Labour And Immigration

Oman’s Ministry of Labour has issued Ministerial Decision No. 390/2026, introducing a new Regulation Governing the Practice of Recruiting Non-Omani Manpower. Issued under the Labour Law promulgated by Royal Decree No. 53/2023, the regulation establishes licensing conditions, operational requirements and compliance obligations for recruitment offices and employers. It replaces the previous framework introduced under Ministerial Decision No. 1/2011 and will take effect on January 1, 2027.

Under the new framework, recruitment offices must obtain a licence from the Ministry of Labour before undertaking recruitment activities. The eligibility requirements include Omani ownership, partnership and authorised signatories, registration with the Small and Medium Enterprises Development Authority, and submission of a financial guarantee of OMR5,000. Recruitment offices must also comply with prescribed standards governing their premises and workers’ accommodation.

Licensed recruitment offices are required to use approved formats for job offers and service contracts. They must provide employers with relevant information about recruited workers, including their personal details, qualifications, skills and work experience. The requirements also include conducting medical examinations before workers enter Oman and arranging insurance coverage for each service contract.

Recruitment offices must engage overseas recruitment agencies accredited by the relevant Omani diplomatic mission and ensure that the necessary documents are attested by the Ministry of Foreign Affairs. Where recruitment takes place from countries without an Omani diplomatic mission, the process must be coordinated with the Ministry of Foreign Affairs and the Royal Oman Police.

The regulation expressly prohibits recruitment offices from charging workers any fees or collecting payments from them in connection with recruitment or employment. It also prohibits the retention of workers’ passports and official documents, except where workers have given their written consent.

Recruitment offices are generally required to complete the recruitment process within 45 days of the service contract being concluded, unless the parties agree to a shorter period. The regulation also establishes circumstances in which recruitment offices must refund employers or provide replacement workers, where this alternative has been agreed in writing.

However, an employer's entitlement to a refund may be forfeited in specified circumstances. These include providing misleading information about working conditions, failing to pay wages for more than two consecutive months or three non-consecutive months within a year, and subjecting a worker to harassment or violence.

The prescribed contractual arrangements also introduce different service guarantee periods depending on the category of worker. For domestic workers and equivalent categories, the guarantee period is two years, while the period for workers recruited by establishments is 90 days, calculated from the commencement of employment.

The regulation further provides for temporary labour authorisations valid for 180 days, which cannot be renewed. This establishes a defined period for temporary recruitment arrangements and places limits on their continuation.

Non-compliance with the new requirements may attract administrative action, including warnings, financial penalties, suspension or cancellation of recruitment licences. These measures are without prejudice to any criminal penalties that may apply under the Labour Law.

Recruitment offices holding valid licences when the new regulation comes into force may continue operating until their licences expire. However, subsequent renewals must comply with the requirements and procedures prescribed under the new framework.

Changing jobs in the UAE is generally a matter of following the applicable employment regulations and contractual obligations. An employer cannot prevent a worker from moving to another organisation simply because the employee has decided to pursue a different career opportunity or seek better employment conditions. However, certain legal provisions allow employers to protect their legitimate business interests, particularly where employees have access to confidential information, trade secrets or established client relationships.

One of the most important considerations is the non-compete clause commonly included in employment contracts. Although UAE law recognises such restrictions, their enforceability is subject to specific legal conditions. An employer cannot impose an unrestricted prohibition on an employee working for a competitor or joining another organisation in the same industry.

The distinction is particularly important when an employment contract contains a broadly worded restriction that prevents an employee from undertaking similar work anywhere in the UAE or even outside the country.

When Can an Employer Impose a Non-Compete Clause?

Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationships, as amended, recognises the employer's right to include a non-compete provision in an employment contract under Article 10.

The provision applies where the nature of an employee's work gives them access to the employer's customers or confidential business information and trade secrets. In such circumstances, an employer may restrict the employee from competing with the business or participating in a competing project after the employment relationship ends.

However, the restriction must be reasonably necessary to protect the employer's legitimate business interests. It must clearly identify three essential elements: the duration of the restriction, its geographical scope and the nature of the work covered.

The non-compete period cannot exceed two years from the expiry of the employment contract. The restriction must also be proportionate to the employee's actual responsibilities and the potential risk to the former employer's business.

Consequently, a non-compete clause is not automatically enforceable merely because an employee has signed an employment contract containing such a provision. Its validity depends on whether it satisfies the statutory requirements.

Why an Overly Broad Restriction May Not Be Enforceable

Consider the case of a fitness instructor who has worked for a Dubai-based fitness centre for four years. One month before the employment contract expires, the employee informs the employer that the contract will not be renewed because the existing salary is no longer acceptable.

The employment contract contains a clause prohibiting the employee, during employment and for 12 months after termination, from competing with the company or becoming involved in any business offering similar services, whether directly or indirectly, in the UAE or anywhere else in the world.

After the contract expires, the employee receives an opportunity to join another fitness organisation in a different emirate. The new employer operates with a different customer base and does not directly target the former employer's clientele.

In such circumstances, the former employer's ability to enforce the restriction would depend on whether the clause meets the requirements of Article 10.

Although the 12-month restriction is within the maximum two-year period permitted by law, the geographical restriction covering the entire UAE and the rest of the world raises questions about its proportionality. The clause must demonstrate a reasonable connection between the geographical area covered and the employer's legitimate business interests.

Similarly, a restriction covering every business offering similar services, without adequately identifying the nature of the competing work, may be considered excessively broad.

