Contracts, probation and the Wage Protection System

Contract types and work models

The Decree-Law states that an employment contract is concluded for a specified period and may be renewed by agreement. The government portal describes this as fixed-term only: the law abolished the unlimited contract, and existing unlimited contracts were to be converted to fixed-term contracts within a set period that the Cabinet may extend. Renewals and extensions count towards continuous service. If both sides keep performing after the term ends without express agreement, the Decree-Law treats the original contract as extended on the same conditions.^[1][2][3]

The portal lists the work models the law admits: full-time, part-time, temporary, flexible, remote and job sharing. Part-time work can be for one or more employers. A contract must specify the start date, type of work, workplace, terms, duration and salary. One portal page says a contract must be for a fixed term not exceeding three years, renewable; the Decree-Law text consulted for this guide says only that the term is specified. Readers should confirm any maximum term with MOHRE.^[2][4][1]

Probation

Under the Decree-Law an employer may place a worker on probation for no more than six months from the start of work, and may not appoint the same worker on probation more than once at the same employer. The period counts towards the term of service. If the employer ends the contract during probation, it must give written notice at least 14 days before the termination date. The government portal adds that probation cannot be extended.^[1][2]

A worker who wants to move to another employer in the UAE during probation must give the original employer at least one month's written notice, and the new employer compensates the original employer for recruitment costs unless the parties agree otherwise. A foreign worker who wants to leave the UAE must give at least 14 days' written notice, and if that worker returns on a new work permit within three months the new employer owes the same compensation. A party that ignores these rules owes wages for the notice period, and a foreign worker who leaves in breach is not granted a work permit for one year.^[1]

Notice and termination

Outside probation, the portal says either party may end a contract for a legitimate reason by written notice, that the contract continues during the notice period, and that the period must be not less than 30 days and not more than 90. The worker receives full wages for the period, and the period must be the same for both parties unless a different one favours the worker. A party that does not serve notice owes the other an allowance based on the last wage, even if no harm was caused. When the employer ends the contract, the worker is entitled to one day a week of unpaid leave to look for another job.^[5]

The portal also lists grounds on which an employer may end a contract without notice, such as forged documents, repeated failure to perform duties after two warnings, or unexcused absence of more than 20 non-consecutive days in a year or more than seven consecutive days. It says the employer may do so only after a written investigation, with a written and justified dismissal notice. Dismissal is arbitrary if it results from a proven serious complaint to MOHRE or a lawsuit against the employer, and compensation in that case cannot exceed three months' wages.^[5]

End-of-service gratuity

For expatriate workers, the portal states that gratuity is due after at least one year of continuous service. It is calculated on the last basic salary, not on allowances such as housing or transport: 21 days' basic wage for each of the first five years and 30 days for each year after that, with fractions of a year counted proportionately once one year is completed. The total may not exceed two years' wage, and days of unpaid absence are not counted. The employer must pay outstanding wages, entitlements and gratuity within 14 days of termination.^[6]

Emiratis in the private sector fall under the pensions and social security legislation instead. For part-time and other work arrangements, the portal gives a formula based on contract hours relative to full-time hours, and says gratuity does not apply to temporary employment of less than one year. MOHRE also offers a voluntary Savings Scheme in which employers pay into an approved investment fund instead of accruing gratuity: 5.83 per cent of monthly basic salary for staff with under five years' service, and 8.33 per cent for longer service.^[6]

The Wage Protection System

The Wage Protection System is the electronic channel through which MOHRE-registered establishments pay private-sector wages, via banks, exchange houses or financial institutions authorised by the Central Bank. The portal says Ministerial Resolution No. 340 of 2026 makes salaries for the previous month due on the first day of each Gregorian month, and requires employers to transfer at least 85 per cent of the wages due on time where lawful deductions apply. Pay may be in dirhams or another currency agreed in the contract. MOHRE said in December 2025 that the system covers more than 99 per cent of private-sector workers.^[7][8]

The resolution sets graduated measures for late payment. Electronic monitoring runs from the due date and alerts begin on the second day. On the fifth day MOHRE suspends new work permits for the establishment. On the 11th day an administrative fine and reclassification to the third category apply to repeat violations within six months. On the 16th day a labour dispute is registered automatically for establishments with 25 or more workers, and on the 21st day further steps include an executive instrument for payment in establishments with fewer than 50 workers, precautionary attachment and a travel ban on the person in charge. The portal also notes that wage non-compliance can lead MOHRE to refuse work permits.^[7][9]

Questions