UAE labour law and Emiratisation: what employers face in 2026
Emiratisation reaches 10% for larger companies by the end of 2026, contributions are AED 108,000 a year per missing national, and MOHRE now decides small disputes itself. Here is what employers must do.
One labour law, two exceptions
Private-sector employment in the UAE is governed by Federal Decree-Law No. 33 of 2021 regulating labour relations, in force since February 2022, and its implementing regulations. It applies on the mainland and in most free zones. The two main exceptions are the DIFC and ADGM, which have their own employment laws and courts. The 2021 law moved the UAE to fixed-term contracts, introduced flexible, part-time and remote work models, codified discrimination and harassment protections, and set clear rules on probation, notice and end-of-service gratuity.
In August 2024, Federal Decree-Law No. 9 of 2024 amended the law: it extended the time limit for bringing employment claims, increased fines for violations such as employing people without permits or fake Emiratisation, and changed how small claims are decided, giving the Ministry of Human Resources and Emiratisation (MOHRE) power to issue binding decisions in disputes up to AED 50,000.
What every employment contract must reflect
| Topic | Position under the Labour Law |
|---|---|
| Contract | Written, fixed-term, registered with MOHRE (or the free zone), renewable |
| Probation | Up to six months, with notice rules for termination during probation and restrictions on moving to another UAE employer |
| Working hours | Normally up to 8 hours a day and 48 a week, with overtime pay and rest days |
| Leave | Annual leave of 30 days after one year, plus sick, maternity, parental, bereavement and study leave |
| Notice | Between 30 and 90 days as agreed in the contract |
| End-of-service gratuity | 21 days' basic salary for each of the first five years and 30 days for each further year, capped at two years' pay; alternative savings schemes permitted |
| Wages | Paid through the Wage Protection System on time; delays trigger MOHRE action |
| Non-compete | Permitted within limits of time, place and type of work, generally up to two years |
Targets and the cost of missing them
Emiratisation requirements apply to mainland private-sector companies administered by MOHRE. Companies with 50 or more employees have increased the share of UAE nationals in skilled positions by about 2% a year since 2022, reaching a target of 10% by 31 December 2026, with interim semi-annual milestones. Companies with 20 to 49 employees in fourteen designated sectors, including finance, real estate, professional and technical activities, information and communications, education, healthcare and construction, were required to employ one UAE national by the end of 2024 and a second by the end of 2025, and must maintain both in 2026.
| Company size | 2026 requirement | Contribution for shortfall |
|---|---|---|
| 50+ employees | 10% of skilled positions by 31 December 2026 | AED 9,000 per month per missing Emirati (AED 108,000 a year) |
| 20 to 49 employees in designated sectors | Maintain two UAE nationals | AED 108,000 for each missing hire under the 2025 obligation, payable from January 2026 |
| Fewer than 20 employees | No quota currently | Not applicable |
Hiring UAE nationals into nominal roles, or registering them without real work, attracts fines per worker and downgrading of the company's classification, and MOHRE monitors registrations with automated tools. A shortfall costs a contribution; a fake hire costs more and taints the company's file.
Making the target workable
Nafis
The federal Nafis programme supports UAE nationals in private-sector jobs with salary top-ups, pension support and training, which reduces the employer's cost.
Salary floor
From 1 January 2026, new and renewed work permits for UAE nationals must reflect a monthly salary of at least AED 6,000.
Pension
UAE nationals are enrolled in the national pension scheme, with employer and employee contributions on top of salary.
Real roles
Roles in client service, operations, HR, finance and management are where most companies build their Emirati workforce; training and progression keep it.
From complaint to court
An employee or employer with a dispute files a complaint with MOHRE, which attempts an amicable settlement. Since the 2024 amendment, where the claim is AED 50,000 or less, or concerns non-compliance with a previous amicable settlement, MOHRE issues a binding decision, which either party may challenge before the Court of First Instance within a short period; otherwise the decision is enforceable. Larger claims are referred to the labour courts, with the usual appeals.
Enforcement goes beyond fines. MOHRE can suspend a company's permit transactions, downgrade its classification and require bank guarantees, and wage delays reported through the Wage Protection System trigger action quickly. For employers, the cheapest defence is the same as elsewhere in the Gulf: contracts registered correctly, salaries paid through the WPS on time, leave and gratuity calculated properly, and records that support the employer's account.
