When hiring in Dubai, you must follow the UAE Federal Labour Law Decree-Law No. 33 of 2021 on labor relations, which applies nationally.
Before we dive in, there’s a compliance trap you need to avoid.
1. Mainland vs. Free Zone
Many foreign businesses set up in one of Dubai’s 40+ Free Zones (like Jebel Ali Free Zone or DMCC) to get 100% foreign ownership and tax incentives. But the official UAE government portal clearly states that employees in Free Zones are NOT governed by the Federal Labour Law.
Each Free Zone has its own employment laws, rules, and authority. The rules for your employee in a Free Zone may be different from an employee on the mainland. A PEO must be an expert in both mainland law and the specific rules of the Free Zone you are operating in.
Here is a breakdown of the key provisions from the Federal Labour Law.
2. Employment Contracts
Unlimited contracts are no longer permitted. All employees must be on fixed-term contracts, usually one to three years. The job offer itself must be a formal, signed document. The official contract must be written in Arabic, though an English translation must be provided.
3. Working Hours and Overtime
By law, normal working hours are 8 hours per day or 48 hours per week. Employees must receive at least one day off per week (normally Friday). Employers may require up to 2 extra hours per day as overtime, but total work time cannot exceed 144 hours in any 3 weeks.
Overtime must be paid at least 125% of the normal wage for overtime hours, and 150% for work between 10 pm–4 am. If an employee works on their day off, they get a compensatory day off plus overtime pay. Many companies schedule 9-hour days or use other shifts, but the 48-hour weekly cap and overtime rules are strictly enforced.
4. Minimum Wage
There is no national minimum wage in the UAE. The Labour Law only empowers the Cabinet of Ministers to set a minimum wage if needed. Employers must use the Wages Protection System (WPS) for salary payments to ensure timeliness, though this is a payment system rather than a wage minimum.
5. Employee Benefits
UAE labor law provides several mandatory leaves and benefits:
- Annual Leave: After one year of service, employees are entitled to 30 calendar days of paid annual leave per year. If employment is between 6–12 months, leave accrues at 2 days per month. Unused leave is paid out at termination if it was not taken.
- Sick Leave: Employees get up to 90 days of paid sick leave per year: the first 15 days at full pay, the next 30 days at half pay, and beyond that, unpaid. Sick leave requires medical proof and reporting within 3 days of illness.
- Maternity Leave: Female employees are entitled to 60 days of maternity leave (45 days at full pay, 15 days at half pay) if they have worked at least one year. If the baby is premature or has special needs, an additional 45 days of unpaid leave is allowed. After returning, mothers are entitled to two 30-minute nursing breaks or one 1-hour break per day for up to 6 months.
- Parental Leave: UAE now grants 5 working days of paid leave to either parent following the birth of a child, to be taken within 6 months.
- Health Insurance: By UAE law, employers must provide health insurance for all private-sector employees (at least basic coverage). In Dubai, the law requires minimum health plans for full-time workers upon contract renewal.
6. Payroll Tax or Social Contributions
The UAE has no personal income tax or payroll tax on salaries. Employees keep their full wages, subject only to deductions like gratuity or social security for nationals. Similarly, there is no social security or pension contribution for expatriate employees.
Only UAE (and other GCC) citizens in the private sector pay into the General Pension and Social Security Authority (GPSSA): currently 5% of salary from the employee and 12.5% from the employer (plus a government top-up). Expatriate workers in Dubai have no mandatory pension payments. Aside from providing end-of-service and insurance, employers have no payroll taxes or social charges in Dubai.
7. Termination and Severance Pay
When an employee is terminated or resigns, they are entitled to a mandatory “end-of-service gratuity”. This is a severance payment calculated based on the employee’s final basic salary and their length of service. The formula is 21 days’ basic salary for each of the first five years of service, and 30 days for each year after. The total gratuity cannot exceed two years’ wages. Employees do not earn gratuity if terminated for gross misconduct, but otherwise, it is mandatory.
8. Foreign Workers
Nearly all private-sector employees in Dubai are foreign nationals. The employer is responsible for sponsoring the worker’s visa and registering them with MOHRE. In early 2022, the UAE revamped its visa system: as of 2025, the Ministry issues 12 types of work permits (including those for full-time, part-time, project-based hires, trainees, juvenile workers, and family-transfer workers). Each work permit must be linked to a signed employment contract.
A recent development is the Green Visa, a 5-year visa that allows skilled employees and freelancers to sponsor themselves. For this new class of talent, the PEO’s value proposition shifts. It is less about “we make it legal for you to hire them” (since they sponsor themselves) and more about “we make it easy to pay them and manage their benefits compliantly.”
Foreign hires also need medical tests, an Emirates ID, and enrollment in health insurance. Expatriate employees are fully integrated into UAE labor protections once legally hired. However, employers may be subject to Emiratisation rules (quotas for hiring UAE nationals) in certain industries. The new law further ties work permit eligibility to factors like skill level and company compliance score.