A different emirate or customer base does not automatically invalidate a non-compete clause. However, the nature of the new employment, the geographical reach of the former employer's operations and the likelihood of damage to its legitimate interests may be relevant when assessing enforceability.

Article 12 of Cabinet Resolution No. 1 of 2022, which contains the Executive Regulations of the Labour Law, further specifies the conditions governing non-compete provisions. It requires the geographical area, duration and nature of the restricted work to be determined. The work restriction must be of a nature that could cause significant harm to the legitimate interests of the former employer.

These requirements prevent employers from using contractual restrictions to impose unreasonable limitations on an individual's ability to earn a living.

Can an Employer Obtain a Labour Ban For Breaching a Non-Compete Clause?

A non-compete dispute and a labour ban are two separate legal matters. An employer cannot automatically prevent a former employee from obtaining a new work permit simply by alleging a breach of a non-compete clause.

Under Article 12(2) of Cabinet Resolution No. 1 of 2022, a dispute concerning the application of a non-compete provision that cannot be resolved amicably may be referred to the competent court. The burden of proving the damage caused by the employee's alleged breach rests with the former employer.

Where a court establishes that a valid non-compete obligation has been breached, the employee may be held liable for compensation, subject to the applicable legal requirements and the evidence presented.

Importantly, Article 10 of the Labour Law also provides that an employer's claim concerning a violation of a non-compete restriction will not be heard if more than one year has passed since the employer discovered the violation.

The law does not create an automatic labour ban as a penalty for breaching a non-compete clause. The appropriate legal remedy is therefore distinct from the administrative restrictions governing the issuance of work permits.

When Can an Employee Face a One-Year Work Permit Ban?

The UAE Labour Law and its implementing regulations specify circumstances in which a worker may be prevented from obtaining a new work permit for one year.

According to Article 8 of Ministerial Resolution No. 47 of 2022, a one-year work permit ban may apply when an employee terminates the employment relationship during the probation period, provided the employer has not breached its contractual obligations, or when a work abandonment complaint against the employee is established as valid.

The regulations also address cases involving the cancellation of work permits issued by fictitious establishments.

These provisions are intended to address specific violations of employment regulations. They do not mean that an employee who completes a fixed-term contract, follows the required notice procedure and moves to another employer will automatically face a work permit restriction.

Under Article 42 of the Labour Law, an employment contract may end through mutual written agreement, expiry of its term without renewal, or termination by either party in accordance with the applicable notice requirements.

Article 27 of Cabinet Resolution No. 1 of 2022 also recognises the circumstances in which a worker may move to another employer after the employment relationship ends in accordance with the law.

Employees who complete their contractual obligations and properly terminate their employment are generally entitled to seek new employment, subject to obtaining the necessary work permit.

Who is Exempt From a One-Year Work Permit Ban?

The implementing regulations provide exemptions for certain categories of workers from restrictions on obtaining a new work permit, particularly in cases involving proven work abandonment.

These include employees whose UAE residence visas are sponsored by family members, holders of Golden Residence visas and workers possessing professional skills, qualifications or knowledge required by the UAE labour market.

Workers applying for a new work permit with the same establishment are also included in the exemptions. Other occupational categories may be exempted through ministerial decisions based on labour market requirements and the approved occupational classification.

These exemptions should be understood within the specific circumstances prescribed by the regulations. They do not constitute a blanket exemption from every employment-related restriction or contractual obligation.

The Ministry of Human Resources and Emiratisation (MoHRE) examines the circumstances of a reported violation before imposing a work permit ban. Employees who believe that a restriction has been imposed unjustifiably may submit a grievance through the Ministry's approved channels, supported by relevant documents.

What Does the UAE Civil Transactions Law Say?

The legal framework governing non-compete agreements is also addressed under the UAE Civil Transactions Law.

An important legislative development is the introduction of Federal Decree-Law No. 25 of 2025 promulgating the new Civil Transactions Law, which came into effect on June 1, 2026. It replaced the previous Civil Transactions Law under Federal Law No. 5 of 1985.

Article 851 of the new law specifically addresses restrictions on employees competing with their former employers. It recognises the possibility of a non-compete agreement where the nature of the employee's work provides access to the employer's customers or business secrets.

For such an agreement to be valid, the restriction must be limited in terms of time, geographical location and the type of work to the extent necessary to protect the employer's legitimate interests. The provision also requires the employee to have attained the age of majority when entering into the agreement.

The new law further restricts an employer's ability to invoke a non-compete agreement where the employer terminates the contract or refuses to renew it without any act on the employee's part justifying that decision. The restriction also cannot be invoked where the employer has committed an act that entitles the employee to terminate the contract.

Read together with Article 10 of the Labour Law, these provisions reinforce the principle that employers may protect genuine commercial interests but cannot use non-compete agreements to impose unreasonable restrictions on employees' professional freedom.

Balancing Business Protection With the Right to Work

The UAE's legal framework seeks to maintain a balance between protecting employers from unfair competition and safeguarding employees' ability to pursue new employment opportunities.

A properly drafted non-compete clause can protect confidential information, customer relationships and other legitimate commercial interests. However, an excessively broad provision that restricts an employee from working across an entire industry, irrespective of the actual risk to the former employer, may face legal challenges.

For employees considering a job change, the important considerations are the terms of their employment contract, the manner in which the existing relationship is terminated and whether any non-compete restriction satisfies the statutory requirements.

Completing the contractual term, complying with notice obligations and following the prescribed work permit procedures are essential. Equally, employers seeking to enforce non-compete provisions must be able to demonstrate that the restrictions are reasonable, necessary and supported by legitimate business interests.

