UAE Labour Law 2025: Key Updates and Practical HR Steps

In 2025 the United Arab Emirates continues consolidating reforms introduced by the 2021 Federal Decree-Law on labour relations, with clarifications from executive regulations and ministerial guidance. Employers and HR teams must keep up with evolving interpretations affecting contracts, working hours, leave, termination, and cross-border working arrangements. This guide summarizes essential policy points and provides concrete operational steps and practical notes for on-the-ground compliance.

Overview of Core Policy Areas

• Contract Types and Flexibility – Fixed-term and unlimited contracts remain the standard. The law supports greater flexibility: part-time, temporary and remote arrangements are increasingly recognized in practice; employers should document scope, hours and location clearly.
• Working Hours and Overtime – Standard weekly hours and overtime compensation principles continue to apply. Recent guidance clarifies calculation methods for mixed-salary packages and pro-rata overtime for part-time staff.
• Leave Entitlements – Annual, sick, maternity/paternity and Hajj leave rules are upheld. Updated administrative practice emphasizes electronic leave records and timely approval to avoid disputes.
• End-of-Service and Termination – Gratuity calculation remains a core entitlement for employees who complete qualifying service. Authorities have issued further interpretations about severance calculation for part-time, commission-based and interrupted service periods.
• Health, Safety and Insurance – Employers are expected to ensure mandatory health insurance and workplace safety measures; incident reporting procedures have become more standardized across emirates.
• Expatriate Employment and Visas – Visa reforms (including Green and Golden Visa schemes) affect sponsorship models and mobility. Employers should align employment contracts with visa categories and benefits.
• Anti-discrimination and Emiratisation – Continued emphasis on nondiscrimination and national employment initiatives (Emiratisation) requires proactive hiring and training strategies in targeted sectors.

Practical HR Steps: From Hiring to Exit

1. Hiring and Onboarding

1. Audit job descriptions: ensure every role has a clear job description, working hours, salary breakdown (basic, allowances, benefits) and contract type.
2. Draft compliant contracts: include probation terms, notice periods, gratuity basis, confidentiality and any non-compete clauses (carefully limited in scope and duration).
3. Check visa alignment: confirm that the employment contract matches the employee's visa type and permitted activities. For remote hires residing abroad, determine whether a local work permit or cross-border compliance model is required.
4. Collect mandatory documents: passport copy, UAE ID (where applicable), health insurance proof, skill certifications and any professional licences.

2. Payroll, Benefits and Working Time

1. Structure pay transparently: separate basic salary from allowances so overtime and gratuity calculations are auditable.
2. Record working hours: use reliable timekeeping (biometric or electronic) and keep digital logs to support overtime and leave records.
3. Manage leave centrally: approve and archive leave requests to prevent accrual disputes.

3. Performance Management and Discipline

1. Implement written policies: performance standards, progressive disciplinary steps and appeal channels should be in the employee handbook.
2. Document warnings: keep contemporaneous records of performance meetings, corrective plans and outcomes.

4. Termination and Gratuity Calculation

1. Follow notice and cause procedures: distinguish termination with cause (serious breach) from without cause; apply contractual and statutory notice periods.
2. Calculate gratuity: compute end-of-service entitlements based on actual service time and the agreed salary components; for interrupted service, document reasons and compute pro-rata where legally appropriate.
3. Finalize clearance: settle final pay, recover company property, deactivate access, and issue a service certificate if required.

5. Cross-border and Remote Work Considerations

1. Tax and social security exposure: remote work across jurisdictions may create tax and social security obligations — obtain specialist advice when employees work from abroad.
2. Data protection and IP: ensure contracts assign IP rights appropriately and include data-handling rules for remote employees.

Operational Checklist for HR Compliance

Common Scenarios and Recommended Responses

Case 1: Employee on Probation Performs Unsatisfactorily

Action: Hold a documented appraisal, offer corrective training if appropriate, and follow written termination procedures if improvement is not achieved. Observe contractual notice and confirm final pay and gratuity entitlements as applicable.

Case 2: Employee Requests Remote Work from Another Country

Action: Assess legal, tax and social security implications, update the employment contract to specify governing law and work location, and ensure data security safeguards.

Case 3: Collective Redundancies or Restructuring

Action: Engage legal counsel, communicate transparently with affected employees, provide fair selection criteria, and comply with labour authority notification and severance requirements.

Notes

• Keep policies written and accessible in English and Arabic where necessary — regulators often request Arabic translations.
• Update HRIS records promptly: delayed updates create compliance risk during audits or disputes.
• Be cautious with non-compete clauses: they must be reasonable in scope, geography and duration to be enforceable.
• When in doubt, obtain local legal advice — regulatory interpretations can vary between emirates and sectors.
• Maintain an internal escalation path for workplace injuries and legal claims; early settlement often reduces costs and reputational harm.

Practical Tips for Small and Medium Enterprises

1. Use standardised contract templates and a central checklist for each hire.
2. Outsource complex payroll, immigration or tax matters to licensed providers when internal capacity is limited.
3. Train managers on lawful termination procedures and performance documentation.

Using External Support — A Quick Word on Services

For companies expanding hiring or handling complex expatriate placements, partnering with experienced providers can reduce risk. For example, SailGlobal offers specialized out-of-sea human services to assist with cross-border employment, visa coordination and compliance management.

Final Recommendations

Keep policy documents under regular review, centralise records, and align employment contracts with visa categories and payroll structures. Maintain clear communication with employees and consult local counsel for high-risk situations such as mass redundancies, cross-border remote work or contested dismissals. With proactive processes in place, HR teams can meet the UAE's regulatory expectations and reduce legal exposure in 2025 and beyond.