UAE Employment Law 2025: WPS, Gratuity and the New Work Permits Explained

Federal Decree-Law No. 33 of 2021 was the most significant overhaul of UAE labour regulation in decades, modernising the relationship between employers and employees and introducing flexible work models that reflect how people actually work in 2025.

Hours, leave and rest

The law caps standard working hours at eight per day or forty-eight per week, with overtime rules for additional time. Employees accrue 30 calendar days of paid annual leave once they complete a year of service, alongside defined sick leave, parental leave and public holidays. Probation periods are capped and notice requirements during probation are now clearly defined, reducing ambiguity for both sides.

End-of-service gratuity

The end-of-service benefit remains a cornerstone of UAE employment. For employees on unlimited contracts, gratuity accrues at 21 days of basic salary for each of the first five years of service and 30 days per year thereafter, calculated on the final basic wage. Understanding how basic salary is structured versus allowances is therefore critical — it directly determines the size of the eventual payout.

WPS compliance

The Wage Protection System (WPS) makes salary payment auditable. Employers must pay wages through approved channels so that the Ministry can verify employees are paid in full and on time. Non-compliance carries real penalties, including fines and suspension of new work permits. For any business hiring in the UAE, WPS registration and discipline is non-negotiable.

New permit types and non-compete

Perhaps the most forward-looking change is the expansion of work-permit categories. Alongside the traditional full-time permit, the law now recognises part-time, temporary, freelance and remote-work arrangements — legitimising the gig and flexible-work economy. Non-compete clauses remain enforceable but must be reasonable in duration, geography and scope, giving employees clearer protection against overreach while preserving legitimate business interests.