Federal Decree-Law No. 33 of 2021, which came into force on 2 February 2022, represents the most comprehensive overhaul of UAE labour legislation in decades. For HR professionals operating in the UAE private sector, understanding its key provisions is not optional — it is a fundamental professional requirement.
Employment Contracts
Under the new law, all employment relationships must be governed by fixed-term contracts of a maximum of three years, renewable by mutual agreement. The previous distinction between limited and unlimited contracts has been abolished. This has significant implications for how HR professionals structure employment terms and how end-of-service benefits are calculated.
All contracts must specify the role, remuneration, working hours, annual leave entitlement, and notice period. Verbal agreements are not enforceable for terms that contradict a written contract. Contracts must be available in Arabic and, where the employee requests it, in a language they understand.
End-of-Service Gratuity
End-of-service gratuity (EOSG) remains a cornerstone of UAE employment and a significant financial obligation for employers. Under the current law, employees who complete one year of continuous service are entitled to gratuity calculated as 21 days of basic salary per year for the first five years, and 30 days of basic salary per year for each year thereafter. The calculation is based on the last basic salary, not the total package.
HR professionals must maintain accurate records of basic salary changes, as these directly impact EOSG liability. Where an employee has accepted a salary reduction, HR must carefully document whether the reduction affects the EOSG calculation basis.
Leave Entitlements
Annual leave entitlement is a minimum of 30 calendar days per year following completion of one year of service. Sick leave is structured in three tiers: fully paid for the first 15 days, half pay for the following 30 days, and unpaid for the subsequent 45 days within any 12-month period. Maternity leave is 60 days — 45 days fully paid and 15 days half pay.
Disciplinary Procedures
The law specifies a structured disciplinary process that must be followed before termination for cause. Employers must issue a written notice of the alleged violation, allow the employee to respond, conduct an investigation, and document findings before proceeding to dismissal. Failure to follow this process exposes the employer to arbitrary dismissal claims regardless of the underlying cause.
What HR Professionals Must Do
Audit all existing employment contracts for compliance with the 2022 regulations. Ensure your EOSG calculations are accurately maintained and provisioned. Train your managers on disciplinary procedures — manager decisions in this area are frequently the source of costly labour disputes. Maintain meticulous records of all employment actions, salary changes, and leave. Build a relationship with a qualified UAE labour law advisor for complex situations. The cost of getting this right is a fraction of the cost of getting it wrong.
Naseeruddin
Group Strategic HR Manager, HRBP Expert with expertise in HR strategy, talent management, and organizational development.
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