Ultimately, signing a non-compete clause does not give an employer an unrestricted right to control an employee's future career. UAE law recognises the protection of business interests, but that protection must remain within clearly defined legal boundaries.

The Abu Dhabi Labour Court of First Instance has ordered a company to pay Dh90,750 to a former employee after failing to pay his wages for four consecutive months and withholding his salary in lieu of notice.

The employee had filed a lawsuit seeking approximately four months of unpaid wages amounting to Dh74,250, along with Dh16,500 as payment for the notice period.

He also asked the court to order the company to bear the legal costs and make the judgment immediately enforceable.

In its ruling, the court observed that the amount and type of remuneration must be specified in the employment contract. Where these details are not stipulated, the competent court is authorised to determine them, with the matter being treated as a labour dispute.

The court further noted that employers are required to pay employees' wages on their respective due dates, in accordance with the regulations approved by the Ministry and the terms, conditions and procedures prescribed under the executive regulations of the relevant decree-law.

It also clarified that wages must be paid in UAE dirhams, although the parties may agree to payment in another currency under the employment contract.

The court found that the employment contract stipulated a gross monthly salary of Dh16,500. Since the case records contained no evidence that the company had paid the agreed wages, it held that the employee was entitled to recover the outstanding amount claimed.

Employee handbooks play an important role in managing workplace relationships across the UAE, setting out expectations on employee conduct, disciplinary measures, workplace benefits and company procedures. However, the existence of a written policy does not automatically make every provision legally binding. Under the onshore private-sector framework, workplace rules can be enforced provided they are lawful, brought to the attention of employees and implemented in accordance with the procedures laid down under the Labour Law. An employee handbook cannot independently override statutory rights, and any provision that contradicts the law will have to give way to the applicable legislation.

The Legal Framework

Federal Decree-Law No. 33 of 2021 (the Labour Law) authorises employers to apply a range of disciplinary measures against employees who breach the law or its implementing regulations. Employers may also suspend a worker for a period of up to 30 days on half pay while a disciplinary investigation is conducted. The Executive Regulations, introduced through Cabinet Resolution No. 1 of 2022, establish the documentation and compliance requirements governing these powers.

Under Article 14, establishments with 50 or more employees must introduce internal work regulations setting out workplace instructions, disciplinary penalties, promotion and bonus arrangements, and procedures for terminating employment. These rules must be communicated to employees in a language they can understand. Article 24(2) further requires employers to prepare a schedule of disciplinary sanctions specifying the penalties that may be imposed under Article 39 [2]. In most organisations, these requirements are incorporated into the disciplinary and workplace conduct provisions of the employee handbook.

Making Workplace Policies Contractually Binding

Certain handbook provisions, particularly those concerning employee behaviour, confidentiality, company equipment and remote working arrangements, may form part of the contractual relationship between an employer and an employee. The Executive Regulations permit additional provisions to be included in approved employment contract templates, provided they do not conflict with the Labour Law or its implementing regulations.

The new Civil Transactions Law, Federal Decree-Law No. 25 of 2025, which took effect on 1 June 2026 and replaced Federal Law No. 5 of 1985, also reinforces the obligation of parties to perform contractual commitments according to their agreed terms and in good faith. Consequently, an employer may encounter difficulties enforcing a workplace policy that was never provided to the employee or has been applied inconsistently. Employers should expressly refer to the handbook in the employment contract and secure a signed acknowledgment confirming that the employee has received and understood it. Changes affecting fundamental contractual conditions, including salary and working hours, should be agreed with the employee rather than imposed simply by revising the handbook.

Legal Limits on Workplace Rules

Article 14 makes it clear that internal work regulations must operate within the boundaries established by the Labour Law and its Executive Regulations. Employers should pay particular attention to three areas where handbook provisions can exceed the limits permitted by legislation:

• Disciplinary measures: Employers cannot penalise employees for conduct outside the workplace unless it has a connection with their employment. Furthermore, an employee cannot be subjected to multiple disciplinary sanctions for the same violation under Article 41.
• Non-compete obligations: A restrictive covenant must define its geographical area, identify the nature of the work covered and remain limited to a maximum of two years following the end of employment. It must also protect the employer's legitimate interests against substantial damage. The employer has to establish that damage, while the restriction will not apply where the employer terminates the contract or fails to fulfil its obligations (Article 12 of the Executive Regulations).
• Salary and benefit deductions: Recovering amounts from end-of-service benefits for workplace violations is permissible only under a penalty schedule approved by the Ministry. Such recovery is also subject to a three-month period, unless the parties agree otherwise (Article 29 of the Executive Regulations).

Following Due Process in Disciplinary Cases

The legal validity of a workplace rule does not, by itself, guarantee that an employer can successfully enforce it. Compliance with the prescribed disciplinary procedure is equally important. Article 24 requires penalties to reflect the seriousness of the misconduct, with relevant considerations including disclosure of confidential work information, health and safety risks, financial or reputational harm, misuse of authority, repeated breaches and any criminal or moral implications.

Before taking disciplinary action, an employer must notify the employee in writing of the alleged violation and provide an opportunity to respond. The investigation and its findings must be documented in a report and retained in the employee's personal file. Any resulting penalty must subsequently be communicated in writing, explaining the reasons for the decision and identifying the consequence of a further violation.

There are also statutory time limits. An employee cannot be accused of a violation if it was discovered more than 30 days earlier, and disciplinary action cannot be imposed more than 60 days after the investigation has concluded. Employees are entitled to contest disciplinary decisions through the employer's grievance mechanism. Organisations with 50 or more workers must also communicate their grievance procedures to employees. Where an employer cannot produce evidence that these procedural safeguards were followed, relying on the handbook alone may prove insufficient in defending a disciplinary decision.

