Five UAE labour law shifts most HR teams missed

Welcome to the first issue of The KhaleejPro Brief. Sundays. Once a week. Built for the people doing the actual work across the GCC.

This week: a quick run-through of five things in UAE labour law that quietly shifted in 2025 — and the gap between what most HR teams think the rules are and what's actually being enforced.

Most of these aren't headline-grabbing. They're the kind of thing that doesn't make legal newsletters until your company gets fined for it.

Federal Decree Law No. 33 of 2021 ended unlimited-term contracts and required everyone to be on a fixed-term contract by early 2023. That deadline came and went, but a meaningful share of HR teams still have employees on legacy paperwork that doesn't match their actual MOHRE record.

If you haven't audited your contract files in the last 12 months, you almost certainly have mismatches. The fines aren't catastrophic on a per-employee basis, but they compound fast across mid-sized teams — and they're a free win for any MOHRE inspector who decides to look.

Action this week: pull a random sample of 10 employee files and check whether the signed contract matches what's filed with MOHRE. If even one is off, the rest probably are too.

The shift to the new gratuity savings scheme (DEWS for DIFC, the federal scheme for the rest) is genuinely better for employees and easier for employers — but most payroll teams are still calculating EOS using a hybrid of old and new rules, especially for employees who joined before the framework changed.

The most common mistake: applying the new accrual rate to pre-2023 service, when those years should still be calculated under the old framework. Either the employee gets short-changed (which becomes a labour court case waiting to happen), or the employer overpays (which adds up across a team).

If you have employees who started before February 2022, audit their EOS calculation methodology before they leave, not after.

The new framework gave non-competes some teeth: a maximum 2-year duration, a limited scope and geography, and the employer must actually demonstrate harm. The catch: in practice, the threshold for "demonstrable harm" is high enough that most non-compete cases don't survive a serious challenge.

The smarter move for protecting commercial interests is rarely the non-compete itself — it's tighter confidentiality clauses, IP assignment language, and well-documented onboarding to non-compete acknowledgement. The non-compete becomes a signal more than a sword.

The 2% annual increase target across companies with 50+ skilled employees in the private sector keeps marching. The penalties for missing it (AED 96,000 per missed Emirati hire, escalating annually) are now being assessed routinely rather than as one-off enforcement actions.

The harder part isn't the target itself — it's the definition of "skilled" roles, which is narrower than most HR teams assume. Sales roles, marketing roles, and some operations roles count. Many support functions don't. If you're calculating your Emiratisation rate against your full headcount, you're probably reporting wrong.

If you haven't run a clean, skilled-headcount audit against MOHRE's current classification this year, do it now. The penalties hit on January 1.

The new flexible-work, part-time, freelance, and remote-work models are great for talent flexibility — and a quiet compliance disaster for companies that adopted them without updating contract templates.

Employees on flexible arrangements often need a different contract type than their original full-time agreement. Many companies just amended the working-hours clause and called it done. That isn't enough — you need the right MOHRE contract type filed, the right working-hours documentation, and clear policies on when "flexible" tips into something that triggers different leave or EOS treatment.

If your company has expanded flexible work post-2023, this is the area most likely to bite first.

The common thread isn't that these laws are confusing — they're actually clearer than the pre-2022 framework was. The problem is that compliance has gotten more granular and more enforced, while a lot of HR teams are still operating on a "we updated our handbook, we're fine" approach.

Half-knowledge of the new framework is now actively riskier than no knowledge under the old one.

One thing worth doing this week: Pick the one item from the list above that's most likely to apply to your company. Spend 30 minutes on it. Most of the cost of getting any of these wrong is in the discovery phase — the moment you actually look, you usually fix the problem in a single afternoon.

That's it for this issue. Short on purpose. Next Sunday: a look at what's happening with regulatory affairs hiring across GCC pharma — who's actively building teams, what they're paying, and where the gaps are.

If something here was useful, the best thing you can do is forward it to one person. That's how this brief grows.

Thanks for reading.

— Tiffany
KhaleejPro

P.S. If you (or your HR team) are thinking about getting current on the new framework properly, our 2-day UAE Labour Law & Employment Compliance intensive runs in May. KHDA-accredited, 16 CPD hours, capped at 18 seats — and yes, the curriculum has been updated for everything in this issue.