Question 1

How is UAE end-of-service gratuity calculated?

Accepted Answer

Under Federal Decree-Law 33 of 2021 (effective 2 February 2022), end-of-service gratuity is calculated on the basic wage only — not the gross/total wage. Calculation: 21 days basic wage for each of the first 5 years of service; 30 days basic wage for each year thereafter; pro-rated for partial years; capped at two years' total basic wage. Limited-term contracts (the only type permitted post-2022 for new hires) entitle the employee to full gratuity on natural-term expiry. The DIFC operates a different regime under DIFC Law 4 of 2020 — the DIFC Employee Workplace Savings Scheme (DEWS), a defined-contribution structure. ADGM operates a similar end-of-service savings regime. Gratuity disputes are among the highest-volume MOHRE filings.

Question 2

What is the post-2022 limited-term-only contract regime?

Accepted Answer

Federal Decree-Law 33 of 2021 abolished the unlimited contract (effective 2 February 2022 for new hires; existing unlimited contracts had to convert by February 2023). All UAE mainland employment contracts must now be limited-term, with a maximum initial duration set by Cabinet Decision (currently 3 years, renewable). Practical implications: (i) renewal terms are negotiable and can include revised remuneration; (ii) early termination by either party triggers Article 42 / 47 compensation rules; (iii) probation period maximum is 6 months (non-renewable); (iv) notice periods are 30-90 days as agreed in the contract; (v) the contract can specify particular grounds for early termination. The DIFC and ADGM still permit indefinite contracts under their separate regimes.

Question 3

How does the MOHRE complaint and Labour Court process work?

Accepted Answer

Mainland UAE employment disputes (post-2022 amendments) follow a streamlined sequence: (i) MOHRE filing — either party may file a complaint via the MOHRE smart application; (ii) MOHRE mediation — typically within 14 days, with a settlement attempt; (iii) MOHRE administrative decision — for claims of AED 50,000 or less, MOHRE issues a binding administrative decision (subject to appeal to the Labour Court); (iv) Labour Court referral — for claims above AED 50,000, MOHRE refers to the competent Labour Court of First Instance; (v) Labour Court — judgment within typically 3-6 months; (vi) appeal to Court of Appeal and Cassation. Critical points: limitation period for filing is one year from termination; both parties bear no court fees in employment matters; and MOHRE administrative decisions can be enforced like court judgments.

Question 4

What are the rules on non-compete clauses?

Accepted Answer

Under FDL 33/2021 Article 10 and the Implementing Regulations (Cabinet Decision 1 of 2022), a non-compete clause is enforceable in the UAE only if it: (a) is in writing and clearly defined; (b) is limited in geography, time and scope of activity; (c) does not exceed two years; (d) is reasonably necessary to protect the employer's legitimate business interests; and (e) is proportionate. The Implementing Regulations introduced a specific waiver mechanism: the non-compete is unenforceable where the employer terminates without cause; where the employee terminates for cause attributable to the employer; or where the employer agrees a written waiver. Damages for breach are limited to compensation actually proven. The DIFC and ADGM follow English common-law restraint-of-trade principles and reach broadly similar outcomes through different doctrine.

Question 5

What does a UAE mass redundancy actually look like?

Accepted Answer

There is no formal collective-redundancy framework under UAE mainland law (unlike the EU TUPE / Acquired Rights or the UK collective-consultation regime). However, large-scale terminations attract MOHRE attention, may trigger reputational and visa-quota consequences, and (under the post-2022 amendments) require specific ground-of-termination documentation per employee. Practical sequence: (i) commercial decision and headcount-impact mapping; (ii) per-employee FDL 33 ground identification (typically Article 42 economic-reasons termination, with full notice and gratuity); (iii) settlement-template preparation with EOSB calculation, accrued leave, repatriation and any ex gratia component; (iv) communication sequencing (regulatory, employees, customers, market); (v) MOHRE notification and visa cancellation processing; (vi) WPS final-salary settlement. We typically run mass exits as a structured workstream over 4-12 weeks.

Question 6

What is the Wage Protection System and what triggers WPS issues?

Accepted Answer

The Wage Protection System (WPS) is the mandatory salary-payment infrastructure for all mainland UAE employers operating through MOHRE-registered banks/exchange houses. Salaries must be paid through WPS within 15 days of the wage period; a delay triggers MOHRE alerts and (after specified thresholds) consequences including suspension of new work-permit issuance, fines, and (for repeated breaches) referral to public prosecution. Most WPS issues we see are: (i) cash-flow related delays at SMEs; (ii) variable-pay calculation disputes treated by MOHRE as non-payment; (iii) end-of-service settlements not run through WPS leaving residual exposure; (iv) intercompany secondment and split-payroll structures that don't comply with WPS source-of-funds requirements.

Question 7

How are senior executive exits handled differently?

Accepted Answer

Senior-executive exits (CEO, C-suite, MD level) typically involve issues that do not arise in standard separations: equity vesting and forfeiture, restrictive covenants of commercial significance, regulatory deregistration (where the executive holds a controlled-function approval), board removal, public/market disclosure timing, public-statement coordination and reputational risk management. We routinely act for both companies and executives. The optimal exit sequence — board resolution, regulatory notice, market disclosure, internal communication, asset return, separation-payment timing, restrictive-covenant carve-outs and dispute-resolution mechanism — is highly fact-specific and benefits from being agreed in a written separation deed rather than left to default statutory machinery.

UAE Employment & Labour — mainland, DIFC, ADGM, free zones.

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