The United Arab Emirates (UAE) Ministry of Human Resources and Emiratisation (MoHRE) announced significant updates to its labor laws on May 15, 2025, impacting both employers and employees across the country. These changes, designed to enhance worker protections and align with international best practices, cover areas like contracts, working hours, and end-of-service benefits. The revisions aim to create a more flexible and transparent labor market, fostering economic growth while safeguarding employee rights.
The amendments, which will take effect on June 15, 2025, represent the first major overhaul of the UAE’s federal labor law since 1980. According to MoHRE, the updates are a direct response to evolving economic conditions and the need to attract and retain skilled talent in a competitive global landscape. These changes are expected to affect millions of workers in the private sector, impacting industries ranging from construction and hospitality to finance and technology.
Understanding the New UAE Labor Laws
The revised labor laws introduce several key changes. One of the most notable is the increased emphasis on the clarity and fairness of employment contracts. All contracts must now be written in Arabic and at least one other language understood by the employee, ensuring full comprehension of terms and conditions. Additionally, fixed-term contracts will now automatically renew unless either party provides notice of non-renewal at least 90 days before expiration.
Changes to Working Hours and Leave
The new regulations address working hours and leave entitlements. While the standard workweek remains at 48 hours, the law introduces greater flexibility for companies to implement alternative work arrangements, such as remote work and compressed workweeks, with appropriate safeguards for employee well-being.
Maternity leave has been extended to 60 calendar days, with an additional 15 days of unpaid leave available. Paternity leave has also been introduced, granting fathers five days of paid leave following the birth of a child. These provisions reflect a growing commitment to family-friendly workplace policies.
End-of-Service Benefits and Job Security
Significant changes have been made to end-of-service benefits. The calculation of gratuity will now be based on the employee’s last salary, rather than the average of the last three years, potentially increasing payouts for long-serving employees. However, the law also introduces a tiered system based on years of service, impacting the amount received.
The new law also strengthens protections against arbitrary dismissal. Employers must now demonstrate a legitimate reason for termination, and employees have the right to appeal unfair dismissal decisions through the MoHRE. This aims to enhance job security and provide a more robust dispute resolution mechanism.
Furthermore, the updated legislation addresses non-compete clauses. These clauses are now limited to a maximum duration of two years for senior management and skilled workers, and one year for other employees. This change seeks to balance employer interests with the employee’s right to pursue future employment opportunities.
Impact on Employers and Employees
The changes to the UAE employment law will require employers to review and update their existing policies and contracts to ensure compliance. This includes translating contracts, revising termination procedures, and adjusting benefit calculations. Failure to comply could result in penalties and legal challenges.
Meanwhile, employees are expected to benefit from increased protections and greater clarity regarding their rights and obligations. The enhanced transparency in contracts and the strengthened dispute resolution mechanisms will empower workers to address concerns and seek redress when necessary. The introduction of paternity leave and extended maternity leave are also positive developments for families.
Experts suggest that the amendments will likely lead to increased legal costs for employers in the short term, as they navigate the new regulations. However, they also anticipate that the changes will contribute to a more stable and productive workforce in the long run. The focus on attracting and retaining talent is expected to boost the UAE’s competitiveness as a regional business hub.
The Ministry of Economy has indicated that these changes are part of a broader strategy to diversify the economy and promote sustainable growth. Related initiatives, such as the recent updates to visa regulations, are designed to create a more attractive environment for foreign investment and skilled workers.
In contrast to previous iterations, the new law places a greater emphasis on resolving disputes amicably. MoHRE will be offering mediation services to help employers and employees reach mutually agreeable solutions before resorting to formal legal proceedings. This proactive approach aims to reduce the burden on the courts and promote a more collaborative labor relations environment.
The implementation of these new labor laws will be closely monitored by businesses and legal professionals. MoHRE has announced plans to conduct awareness campaigns and provide training to employers and employees to ensure a smooth transition.
Looking ahead, the MoHRE is expected to issue further guidance on specific aspects of the new legislation in the coming weeks. The effectiveness of the changes will depend on consistent enforcement and ongoing dialogue between the government, employers, and employees. The long-term impact on the UAE’s labor market remains to be seen, but the initial response suggests a positive step towards a more equitable and sustainable future of work.
