UAE Employment Contract: What to Check Before You Sign

As of February 2022, all new UAE employment contracts must be limited term — typically 2 or 3 years, renewable. The previous 'unlimited term' contract type no longer exists for new engagements. On renewal, a new limited-term contract is issued. This change affects end-of-service gratuity calculations — gratuity accrues annually on basic salary during the contract term, regardless of who initiates termination (subject to some conditions). If you are transitioning from an old unlimited-term contract, clarify with your employer how the previous term is being treated under the new structure.

The maximum probation period under UAE law is 6 months. During probation, either party can terminate with 14 days' written notice. There is no end-of-service gratuity entitlement if you are terminated during probation (as gratuity requires 12 months of completed service). However, you are entitled to all outstanding salary, accrued leave, and notice pay during probation. If you resign during probation and take up employment with a different UAE employer within 3 months, you may face restrictions — check the specific terms of your contract. Do not agree to probation periods exceeding 6 months — they are unlawful.

Non-compete clauses are enforceable in the UAE under Article 10 of the 2021 Labour Law. To be enforceable, the clause must: be limited in duration (maximum 2 years from end of employment); be limited in geography (reasonable scope); and relate to a legitimate business interest. Courts assess non-compete clauses on proportionality — overly broad restrictions are likely to be reduced rather than struck out entirely. If your role involves genuine access to trade secrets, client relationships, or proprietary methods, expect a non-compete clause and negotiate the scope before signing, not after.

Your contract should reference gratuity rights under Federal Decree-Law No. 33 of 2021. The standard calculation: 21 days of basic salary for each year of service for the first 5 years; 30 days for each year thereafter. Gratuity is based on basic salary only — not total package. Some DIFC and ADGM employers operate alternative savings schemes (DEWS for DIFC) — if you are in a free zone, check whether a separate savings scheme applies instead of the statutory gratuity calculation. Gratuity must be paid within 14 days of the employment end date.

Beyond the mandatory elements, pay close attention to: the basic salary figure (confirm it matches what was discussed — allowances are separate); the exact notice period (both what you owe and what they owe you); the non-compete scope and duration; any clawback provisions (training bond repayment, relocation allowance repayment if you leave within a defined period); and the dispute resolution clause (DIFC and ADGM contracts may specify their own courts — be aware of the implications). In the UAE, nothing is agreed until it is signed — a verbal offer, an email confirmation, and a signed offer letter are three different levels of commitment. Do not resign from your current role until the contract is signed.