Different Rules for Financial Free Zones

The discussion above concerns employment relationships governed by the UAE's onshore private-sector Labour Law. Employers operating within the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) are governed by separate employment legislation applicable to those financial free zones. Their employee handbooks and disciplinary procedures must consequently be assessed against the relevant jurisdictional requirements.

Steps Employers Should Consider

• Review disciplinary provisions against Articles 39 and 41 of the Labour Law and Article 24 of the Executive Regulations. Where deductions are proposed, ensure that the relevant penalty schedule has received Ministry approval.
• Make the handbook an express part of the employment contract and obtain signed acknowledgments in Arabic or English, according to the language understood by the employee.
• Identify and amend provisions that conflict with statutory protections or impose restrictions beyond those permitted by law, particularly in relation to non-compete obligations.
• Keep complete written records of disciplinary investigations, employee responses, decisions and penalties, while ensuring compliance with the statutory 30-day and 60-day deadlines.
• Conduct regular reviews of workplace policies to reflect legislative amendments and developments, including the implementation of the new Civil Transactions Law.

The UAE’s employment regulatory landscape has seen several developments in 2026, introducing additional responsibilities for businesses in areas ranging from salary payments and Emiratisation to workforce accommodation and the prevention of forced labour.

The changes affect employers across various sectors, although the specific obligations depend on the size and nature of their workforce and the activities they undertake. Businesses employing Emirati nationals, managing large workforces or providing staff accommodation may need to make particular adjustments to their existing arrangements.

For companies, compliance involves more than simply updating human resources policies. Payroll systems, employment contracts, staff records, accommodation arrangements and internal procedures may all require attention to ensure that business practices remain aligned with the latest regulatory requirements.

Understanding the scope of these developments and the obligations they create is important for employers seeking to avoid regulatory breaches and maintain a compliant workplace.

Revised Wage Protection System Requirements

The Wage Protection System (WPS) continues to serve as a principal mechanism for monitoring salary payments in the UAE, enabling authorities to identify establishments that fail to meet their contractual obligations towards employees.

Ministerial Resolution No. 340 of 2026, which took effect on June 1, introduced revised provisions governing compliance with the system. Under the updated framework, employers are required to pay wages for the preceding month by the first day of the following Gregorian month.

The resolution also introduces an 85 per cent threshold for assessing an establishment’s compliance with wage-payment requirements. However, this threshold should not be understood as allowing employers to retain 15 per cent of employees’ monthly salaries. Their contractual obligation to pay the agreed wages remains in force.

Businesses should review their payroll arrangements to ensure that salaries are transferred within the prescribed timeframe through authorised payment channels. They should also maintain proper records of salary transactions, including bank transfer confirmations and other relevant documentation, to address any questions concerning payment delays or discrepancies.

Employees facing salary-related difficulties should similarly preserve their payslips, bank statements and written communications with their employers. These documents can help establish whether wages were transferred on time and whether the amounts received correspond with contractual entitlements. If an issue cannot be resolved internally, employees may approach the appropriate labour authorities through the prescribed complaint procedures.

Higher Minimum Pay For Emirati Employees

Another significant development concerns the minimum monthly salary applicable to Emirati nationals employed in the private sector.

The prescribed minimum increased to Dh6,000 with effect from January 1, 2026. Employers were given until June 30 to adjust the salaries of existing Emirati employees to meet the revised requirement, with compliance measures taking effect from July 1.

The requirement is specifically directed at Emirati nationals working in the private sector. It does not introduce a universal minimum wage for all employees in the UAE, and businesses should distinguish between the two when reviewing their employment obligations.

Employers should examine their workforce records to identify any Emirati employees whose salaries remain below the prescribed threshold. Where adjustments are required, the corresponding changes should be reflected consistently in payroll systems, employment contracts and other relevant records.

A review of contractual documentation is particularly important because discrepancies between the agreed terms and actual salary payments could create difficulties during regulatory inspections or employment disputes. Businesses should retain evidence of salary revisions and ensure that all necessary administrative changes have been completed.

Nafis Programme Extended Until 2040

The UAE's decision in April 2026 to extend the Nafis programme until 2040 provides a longer-term framework for encouraging Emirati participation in the private sector.

Nafis is a government initiative intended to improve employment opportunities for UAE nationals and support their career development outside the public sector. It offers various employment-related incentives and financial assistance measures, subject to the eligibility conditions governing individual schemes.

The extension is relevant to businesses seeking to recruit and retain Emirati employees, as well as UAE nationals looking for opportunities in private-sector organisations. Depending on the applicable initiative, eligible employees may receive financial support, while participating employers can benefit from measures designed to encourage the recruitment and development of national talent.

However, the availability of assistance is not automatic. Employers and prospective beneficiaries should examine the relevant programme conditions and current eligibility criteria before making decisions based on the expected benefits.

Although extending Nafis does not amount to an amendment of the UAE Labour Law, it remains an important policy consideration for businesses developing their Emiratisation plans. Companies should assess how the available initiatives can complement their recruitment strategies while ensuring that they continue to meet their statutory obligations.

New Standards For Labour Accommodation

Worker welfare and accommodation have also received regulatory attention in 2026, with updated requirements governing employers responsible for providing housing facilities.

In February, the Ministry of Human Resources and Emiratisation issued Ministerial Resolution No. 122 of 2026, introducing revised standards for labour accommodation.

