Navigating Labour Laws When Hiring Your First Employees
- andreaj59
- Aug 16
- 4 min read
Hiring your first employees is a major milestone, it’s the moment your business moves from being a one-person dream to a growing enterprise. But in the UAE, this exciting step comes with important legal responsibilities. To protect both you and your team, you must understand labour laws when hiring first employees.
The UAE has a clear and evolving labour law framework designed to promote fairness, safety, and transparency in the workplace. For new employers, these laws aren’t just red tape, they’re the foundation for building a compliant and reputable company culture.
At Verde, we help entrepreneurs navigate these regulations so they can focus on growth while staying compliant from day one.
Understanding UAE Labour Laws
The UAE’s labour system is governed by Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, along with its executive regulations. These laws apply to most employees in the private sector and cover:
Contract requirements
Working hours
Salary and benefits
Employee rights and employer obligations
Dispute resolution processes
Key authorities involved:
Ministry of Human Resources and Emiratisation (MOHRE) – Oversees employment in the mainland private sector.
Free Zone Authorities – Handle employment regulations for companies operating in specific free zones (though many follow MOHRE guidelines with their own adjustments).
Understanding which authority applies to your business is the first step to compliance.
Step 1: Start with the Right Trade License
Before you even post a job ad, you must have a valid trade license that matches your intended business activities.
Mainland Companies – Licensed through the Department of Economic Development (DED) and regulated by MOHRE.
Free Zone Companies – Licensed and regulated by their respective free zone authority.
Without the correct license, you cannot legally sponsor employees for visas or register contracts.
Step 2: Choose the Right Type of Employment Contract
Since 2022, all private sector contracts in the UAE have been converted to limited-term contracts (maximum 3 years, renewable). This change standardizes employment agreements and reduces ambiguity.
A compliant contract must include:
Employer and employee details
Job title and description
Salary structure (basic + allowances)
Work location and hours
Leave entitlements
Probation period terms
Termination clauses
Why this matters: Contracts protect both parties, serve as the legal basis for disputes, and must be registered with MOHRE or your free zone authority.
Step 3: Understand Working Hours and Overtime Rules
Standard hours: 8 hours per day, 48 hours per week (or 9 hours for certain industries like hospitality).
Overtime: Paid at 125% of the hourly wage, or 150% for night shifts.
Public holidays: Employees are entitled to paid days off for official UAE holidays.
Ramadan: All employees, regardless of religion, have reduced working hours by 2 hours per day.
Failure to follow these rules can result in penalties and damage to your reputation as an employer.
Step 4: Provide Mandatory Employee Benefits
Labour laws require you to provide certain benefits from day one:
Health Insurance – This is mandatory, employers must cover the cost.
Paid Leave
Annual leave: 30 calendar days per year after 1 year of service.
Sick leave: Up to 90 days per year (with varying pay structure).
Maternity leave: 60 days (45 fully paid, 15 half-paid).
Paternity leave: 5 paid working days.
End-of-Service Gratuity – Calculated based on length of service and last basic salary.
Step 5: Visa and Work Permit Process
Employers must sponsor their employees for a UAE residency visa. The process includes:
Applying for a work permit via MOHRE or your free zone.
Issuing an entry permit for the employee.
Completing medical tests.
Registering for Emirates ID.
Stamping the residency visa in the passport.
Step 6: Salary Protection System (SPS/WPS)
To ensure timely and full payment of wages, the UAE requires most employers to process salaries through the Wages Protection System (WPS). Non-compliance can lead to fines, bans on new work permits, and even suspension of your trade license.
Step 7: Foster Equality and Non-Discrimination
The law prohibits discrimination based on gender, race, religion, disability, or nationality. Equal pay for equal work between men and women is mandatory. Employers must also accommodate people with disabilities in the workplace.
Common Mistakes First-Time Employers Make
Hiring before obtaining the correct license – Can lead to visa rejections.
Using verbal agreements instead of contracts – Legally risky and unenforceable.
Not registering contracts with MOHRE – Leaves you unprotected in disputes.
Missing WPS deadlines – Leads to penalties and recruitment bans.
Ignoring leave and benefit entitlements – Can result in employee claims and fines.
Labour Law When Hiring Your First Employees
Navigating labour laws when hiring first employees can feel overwhelming, but with the right partner, it becomes a smooth process. By securing the right license, drafting compliant contracts, providing mandatory benefits, and keeping up with legal changes, you’re not just avoiding penalties, you’re creating a workplace that attracts and retains top talent.
At Verde, we don’t just set up businesses, we set them up for success. From licensing to visas to payroll compliance, our team ensures you meet every requirement, so you can focus on building your dream team.
Book a free consultation today and make your first hire the right way.
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