A UAE employment contract defines the salary structure that drives end-of-service gratuity, the notice period that controls exits, and the restrictive clauses that may follow after leaving. Since February 2022, every private-sector contract registered through the Ministry of Human Resources and Emiratisation (MOHRE) has been fixed-term under Federal Decree-Law No. 33 of 2021. This guide covers what must be in a UAE contract by law, what employers commonly add, and how to read an offer letter before signing — with notes on how rules differ inside DIFC and ADGM. The Working in the UAE hub collects the rest of the cluster, and labour-law rights covers the wider 2021 Law framework.
At a Glance
| Clause | What to check | Red flag |
|---|---|---|
| Contract type (since Feb 2022) | Fixed-term, up to 3 years, renewable | Any reference to an "unlimited" or "open-ended" contract |
| Probation period | Maximum 6 months from start date | Probation longer than 6 months, or "renewable" probation |
| Notice during probation | 14 days if leaving for another UAE employer; immediate if leaving the country or being dismissed | Probation notice longer than 14 days or financial penalty for leaving |
| Notice after probation | 30 to 90 days, as specified in the contract | Less than 30 days (unenforceable) or more than 90 without justification |
| Required terms by law | Basic salary, working hours, leave, end-of-service gratuity | Any of these missing, vague or "to be agreed" |
| Gratuity calculation base | Basic salary only — allowances are excluded | Contract that hides or understates the basic salary line |
| Salary structure ratio | Basic typically 50-70% of total package | Basic well below 50% of total — gratuity will be much lower |
| Non-compete maximum term | 2 years post-employment | Anything over 2 years, or "indefinite" restrictions |
| Non-compete maximum scope | Same business activity, defined geographic area | "Any competing business" or "worldwide" without limits |
| Two-contract setup (offer letter + MOHRE) | The MOHRE Standard Contract governs in conflict, in UAE terms | Offer letter terms that contradict the MOHRE filing |
| DIFC and ADGM | Separate employment laws — DIFC Employment Law (2019), ADGM Employment Regulations (2019) | Treating DIFC/ADGM contracts as if federal MOHRE rules apply |
The Fixed-Term Contract Standard (since Feb 2022)
Federal Decree-Law No. 33 of 2021 came into force on 2 February 2022 and removed the unlimited-term contract from the onshore private sector. Every employee registered through MOHRE now sits on a fixed-term contract with a defined end date, up to three years and renewable by mutual agreement. Existing unlimited contracts were converted by February 2023.
"Fixed-term" does not mean the contract automatically ends and forces a job change. Renewal is routine; most employees stay with the same employer across multiple terms. At renewal, both sides have an explicit moment to renegotiate salary, scope and benefits. Gratuity, notice periods and other statutory entitlements continue uninterrupted — service is continuous for gratuity purposes. A contract may run to term, be terminated early with proper notice, or end on grounds in the law (such as gross misconduct under Article 44). See termination and resignation.
The MOHRE Standard Contract — What Must Be Included
The MOHRE Standard Employment Contract is the official bilingual (Arabic/English) document registered when a work permit is issued — the contract the labour authorities recognise. Many employees also receive an offer letter beforehand setting out commercial terms in more detail; the MOHRE Standard Contract is what is filed.
Required terms by law
Under the 2021 Labour Law and its Implementing Regulations, a UAE employment contract must specify:
- Employer name, employee name, nationality and date of birth.
- Job title and description of duties.
- Date of appointment and contract term (fixed-term, with end date).
- Workplace location, working hours and weekly rest day.
- Probation period, if any.
- Wage — basic salary plus allowances and benefits.
- Annual leave entitlement.
- Notice period for termination.
- End-of-service entitlements as defined by law.
If any of these is missing, MOHRE may refuse to issue or renew the work permit. The MOHRE filing is what the regulator and labour court reference first — do not rely solely on the offer letter.
What employers commonly add
Beyond the statutory minimum, most UAE employers add clauses that are legally permitted but should be read carefully:
- Non-compete and non-solicitation — restricting where the employee may work after leaving and preventing approaches to clients or staff.
- Confidentiality and intellectual property — assigning ownership of work produced and protecting trade secrets.
- Bonus and variable-pay terms — discretionary or formula-based, often with a "must be in employment on payment date" clause.
- Repayment of joining costs — recovery of relocation, visa or training costs if the employee resigns within a defined window.
- Garden leave and exclusivity — preventing outside work or keeping the employee out of the office during notice.
None of these override statutory minimum entitlements. A clause conflicting with the 2021 Law — for example, post-probation notice below 30 days — is unenforceable to the extent of the conflict.