The provisions generally apply to establishments employing 50 or more workers whose contractual monthly wages do not exceed Dh1,500. Businesses within the scope of the resolution must provide approved accommodation, maintain the prescribed records and ensure that the facilities meet the applicable standards.

The framework also addresses accommodation and support arrangements for workers with disabilities, employees who have sustained injuries and individuals requiring additional assistance. These requirements reflect a broader regulatory emphasis on ensuring that workforce housing arrangements provide suitable living conditions and take account of workers' particular needs.

For employers, meeting these obligations involves more than arranging accommodation. They must establish whether the facilities satisfy the applicable standards and whether the necessary approvals, registrations and administrative requirements have been completed.

Businesses should undertake a review of their existing accommodation arrangements to identify any shortcomings requiring attention. Where housing is provided through an external operator or third-party contractor, employers should also examine the service agreements and verify that the facilities comply with the requirements applicable to their workforce.

International Commitment Against Forced Labour

The UAE strengthened its international commitment to protecting workers against exploitation in January 2026 by ratifying the International Labour Organization's Protocol of 2014 to the Forced Labour Convention, 1930.

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Forced labour is already prohibited under UAE domestic legislation. Article 14 of Federal Decree-Law No. 33 of 2021 prohibits employers from compelling workers to perform duties against their will or threatening them with penalties to make them work.

The international protocol reinforces the wider framework for preventing forced labour, protecting affected individuals and providing access to appropriate remedies. It places particular emphasis on identifying coercive employment practices, addressing exploitation and safeguarding the rights of vulnerable workers.

For businesses, the ratification highlights the importance of ensuring that recruitment and employment practices remain transparent and voluntary. Employers should examine their recruitment procedures, contractual arrangements and workplace policies to identify practices that could expose workers to coercion or exploitation.

Proper employment documentation, clear contractual terms and effective internal complaint mechanisms can help businesses identify potential concerns and take corrective action. Employers should also ensure that workers are not subjected to threats, unlawful restrictions or other forms of pressure that undermine their freedom to work.

The ratification represents an international commitment rather than a separate amendment to the UAE Labour Law. Nevertheless, it reinforces the country's existing legal protections and signals the continuing importance of responsible employment practices across the private sector.

What Employers Should Do To Remain Compliant

Taken together, the developments in 2026 demonstrate the continuing expansion of the regulatory responsibilities placed on UAE employers. While some measures introduce specific compliance requirements, others reinforce the broader policy direction towards better worker protection, greater Emirati participation and improved employment standards.

Businesses should review their payroll systems, verify that Emirati employees receive the prescribed minimum salary, and assess whether their recruitment and workforce planning arrangements take account of the extended Nafis programme.

Employers falling within the scope of the revised accommodation requirements should also check their housing facilities, approvals and supporting records. Recruitment practices and internal procedures should be examined to ensure that workers are employed voluntarily and are protected against coercion or exploitation.

A periodic compliance review involving human resources, payroll, finance and legal teams can help identify gaps before they develop into regulatory or employment disputes. Companies should also monitor further announcements from the relevant UAE authorities, as implementation requirements and administrative guidance may evolve.

For employers, the objective should not simply be to respond to individual regulatory changes. Maintaining accurate records, transparent employment practices and effective internal controls is essential to managing legal risks and building a sustainable workforce in the UAE.

Employees in the UAE who have consistently received favourable performance assessments may be able to use these records to challenge the reasons given by their employers for terminating their employment. However, positive appraisals alone do not automatically establish arbitrary dismissal. Their importance must be assessed in the context of the circumstances surrounding the termination and the legal provisions governing employment relationships in the country.

For employees working in mainland Dubai, employment termination is primarily governed by Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationships, together with its amendments and implementing regulations. The legislation provides a framework for terminating employment contracts while protecting the contractual and statutory rights of both employers and employees.

Under Article 42 of the Employment Law, an employment contract may be terminated in several circumstances, including mutual written agreement, expiry of the contract term or a decision by either party to terminate the relationship, provided the applicable legal requirements are followed. Article 42(3) specifically recognises termination at the request of either party, subject to compliance with the law and the agreed notice requirements.

Article 43 further provides that either party may terminate an employment contract for a legitimate reason by notifying the other party in writing. The notice period must be in accordance with the employment contract and cannot be less than 30 days or exceed 90 days. During this period, the employment relationship remains in force, and the employee is generally entitled to receive the agreed wages.

However, compliance with the notice period does not necessarily settle every question concerning the legality of a dismissal. The circumstances and reasons behind the termination may still become relevant if the employee believes that the employer has acted unlawfully.

A particularly important provision in this regard is Article 47 of the Employment Law, which deals specifically with illegitimate termination of an employee's service. It provides that dismissal is unlawful when it results from an employee submitting a serious complaint to the Ministry of Human Resources and Emiratisation (MOHRE), or filing a lawsuit against the employer that is subsequently proven valid.

This distinction is important because an employee's belief that a termination was unjustified does not, by itself, establish arbitrary dismissal under Article 47. The employee must demonstrate the connection between the termination and the serious labour complaint or valid legal action against the employer.

Nevertheless, documented performance appraisals can play an important evidential role when the employer's explanation for dismissal is disputed. For instance, if an employer subsequently claims that an employee was terminated because of consistently poor performance, previous assessments recording satisfactory or outstanding performance may undermine that explanation.

The employee may rely on these documents alongside other relevant material, including employment contracts, written warnings, internal correspondence, performance improvement plans, disciplinary records and the termination letter. The timing of the assessments and whether the employer raised any performance-related concerns before issuing the termination notice may also be relevant.