An employer at 48 people
A mainland IT services company has 48 employees, all expatriates, and plans to grow to 60 in 2026. As a company with 20 to 49 employees in a designated sector, it should already have two UAE nationals; it has none, and owes AED 108,000 for each missing hire under the 2025 obligation, collected from January 2026. Once it passes 50 employees, it moves into the 10% regime for skilled roles: with 50 skilled positions, five UAE nationals by the end of 2026, or AED 9,000 a month for each one missing.
Planned properly, the company hires two UAE nationals immediately into client service and project coordination roles with Nafis support, and three more during the year as it grows, budgeting the AED 6,000 salary floor, pension contributions and training. Unplanned, it pays roughly AED 216,000 for 2025 and up to another AED 540,000 for 2026, and still has no Emirati staff. Emiratisation is cheaper as a hiring plan than as a penalty.
Ending employment lawfully
Either party may end a fixed-term contract by notice for a legitimate reason, with the notice period agreed in the contract within the 30 to 90 day range, and the employee receives end-of-service gratuity and any accrued leave. Dismissal without notice is permitted only on the grounds listed in the law, such as serious misconduct, repeated breaches after written warnings, or disclosure of trade secrets, following an investigation. Termination for an illegitimate reason, including because the employee filed a genuine complaint, can lead to compensation of up to three months' wages in addition to other entitlements.
Redundancy is not separately regulated, but terminations for economic reasons must still follow the contract and the notice rules, and the employer must settle all dues within fourteen days of the end of employment. Employers should also cancel work permits and residence promptly; leaving them active creates liability and blocks the employee's next employment.
Where different rules apply
The DIFC and ADGM each have their own employment laws, closer to common-law models, with their own courts. Notable differences include the DIFC's employee workplace savings scheme in place of end-of-service gratuity, and different procedures for disputes. Employers in these centres should not assume the federal rules apply.
Ordinary free zones apply the federal labour law, but contracts are registered with the free zone authority, and some zones have dispute resolution procedures of their own before cases reach the courts. Emiratisation quotas are administered by MOHRE for mainland employers, which is why their application to free zone entities differs. Groups with staff across mainland, free zone and financial centre entities should map which rules apply to each team, rather than run a single HR policy that fits none of them exactly.
What to budget beyond salary
Salary is only part of the cost of employing someone in the UAE. Employers must provide health insurance for employees, and in practice usually for those whose dependants they sponsor; they pay for work permits, residence visas, Emirates ID and medical tests; they accrue end-of-service gratuity every month, which becomes a substantial liability for long-serving staff; and they pay annual leave and, for UAE nationals, pension contributions. Many employers also provide housing and transport allowances, which affect gratuity only to the extent they form part of basic salary.
Two practical points follow. First, define basic salary and allowances clearly in the contract, because gratuity and some leave entitlements are calculated on basic salary. Second, provide for gratuity in the accounts from the first month, rather than discovering the liability when a senior employee leaves after eight years. Companies that use an approved alternative savings scheme for gratuity shift this into regular contributions instead.
Questions we get asked first
Which law governs employment in the UAE?
Federal Decree-Law No. 33 of 2021, amended by Federal Decree-Law No. 9 of 2024, on the mainland and in most free zones. The DIFC and ADGM have their own employment laws.
What are the Emiratisation targets for 2026?
Companies with 50 or more employees must reach 10% UAE nationals in skilled positions by 31 December 2026. Companies with 20 to 49 employees in fourteen designated sectors must maintain two UAE nationals.
What is the penalty for missing Emiratisation targets?
AED 9,000 per month (AED 108,000 a year) per missing UAE national in 2026 for larger companies, and AED 108,000 per missing hire under the 2025 obligation for companies with 20 to 49 employees. Fake Emiratisation carries heavier fines.
How are labour disputes resolved in the UAE?
Through MOHRE first. Since 2024, MOHRE issues binding decisions on claims of AED 50,000 or less, which can be challenged before the Court of First Instance; larger claims go to the labour courts.
How is end-of-service gratuity calculated?
21 days' basic salary for each of the first five years of service and 30 days for each year after, capped at two years' pay, unless an approved alternative savings scheme applies.
Are non-compete clauses enforceable in the UAE?
Yes, within limits of time, place and type of work, generally for up to two years after employment ends.
Contracts by the law, payroll by the WPS, Emiratisation by plan
The UAE's labour law is modern and enforced, and Emiratisation is now expensive to ignore. Register contracts properly, pay through the WPS, calculate gratuity correctly, and treat Emiratisation as a hiring plan with Nafis support rather than a fine to absorb. Above 20 employees in a designated sector, the clock is already running.
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This article is general information, current as of 2026, and is not advice for any specific situation. Confirm current rules with the MOIC, the NBR or the relevant authority before acting.