Salary Structure — Reading the Numbers
UAE salaries are quoted as a "total package" but split into components on the contract. The split matters because gratuity is calculated on basic salary alone. A deeper payslip and Wage Protection System (WPS) walk-through sits in salary and payslips.
Basic salary (the gratuity base)
Basic salary is the figure used for gratuity, severance and most statutory calculations. It typically represents 50-70% of total package in mid- and senior-level roles, though some employers set it lower to reduce gratuity liability. A basic at 40% is legal but warrants modelling the gratuity impact over the expected tenure. The full formula sits at end-of-service gratuity.
Housing allowance
Housing allowance is a separate line item, paid monthly or sometimes annually as a lump sum, and excluded from gratuity. Typical ranges run 25-40% of total package. Some employers provide accommodation directly, with the same gratuity effect but less flexibility.
Transport allowance
Transport allowance covers commuting costs — normally a flat monthly amount, excluded from gratuity. Where a company car or fuel card is provided instead, the cash value is generally not added back to basic salary.
Other benefits (medical, schooling, flights home)
Health insurance is mandatory; the employer must provide cover. Some extend cover to dependants, others require the employee to pay separately. Schooling allowances, where offered, are typically capped per child annually and tied to invoiced fees. Annual flight allowance to the home country is common. None of these feed into the gratuity base.
Variable / bonus structure
Variable pay ranges from formal commission schemes to discretionary year-end bonuses. The contract should specify whether the bonus is discretionary or formulaic, the metrics, the payment date, and whether the employee must be in employment on the payment date. Discretionary bonuses create no automatic right; formulaic schemes are enforceable as written.
Probation Period
Probation under the 2021 Labour Law is capped at six months and cannot be extended. During probation:
- Employer dismissing the employee — 14 days' written notice required.
- Employee leaving for another UAE employer — 30 days' written notice; the new employer must compensate the current one for recruitment costs unless waived.
- Employee leaving the UAE entirely — 14 days' written notice; if the employee returns to UAE work within three months, the original employer can recover recruitment costs from the new employer.
If the contract does not specify a probation period, none applies.
Notice Periods and Mutual Termination
After probation, notice must be between 30 and 90 days as set out in the contract. Anything below 30 is unenforceable; above 90 is unusual outside senior roles. The same notice applies whether the employee resigns or the employer terminates without cause.
The employer may pay salary in lieu of notice or direct the employee onto garden leave during notice. Notice runs in calendar days, including weekends and public holidays. Either side breaching is liable for compensation equal to the unworked notice. Detailed mechanics — final settlement, gratuity, leave encashment — sit in termination and resignation, with the move process in changing jobs.
Non-Compete and Restrictive Clauses
Non-compete clauses are enforceable in the UAE, but the 2021 Labour Law tightened the scope. To be enforceable, a non-compete must be:
- Limited in time — maximum 2 years post-employment.
- Limited in geography — a defined area, not "worldwide".
- Limited in scope — the same business activity, not "any competing business".
- Justified by legitimate interest — trade secrets, client relationships or specialised knowledge.
Overbroad clauses are unenforceable; MOHRE guidance confirms non-competes should be proportionate. Non-solicitation clauses are generally easier to enforce than blanket non-competes, provided they are time-limited. Confidentiality and intellectual-property clauses survive the end of the contract regardless: even where a non-compete is unenforceable, the employee may not use confidential information from the previous employer.
How to Read Your Offer Letter — A 7-Step Checklist
The following walks through an offer letter or draft contract before signing, ideally with the draft MOHRE Standard Contract to hand.
Step 1 — Verify the basic salary vs total package
Step 1 — Identify the basic salary as a separate line item and calculate it as a percentage of the total monthly package. The 50-70% range is normal; below 40% should prompt a question about why the structure is so weighted toward allowances. Allowances do not feed gratuity.
Step 2 — Check the gratuity base (basic salary)
Step 2 — Confirm in writing that "basic salary" is the figure used for end-of-service gratuity. Some contracts use ambiguous terms like "consolidated salary" or "core remuneration". Cross-check the basic-salary figure on the offer letter against the MOHRE Standard Contract.
Step 3 — Confirm probation, notice, and contract term
Step 3 — Read the probation clause (max 6 months), the post-probation notice period (30-90 days) and the contract term (fixed-term, up to 3 years, with end date). Note any clauses about repayment of joining costs if the employee resigns within a defined window.
Step 4 — Identify the variable / bonus formula
Step 4 — If the offer references a bonus or commission, find the clause that defines how it is calculated, when it is paid, and whether the employee must be in employment on the payment date. A discretionary bonus creates no automatic right; a formula-based scheme does.