The evidential value of such records will ultimately depend on the facts of the dispute and the circumstances in which the dismissal occurred. They may help establish inconsistencies in the employer's explanation, although they do not independently prove that the termination was motivated by a protected complaint or legal action.

Where arbitrary dismissal is established under Article 47, the competent court may award fair compensation, taking into account the nature of the employee's work, the extent of the damage suffered and the length of service. Such compensation cannot exceed three months' wages, calculated on the basis of the employee's last wage.

Importantly, this compensation is separate from the employee's entitlement to notice pay and end-of-service benefits, where applicable. Article 47 expressly preserves these statutory entitlements.

An employee who believes that the employer has violated the law may approach MOHRE to lodge a labour complaint. The Ministry will examine the dispute and attempt to facilitate an amicable settlement. Under the amended Article 54, MOHRE also has authority to issue decisions in certain employment disputes involving claims of up to Dh50,000, as well as cases where an amicable settlement decision has not been complied with. Other disputes may be referred to the competent court if settlement efforts fail.

Therefore, employees who believe that their dismissal was unlawful should preserve their performance appraisals and other employment records and examine the circumstances surrounding the termination before pursuing a claim. While favourable assessments can strengthen their position when challenging an employer's stated reasons, establishing arbitrary dismissal requires satisfying the specific legal conditions set out in Article 47.

Editorial note: This version is approximately 500 words, retaining the substance and scope of the original while developing it into an independent article. I have also corrected the important legal distinction between an unjustified termination in ordinary language and unlawful termination under Article 47. The article assumes mainland Dubai employment; DIFC and ADGM employment relationships are governed by separate legislation.

Employers in the UAE who hire domestic workers under their personal sponsorship can terminate an employment contract before its expiry, but they must have valid legal grounds and comply with the requirements of the UAE Domestic Workers Law.

The matter is governed by Federal Decree-Law No. 9 of 2022 Concerning Domestic Workers, as amended by Federal Decree-Law No. 21 of 2023, together with Cabinet Resolution No. 106 of 2022, which sets out the executive regulations.

Under Article 20(1) of the law, either the employer or the domestic worker may terminate the employment agreement unilaterally if the other party breaches the obligations specified under Articles 11 and 12. The employer's responsibilities include paying the agreed wages, providing suitable accommodation and medical care, and treating the worker with dignity. The worker, in turn, is required to perform the agreed duties with due care, follow lawful instructions and safeguard the employer's property.

Consequently, an employer who is dissatisfied with a domestic worker's performance may have grounds for termination if the circumstances establish a breach of the worker's legal or contractual obligations. However, mere dissatisfaction or a difference in expectations does not automatically justify unilateral termination. The nature of the breach and the supporting evidence must be considered.

Article 7 also allows an employment agreement to be terminated before its expiry with the consent of both parties. This provides an alternative where the employer and worker mutually agree to end the employment relationship.

Financial obligations following termination depend on the circumstances. Under Article 20(2), where an employer terminates the agreement for a reason not attributable to the worker, the employer must pay all outstanding dues and provide a return ticket to the worker's home country. The employer must also settle any unpaid wages and other contractual entitlements.

Where a dispute arises over termination or the parties cannot reach an amicable settlement, the matter may be referred to the Ministry of Human Resources and Emiratisation (MOHRE). Under Article 23 of the law and the applicable executive regulations, the Ministry will attempt to resolve the dispute. If an amicable settlement cannot be reached within the prescribed period, the matter may be referred to the competent court.

Before proceeding with termination, employers should review the employment agreement, retain records of any performance-related concerns and establish the grounds for their decision. They must also settle outstanding wages and other entitlements and complete the necessary work permit and residence sponsorship cancellation formalities.

An employer's right to terminate a domestic worker's contract before its expiry is therefore not unconditional. The decision must be supported by a recognised legal ground or mutual agreement, with the worker's statutory rights and financial entitlements protected throughout the process.

Employers in the United Arab Emirates have the authority to establish internal workplace rules governing employee conduct, disciplinary penalties, promotions and rewards. However, this authority is not unlimited. The rules must comply with the UAE Labour Law and its Executive Regulations, and employers cannot introduce workplace policies that undermine the statutory rights of employees.

The legal framework governing these arrangements is primarily set out in Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, as amended, and Cabinet Resolution No. 1 of 2022 concerning its Executive Regulations. Together, these provisions establish the obligations of employers in organising workplace operations, communicating internal policies and ensuring that disciplinary measures are imposed through fair and legally compliant procedures.

A significant requirement under the legislation is that establishments employing 50 or more workers must establish formal regulations covering work instructions, disciplinary penalties, promotions, bonuses and procedures for terminating employment relationships. These regulations must also be communicated to employees in a language they understand.

The Legal Authority to Establish Internal Workplace Rules

Article 13 of Federal Decree-Law No. 33 of 2021 sets out the obligations of employers, including the responsibility to establish rules governing the organisation of work. These include regulations covering work instructions, disciplinary sanctions, promotions, rewards and other internal policies.

The provision gives employers the flexibility to introduce workplace procedures suited to the nature and operational requirements of their businesses. Such policies can address employee responsibilities, workplace discipline, performance expectations, career progression and incentive arrangements.

However, the authority to establish internal regulations must be exercised within the boundaries of the applicable labour legislation. An employer cannot use an internal policy to introduce conditions that contradict the law, reduce statutory employee entitlements or circumvent the protections available under the employment framework.

Article 14 of Cabinet Resolution No. 1 of 2022 provides further details on how these regulations must be formulated and implemented.

