UAE Labour Law Updates 2026: What HR Teams Need to Know

The UAE Labour Law — Federal Decree-Law No. 33 of 2021 and its 2022 executive regulations — reshaped how private-sector employment works in the Emirates. Three years on, MOHRE continues to issue ministerial resolutions that tighten compliance for HR teams. This guide is the 2026 practitioner's view: what's actually changed, what HR must update in employee files, and where the fines fall.

1. Fixed-term contracts only

Unlimited contracts no longer exist in the UAE private sector. Every employment contract must be fixed-term, up to 3 years, renewable. Employers that still hold legacy unlimited contracts were required to migrate by 31 December 2023. If you find one in your files in 2026, migrate it immediately — the penalty is AED 20,000 per worker.

2. New work models

MOHRE now recognises six work patterns, each with its own permit category: full-time, part-time, temporary, flexible, remote and job-sharing. Part-time workers can hold multiple permits across employers — HR teams must track every active permit, not just the one their company sponsors.

3. End-of-service gratuity

EOS remains 21 days' basic salary per year for the first 5 years and 30 days thereafter, capped at 2 years' total pay. From 2023, employers may opt into the voluntary alternative end-of-service savings scheme (managed by licensed funds) — once enrolled, employees accrue investment-linked balances instead of a lump-sum payout. HR must keep proof of enrolment and monthly contribution records.

4. Leave entitlements to double-check in 2026

• Annual leave — 30 calendar days after 1 year; 2 days per month between 6–12 months.
• Parental leave — 5 working days for both parents, taken within 6 months of birth.
• Maternity leave — 60 days total (45 full pay + 15 half pay), plus extensions for medical or special-needs cases.
• Compassionate leave — 5 days (spouse), 3 days (parent, child, sibling, grandparent, grandchild).
• Study leave — 10 working days per year for employees enrolled in accredited UAE institutions, after 2 years of service.

5. Non-compete clauses

Non-compete restrictions are enforceable only if limited in time (≤ 2 years), geography and scope. The 2024 ministerial resolution clarified that the employer must prove legitimate business interest in writing — generic non-competes are routinely struck down by UAE labour courts.

6. Anti-discrimination and wage protection

Equal pay for equal work is now explicit in law. The Wage Protection System (WPS) covers every private-sector employer; salaries must land within 15 days of the due date or MOHRE blocks new work permits and may suspend the company file.

7. Fines HR should price in

• AED 100,000 — employing a worker without a valid permit (per worker).
• AED 50,000 — false Emiratisation declarations.
• AED 20,000 — failing to migrate from unlimited contract.
• AED 5,000–50,000 — late WPS salary transfers (escalating).
• AED 500/month — late labour-card renewal (see our labour card renewal guide).

8. Emiratisation targets

Companies with 50+ skilled employees must hit 2% Emirati growth per year, with the cumulative target reaching 10% by 2026. The Nafis platform tracks each company's status — falling short triggers AED 108,000 per missed Emirati slot per year.

9. What HR teams should action today

1. Audit every active contract — confirm fixed-term, dated, and signed.
2. Reconcile WPS payments for the last 6 months.
3. Verify every employee's labour card, Emirates ID and residence visa are within validity.
4. Re-check non-compete clauses against the 2-year/geographic-scope test.
5. Map your Emiratisation progress against the 2026 cumulative target.

How Salahiya helps

Salahiya tracks every expiring document — residence visa, Emirates ID, labour card, passport and health card — and emails the right person before fines accrue. Bring labour-law compliance and document compliance into a single workspace. See pricing, or read our complete walkthrough.

FAQ

Are unlimited contracts still legal?

No. All UAE private-sector contracts must be fixed-term since the migration deadline of 31 December 2023.

How is end-of-service calculated in 2026?

21 days of basic salary per year for the first 5 years, 30 days thereafter, capped at 2 years' total pay — unless the employer is enrolled in the alternative end-of-service savings scheme.

What is the late-salary penalty under WPS?

If wages aren't paid within 15 days of the due date, MOHRE blocks new work permits for the company and imposes escalating fines from AED 5,000.