Step 5 — Note allowances and benefits explicitly
Step 5 — List every allowance and benefit: housing, transport, education, medical, flights, mobile, parking. Confirm whether each is paid in cash, reimbursed against invoice, or provided in kind. Health insurance scope (employee only or family) and annual flight allowance terms should be explicit.
Step 6 — Flag restrictive clauses (non-compete, exclusivity)
Step 6 — Read the non-compete, non-solicitation, confidentiality and exclusivity clauses. Check duration (max 2 years for non-compete), geographic scope (defined area, not worldwide) and business-activity scope (same activity, not "any competing business"). Negotiate down anything overbroad.
Step 7 — Verify the MOHRE Standard Contract aligns with the offer
Step 7 — Before signing the MOHRE Standard Contract, compare it line-by-line with the offer letter. Basic salary, allowances, job title, probation, notice and contract term should match. Where they differ, the MOHRE Standard Contract governs in UAE labour-law terms. If the MOHRE filing reduces a figure that was higher on the offer letter, do not sign until it is corrected.
DIFC and ADGM — Different Rules
The Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) are separate jurisdictions with their own employment laws. Federal labour law and MOHRE rules do not apply to employees of DIFC- or ADGM-licensed entities within the financial centres.
- DIFC Employment Law (2019) — governs DIFC employees. Notice is a minimum of 30 days. End-of-service rules differ from the federal regime; the DIFC Employee Workplace Savings (DEWS) scheme replaced traditional gratuity for most DIFC employees from February 2020, with employer contributions paid into a funded plan.
- ADGM Employment Regulations (2019) — broadly similar to the DIFC regime: minimum notice, statutory leave and end-of-service entitlements defined separately from the federal framework.
Service in one regime does not automatically count toward gratuity in the other. Read contracts against the licensing jurisdiction's specific law.
Frequently Asked Questions
Are open-ended contracts still legal in the UAE?
No. Since 2 February 2022, all new private-sector contracts under the federal regime must be fixed-term, up to 3 years, renewable. Existing unlimited contracts were converted to fixed-term by February 2023 under Federal Decree-Law No. 33 of 2021. DIFC and ADGM may permit different structures within their own employment laws.
What if my offer letter and the MOHRE contract say different things?
The MOHRE Standard Contract governs in UAE labour-law terms. If the offer letter promises a higher basic salary or better terms than the registered MOHRE contract, the lower MOHRE figure is what applies for gratuity, severance and other statutory calculations. Reconcile the two before signing, and ask for the MOHRE filing to be corrected if it understates what was offered.
Can my employer change my contract?
Material changes — pay, role, location, working hours — require employee agreement and an updated MOHRE filing. An employer cannot unilaterally cut basic salary, extend probation beyond 6 months or impose new restrictive clauses mid-contract without consent. Where a change feels coerced, it can be raised with MOHRE.
Can I sign two contracts (UK + UAE)?
Yes — many international employers issue an offer letter from their headquarters alongside the MOHRE Standard Contract in the UAE. Where the two conflict, the MOHRE Standard Contract governs in UAE terms (gratuity, notice, leave, dismissal). The overseas contract may apply to non-UAE matters such as international stock plans. If the setup is complex, take legal advice before signing.
What's a non-compete clause and is it enforceable?
A non-compete restricts the employee from working for a competitor after leaving. Under the 2021 Labour Law, non-competes are enforceable but limited: maximum 2 years, defined geographic area, same business activity, and justified by a legitimate interest such as trade secrets or client relationships. Overbroad clauses ("worldwide, any field, indefinite") are unenforceable.
What happens if I refuse to sign the MOHRE contract?
Without a signed MOHRE Standard Contract, no work permit can be issued. If the filing differs materially from the offer letter, raise the discrepancy and have it corrected before signing — not after. A signed MOHRE contract is generally the binding record.
What's the difference between basic salary and total package?
Basic salary is the figure used for end-of-service gratuity and most statutory calculations. Total package adds housing, transport and other cash benefits to the basic. Two offers with the same total package can produce very different gratuity outcomes if the basic split differs — a 60% basic produces 50% more gratuity than a 40% basic over the same tenure.
Can my probation be extended?
No. Probation is capped at 6 months and cannot be extended. An employer that wants longer to assess must either confirm the role at the end of probation or terminate with proper notice. A clause attempting to extend probation beyond 6 months is unenforceable to the extent of the excess.
Related: labour-law rights, salary and payslips, changing jobs, employee sponsorship, and freelance permit.