Mandatory Regulations for Establishments With 50 or More Workers

Under Article 14 of the Executive Regulations, establishments employing 50 or more workers are required to establish regulations organising workplace operations. These must cover work instructions, disciplinary penalties, promotions, bonuses and procedures for terminating the employment relationship.

The regulations must satisfy several legal requirements:

First, the employer must ensure that the internal rules do not contradict the provisions of the Labour Law, its Executive Regulations or other applicable legislation.

Second, the disciplinary regulations must clearly identify the penalties that may be imposed on employees who commit workplace violations. They must also specify the circumstances, conditions and procedures governing the imposition of such penalties.

Third, workplace instructions must address essential operational matters, including daily working hours, weekly rest days and official holidays. They must also incorporate the necessary measures and precautions to prevent workplace injuries and fire hazards.

Fourth, regulations governing promotions and bonuses must establish the relevant eligibility criteria, standards and conditions. This is intended to provide employees with clarity about the basis on which career advancement and financial incentives are awarded.

The employer must also communicate these regulations to employees through any available means and ensure that they understand the provisions in a language they can comprehend. Merely preparing an internal policy document without making employees aware of its contents would not satisfy this communication requirement.

What Disciplinary Penalties Can Employers Impose?

While employers have the right to maintain workplace discipline, the types of disciplinary sanctions they can impose are restricted by Article 39 of the Labour Law.

The legislation identifies seven permissible categories of disciplinary penalties for employees who violate the Labour Law, its Executive Regulations or the decisions issued in implementation of the legislation.

These include a written caution, a written warning and deductions from wages not exceeding the equivalent of five days' wages per month.

An employer may also suspend an employee from work for a period not exceeding 14 days, without payment of wages for the suspension period.

Other permissible measures include withholding a periodic increment for a period not exceeding one year, where the establishment operates a system of periodic increments, and withholding promotion for a period not exceeding two years in establishments that have an established promotion system.

The final disciplinary measure is dismissal from service, while preserving the employee's entitlement to end-of-service gratuity.

These provisions mean that employers cannot independently introduce additional forms of disciplinary punishment outside the categories permitted by law. Internal regulations must identify the applicable sanctions and explain the circumstances in which they may be imposed.

The severity of the penalty must also correspond to the seriousness of the violation. Employers cannot treat every workplace breach as equally serious or impose disproportionate sanctions without considering the circumstances.

Conditions and Procedures for Imposing Disciplinary Sanctions

Article 24 of Cabinet Resolution No. 1 of 2022 establishes specific safeguards governing the imposition of disciplinary penalties.

Under this provision, the penalty must be proportionate to the nature and seriousness of the violation. Several factors must be considered when determining the appropriate sanction.

These include the extent to which the violation affects the confidentiality of work-related information, its impact on the health and safety of employees, the financial consequences for the establishment and any damage to its reputation.

The employer must also consider whether the employee abused the authority entrusted to him or her, the employee's previous record of different types of violations and whether the incident involves any criminal or moral element.

Importantly, an employer cannot impose a disciplinary penalty without following the prescribed investigation procedure.

The employee must first be notified in writing of the violation alleged against him or her. The employee must then be given an opportunity to explain the circumstances, present a defence and respond to the allegations.

The employee's statements and defence must be documented in a report, which must be placed in the employee's personal file. The disciplinary penalty, if imposed, must also be recorded as part of the report.

The employer must subsequently notify the employee in writing of the nature and extent of the penalty, the reasons for imposing it and the consequences of repeating the violation.

These requirements are intended to ensure that disciplinary action is based on an established violation rather than an arbitrary decision by the employer.

Time Limits for Disciplinary Action

The Executive Regulations also prescribe time limits within which employers must initiate and conclude disciplinary proceedings.

An employee cannot be accused of a disciplinary violation more than 30 days after the employer discovers the incident.

Similarly, a disciplinary penalty cannot be imposed if more than 60 days have elapsed from the date on which the investigation was completed and the violation was established.

These time limits are important because they prevent employers from keeping allegations unresolved indefinitely or imposing disciplinary measures long after an incident has been investigated.

Employers should therefore ensure that workplace investigations are conducted promptly and that any disciplinary decision is taken within the statutory period.

Employees Have The Right to Challenge Disciplinary Decisions

The legislation also provides employees with the right to challenge disciplinary penalties imposed by their employers.

Under Article 24 of Cabinet Resolution No. 1 of 2022, an employee may submit a grievance to the establishment's management against any disciplinary penalty. The grievance must be accompanied by the decision or penalty being challenged.

The employer is required to notify the employee of the outcome of the grievance. Importantly, an employee must not suffer any adverse treatment merely for exercising the right to challenge a disciplinary decision.

This internal grievance mechanism does not take away the employee's right to pursue a labour complaint or claim through the appropriate legal channels.

For establishments employing 50 or more workers, the Executive Regulations impose an additional obligation. Employers must make their complaints and grievance procedures accessible to employees, either by displaying the relevant rules in a prominent place or through another appropriate means.

The procedure must clearly state that employees are entitled to submit complaints or grievances to the employer or its representative. It must also provide for written responses within a specified timeframe.

This requirement makes it important for larger establishments to maintain an accessible and properly documented employee grievance mechanism.

How Employers Can Structure Promotion And Reward Systems

Apart from disciplinary measures, the Labour Law recognises the employer's authority to establish systems governing promotions, periodic increments and bonuses.

Under Article 14 of the Executive Regulations, establishments with 50 or more workers must ensure that their promotion and reward regulations clearly identify the applicable standards and eligibility criteria.

