benefits over time through investments. It also ensures that funds are protected and accessible, even if an employee switches jobs or leaves the UAE.
Employers who choose to stick with the traditional gratuity system must still comply with the new formulas and thresholds for calculation, ensuring full payment upon contract termination or resignation.
Probation Periods and Termination Procedures
The 2025 updates reaffirm that probation periods may not exceed six months. Employers must provide at least 14 days’ written notice before terminating an employee during probation. Similarly, if an employee wishes to resign during probation, they must give notice ranging from 14 to 30 days, depending on their intention to remain in the UAE or leave the country.
Termination procedures have also been clarified. Employers are now required to provide specific reasons for dismissal and follow a transparent disciplinary process. Termination without notice is limited to cases of gross misconduct, and all terminations must be documented and filed properly.
For employees, these updates offer added protection from arbitrary dismissal and ensure that legal procedures are followed.
Anti-Discrimination and Equal Pay
The UAE continues to promote diversity and inclusion in the workplace. The new labour law prohibits discrimination on the basis of race, gender, religion, national origin, or disability. Equal pay for equal work is also reinforced, particularly concerning gender-based wage gaps.
These principles are now more actionable, with clearer pathways for employees to file complaints and legal obligations on employers to rectify violations. Employers are encouraged to review internal policies, training programs, and pay structures to ensure compliance.
Employment for Teenagers and Students
The 2025 update introduces detailed regulations for employing teenagers between the ages of 15 and 18. Employers hiring young workers must obtain proper work permits and ensure that:
- The job is not hazardous
- The working hours do not interfere with education
- Work is limited to specific hours and does not include overtime or night shifts
These rules aim to support the career development of young people while safeguarding their well-being and education.
Leave for Parental and Family Responsibilities
Parental leave has been extended under the new reforms. Male employees are now entitled to 10 days of paternity leave, and female employees continue to receive a minimum of 60 days of paid maternity leave, with options to extend unpaid.
New family leave options have also been introduced for situations like bereavement, caregiving responsibilities, and adoption, helping employees maintain work-life balance.
Employers must update internal HR policies to reflect these changes and ensure that all leave entitlements are honored.
Grievances and Labour Disputes
The process for filing and resolving labour disputes has been streamlined. Employees may now submit complaints through smart platforms offered by the Ministry of Human Resources and Emiratisation (MOHRE).
If a dispute is not resolved within 14 business days, it may be escalated to labour courts. The reforms also promote mediation and settlement before litigation, reducing the burden on the court system and expediting resolutions.
Conclusion: A More Balanced Workplace for the Future
The 2025 UAE Labour Law represents a shift toward a more equitable, transparent, and modern employment environment. For employers, it means reviewing contracts, updating HR practices, and embracing flexibility. For employees, it offers greater protection, more financial options, and clearer rights.
Understanding and applying these updates isn’t just about compliance—it’s about creating a workplace where both sides can thrive.
Wrongful Termination in the UAE: What Are Your Legal Rights?
Losing a job can be a stressful experience, especially when the termination feels unjust or violates your employment rights. In the UAE, the law provides clear guidelines on what constitutes legal termination and outlines remedies for employees who are dismissed without proper cause or procedure.
Whether you’re a long-time resident or a newly employed professional, understanding your rights in cases of wrongful termination is essential. This guide breaks down the key legal protections, the types of wrongful dismissal, and the steps you can take if you believe your employer has acted unlawfully.
Understanding Wrongful Termination in UAE Law
Wrongful termination occurs when an employer ends an employee’s contract without a valid reason, or without following the correct legal process. The UAE Labour Law, updated most recently in 2025, provides specific grounds under which termination is deemed lawful—and anything outside these can be challenged.
According to Federal Decree-Law No. 33 of 2021 (as amended), employers must justify terminations with valid reasons related to performance, misconduct, or company restructuring. Arbitrary dismissals, especially those based on discrimination or retaliation, are not permitted.
What Counts as Valid Termination?
Valid reasons for termination may include consistently poor performance, repeated misconduct, breach of contract terms, redundancy due to economic downturn, or company closure. However, even in these cases, the employer is required to:
- Give appropriate notice as per the employment contract (usually 30 days)
- Document the reasons and process of termination
- Follow fair disciplinary procedures if misconduct is involved
Failure to do so can convert even a seemingly valid dismissal into a wrongful one.
What Is Arbitrary or Unfair Dismissal?
An arbitrary dismissal is when an employee is terminated without legitimate cause or due process. Common examples include:
- Termination without notice or adequate reason
- Dismissal based on nationality, religion, gender, or disability
- Firing an employee for filing a complaint or whistleblowing
- Ending employment due to pregnancy or maternity leave
Under Article 47 of UAE Labour Law, if a court finds the termination arbitrary, the employee may be entitled to compensation of up to three months’ salary, in addition to end-of-service benefits and unpaid dues.
Termination During Probation Period
Employers can terminate contracts during the probation period (up to six months), but even then, certain rules apply. The employer must give at least 14 days’ written notice. Likewise, an employee intending to resign must also provide notice, especially if they intend to leave the UAE.
Failure to observe these notice periods can lead to penalties or a labour ban, depending on the circumstances.
Constructive Dismissal: When You’re Forced to Resign
Constructive dismissal refers to situations where the work environment becomes so intolerable that the employee feels compelled to resign. This can include:
- Unlawful changes to job duties or compensation
- Hostile or discriminatory behavior by management
- Lack of payment for extended periods
The UAE Labour Law allows employees to resign and file a claim in such cases, treating it as if they were wrongfully terminated. However, strong evidence is required.
How to Challenge a Wrongful Termination
If you believe you’ve been wrongfully dismissed, you can take the following steps:
- File a Complaint with MOHRE: The Ministry of Human Resources and Emiratisation (MOHRE) offers an online and in-person platform for lodging complaints. A mediator may first attempt to resolve the dispute.
- Gather Evidence: Keep all documentation related to your contract, emails, termination letter, performance evaluations, and any records of discriminatory behavior or unpaid wages.
- Escalate to Labour Court: If mediation fails, your case will be referred to the Labour Court. You have up to one year from the date of termination to file a claim.
- Seek Legal Advice: Legal representation can significantly strengthen your case, particularly in complex disputes involving discrimination or large financial claims.
Compensation and Remedies
Employees who win a wrongful termination case may be entitled to:
- Compensation for arbitrary dismissal (up to 3 months’ salary)
- End-of-service benefits
- Unpaid salaries and accrued leave
- Airfare allowance (if included in contract)
The court may also order the employer to issue a service certificate, necessary for future employment.
Employer’s Rights to Defend Termination
Employers can defend a termination if they can demonstrate that:
- The employee was warned in writing and given opportunities to improve
- The dismissal was due to misconduct backed by investigation
- Business necessity, like downsizing, required the role to be eliminated
Clear records, internal investigations, and compliance with legal procedures are crucial for an employer’s defense.
Tips for Employees to Protect Themselves
- Always insist on a written contract and keep a copy
- Document performance reviews and disciplinary warnings
- Maintain professional communication and avoid confrontational behavior
- Request written explanations for any disciplinary action or change in terms
Being proactive can help you build a stronger case if problems arise later.
Conclusion: Know Your Rights, Act Promptly
Wrongful termination can have serious financial and emotional consequences, but the UAE’s legal system provides mechanisms for justice. Whether you’re an employee who has been let go unfairly or an employer navigating complex HR decisions, knowing the law—and acting quickly—is key.
Consult a qualified legal advisor to evaluate your case, collect the necessary evidence, and pursue the remedy that best protects your interests.
