UAE New Labour Law 2025 Complete Guide, Rules & Updates

The UAE New Labour Law 2025 introduces new changes to improve private sector jobs and match international work standards. Designed to protect employee rights while offering flexibility to employers, this law ensures fair, transparent, and competitive work environments.

Whether you’re an employee or an employer, understanding the updated rules is no longer optional, it’s essential. This detailed guide explains the latest amendments, from contracts and leaves to work permits and penalties.

What Is the UAE Labour Law 2025?

The UAE Labour Law governs the relationship between employers and employees in the private sector. The foundation is set by Federal Decree Law No. 33 of 2021, which has been amended by Decree Law No. 9 of 2024, effective from August 31, 2024. These laws regulate contracts, wages, working hours, leaves, disputes, and much more.

The goal? To modernize employment relations, ensure job market flexibility, and attract global talent while giving fair rights to workers.

Major Changes in the New Labour Law UAE 2025

The 2025 updates bring sweeping reforms across multiple employment areas:

Fixed-Term Contracts Only

The law has eliminated unlimited contracts. All workers must now be hired on fixed-term contracts (up to 3 years), which are renewable with mutual agreement.

Flexible Work Models Introduced

Employees can now be hired under different arrangements:

• Full-time
• Part-time
• Temporary
• Freelance
• Remote work
• Job-sharing

This change empowers employees and gives employers the ability to manage dynamic business needs.

Probation Period Rules

The probation period cannot exceed 6 months. During probation:

• 14-day notice is required for termination.
• If the employee joins another UAE company, a 30-day notice is required.
• New employer may need to pay recruitment costs.
  

Salary Continuation During Disputes

Employers must continue paying salary for up to 2 months during unresolved labor disputes. This ensures financial stability for employees during uncertain times.

Working Hours & Overtime in 2025

Private Sector Working Hours

• 8 hours per day, 48 hours per week
• Reduced by 2 hours during Ramadan
• Maximum 2 hours overtime per day with 25%-50% extra pay
• Fridays no longer mandatory as off-days (flexible scheduling allowed)

Public Sector Working Hours

• 4.5-day week: Monday to Friday (half-day)
• Weekends: Saturday & Sunday in most emirates

Leave Entitlements in the UAE 2025

Understanding leave policies is key to maintaining work-life balance. The law outlines different paid and unpaid leave options:

Type of Leave	Details
Annual Leave	30 days after 1 year of service
Sick Leave	90 days/year (15 full-pay + 30 half-pay + 45 unpaid)
Maternity Leave	60 days (45 fully paid + 15 half-paid) + 30 more if medically needed
Paternity/Parental	5 days paid leave within 6 months of childbirth
Study Leave	10 days/year after 2 years of employment
Compassionate Leave	5 days (spouse death), 3 days (relative death)
Hajj Leave	30 days (unpaid, once during employment)
Job Search Leave	1 unpaid day per week during notice period

Wages & Gratuity Under UAE Labour Law 2025

Wages & Payment

• Salaries must be paid via Wages Protection System (WPS)
• Can be paid in AED or any mutually agreed currency
• Employers must pay salaries within 15 days after the due date

If your employer fails to release your salary or final dues on time, you may need to file a complaint for delay in gratuity payment through the Ministry of Human Resources and Emiratisation (MoHRE). Timely payments are not just good practice; they are now a legal obligation.

Gratuity Entitlement

Employees are entitled to full gratuity after completing one year of service.

Gratuity Calculation:

• 21 days’ basic salary for each year (1–5 years of service)
• 30 days’ salary for every year after 5 years
• Cap: Gratuity must not exceed two years’ salary

To better understand your entitlements as a domestic worker, use our Gratuity Calculator UAE for Domestic Workers & Housemaids to get an accurate estimate of your end-of-service benefits.

Types of Employment Contracts

Private Sector Contracts

• Full-time
• Part-time
• Temporary
• Flexible
• Remote
• Job-sharing

Public Sector Contracts

• Full-time
• Part-time
• Temporary (3 months)
• Special contracts (high-level roles)

Work Permits & Visa Types in UAE

There are 12 types of work permits including:

• Recruitment from abroad
• Family-sponsored work
• Temporary and freelance permits
• One-mission & student training permits
• Golden visa employment

Work permit cost: AED 250 – AED 3,450 depending on employer classification.

Termination Rules in the UAE 2025

Termination with Notice

• 30–90 day notice depending on years of service
• Termination allowed for legitimate reasons

Termination Without Notice

Applies when:

• Fraud or false documents used
• Major misconduct or absenteeism
• Safety violations or job abuse

End-of-Service Settlements

• Must be paid within 14 days of termination
• Includes gratuity, unused leave, and final salary

Non-Compete Clause

Employers can enforce non-compete clauses if:

• It’s limited in duration, region, and scope
• It does not exceed 2 years
• It protects legitimate business interests

The clause is void if the employer breaches contract or fails legal duties.

Employee Rights & Benefits

Workplace Safety

• Employers must ensure a safe working environment
• Summer midday work ban still applies to outdoor workers
• Injuries must be reported to MoHRE

Discrimination & Equal Pay

• No discrimination based on gender, race, religion, or disability
• Equal pay for men and women is legally required

Health Insurance

• Mandatory for all employees, paid by employer
• Covers basic medical needs but not always dependents

Unemployment Insurance Scheme

• Workers are eligible for up to AED 20,000 if laid off
• Not available for minors, investors, temporary staff, or domestic workers

Employer Responsibilities & Fines

Failure to comply with new law can result in heavy fines:

• Up to AED 1 million for major violations
• AED 20,000 to 200,000 for unlawful recruitment
• Penalties for harassment, unpaid wages, or unsafe working conditions

How Can Employers Stay Compliant?

1. Update all employment contracts
2. Train HR teams on new rules
3. Use workforce management tools
4. Ensure salary and leave policies are up-to-date

“A stitch in time saves nine” – Staying proactive helps businesses avoid legal trouble down the line.

Benefits of the New UAE Labour Law for Employers

• Clearer dismissal and notice rules reduce confusion
• Flexible working options improve productivity
• Legal protections improve employer reputation
• Tech-driven compliance tools reduce human error

Conclusion

The UAE New Labour Law 2025 marks a major shift towards a more balanced, fair, and modern work environment. With greater flexibility, legal clarity, and stronger employee protections, it benefits both employers and employees.

For those confused between older and newer rules, our detailed comparison on Limited vs Unlimited Contract UAE helps clear up contract types, obligations, and entitlements under the revised law.

Whether you’re hiring, resigning, or updating policies, understanding the UAE labour law updates is no longer just useful; it’s essential.