Employers may develop performance-based incentive arrangements, promotion criteria and bonus structures according to their operational requirements. These may take into account individual performance, productivity, professional qualifications, experience, responsibilities and other relevant considerations.

However, the criteria must be clearly established and communicated to employees. Where a periodic increment or promotion system exists, disciplinary decisions involving the withholding of these benefits must also remain within the limits prescribed by Article 39 of the Labour Law.

For instance, the deprivation of a periodic increment cannot exceed one year, while the deprivation of promotion cannot exceed two years.

The legislation therefore allows employers to develop their own reward and career progression systems, while placing limits on how these benefits may be withheld as disciplinary measures.

Can Employers Introduce Their Own Rules Without Restrictions?

Although employers have considerable flexibility in establishing internal workplace policies, their authority is subject to statutory restrictions.

Article 41 of the Labour Law specifically provides that an employee cannot be subjected to disciplinary action for conduct outside the workplace unless that conduct is related to the employee's work.

The same provision prohibits imposing more than one disciplinary sanction for a single violation under Article 39.

Consequently, an employer cannot impose multiple disciplinary penalties for the same incident merely by describing the measures under different headings in its internal regulations.

Similarly, internal policies cannot override statutory requirements relating to working hours, weekly rest days, official holidays, wages, employee entitlements or other protections established under the Labour Law.

The employer's disciplinary authority must also be exercised through the investigation and notification procedures prescribed by the Executive Regulations.

These restrictions apply regardless of whether the internal policy has been formally approved by management or communicated to employees.

The Importance of Clear and Legally Compliant Workplace Policies

Internal workplace regulations serve an important purpose in establishing a transparent working environment. They help employers communicate operational expectations, maintain discipline, establish performance standards and provide employees with a clear understanding of their rights and responsibilities.

For businesses employing 50 or more workers, preparing these regulations is a specific statutory requirement under Article 14 of Cabinet Resolution No. 1 of 2022. Employers must ensure that their policies cover all the prescribed areas and are communicated to employees in a language they understand.

Even where an establishment employs fewer than 50 workers, the general obligations under Article 13 of the Labour Law and the statutory restrictions governing disciplinary action continue to apply. The 50-worker threshold does not give smaller businesses permission to disregard the legal framework governing employee discipline.

Ultimately, the UAE Labour Law seeks to balance the employer's legitimate need to manage business operations with the employee's right to fair treatment and protection against arbitrary disciplinary action.

Employers may establish their own workplace rules, including systems for penalties, promotions and rewards, but those rules must operate within the limits of the law. Clear policies, proportionate disciplinary measures, proper investigations and accessible grievance procedures are essential to ensuring that internal workplace regulations remain legally compliant.

The Abu Dhabi Labour Court of First Instance has ordered a company to pay Dh187,711 to a former employee who was dismissed after 15 years of service without receiving his outstanding employment dues.

The employee had filed a lawsuit seeking payment of Dh160,921 in end-of-service gratuity, Dh6,152 in accrued annual leave pay and an additional Dh21,210 under a settlement agreement submitted to the court.

He also asked the court to impose interest at 9 per cent on the delayed payments, recover legal costs and expenses from the employer, and order immediate enforcement of the judgment.

In his claim, the employee said he had worked for the company in a designated position, earning a basic monthly salary of Dh12,000 and a total monthly salary of Dh18,000. However, his employment was terminated without the company settling his outstanding financial entitlements.

The court noted that the company had acknowledged, in a previously issued settlement and its response to the lawsuit, that the employee was entitled to Dh160,356 in end-of-service gratuity and Dh6,152 in annual leave pay. However, it disputed his claims for the additional amounts.

An employer in the UAE may terminate an employee's employment contract even while the employee is on approved annual leave. However, such a decision must comply with the requirements of Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationships, as amended, which governs employment relationships in the private sector.

The law allows either an employer or an employee to terminate an employment contract for a legitimate reason, provided the other party receives written notification. However, when termination takes place during an employee's leave, the commencement of the notice period is subject to a specific statutory provision.

Under Article 35 of the Employment Law, if either party decides to terminate an employment contract while the employee is on leave, the notice period agreed upon in the employment contract does not begin until the day following the employee's scheduled return from leave, unless both parties agree otherwise. Consequently, an employer cannot ordinarily count the employee's approved leave as part of the contractual notice period.

The provision ensures that employees do not lose their entitlement to the full notice period simply because their employer communicates a termination decision while they are away from work. It also applies when an employee chooses to resign during an approved period of leave.

Article 43 further establishes the conditions governing termination. Either party may end the employment relationship for a legitimate reason, provided written notice is given and the agreed notice period is observed. The notice period must be at least 30 days and cannot exceed 90 days, with the applicable duration specified in the employment contract.

Throughout this period, the employment contract remains in force and the employee is entitled to full wages based on the last salary received. The employee must continue performing their duties if required by the employer. However, both parties may mutually agree to waive the notice requirement or reduce its duration without affecting the employee's applicable financial entitlements.

If either party fails to comply with the agreed notice period, the other may be entitled to compensation in lieu of notice. This payment is calculated according to the employee's wage for the entire notice period or the unserved portion, as applicable.

An employee who believes that the termination was unlawful or that the employer has failed to honour statutory entitlements may approach the Ministry of Human Resources and Emiratisation (MoHRE) to register a labour complaint.

The legal position is therefore clear: approved leave does not prevent an employer from terminating an employment contract, but it does not allow the employer to disregard the employee's statutory notice rights. Unless both parties agree otherwise, the notice period begins only on the day following the employee's scheduled return from leave.