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The Ministry of Human Resources and Emiratisation (MOHRE) issued over AED 1.2 billion in fines to UAE companies for labour law violations — many of which could have been avoided with simple, up-to-date HR policies UAE and proper documentation.
Whether you’re a start-up with 5 employees or an established firm with hundreds, non-compliance can lead to penalties starting at AED 50,000 per violation, work permit blocks, or even forced company closure. This 2025 guide explains exactly why robust HR policies and documentation are no longer optional for any serious UAE business.
Why Most UAE Companies Get Fined AED 50,000+ Every Year
MOHRE inspections increased by 42% in 2024. The most common violations:
- Missing or incorrect employment contracts
- No internal HR policy manual or employee handbook
- Incorrect gratuity calculation or non-payment
- Failure to register employees on the Wage Protection System (WPS)
- Undocumented disciplinary actions
A single unrecorded warning letter or unsigned addendum can trigger fines that quickly snowball.
What the UAE Labour Law Actually Requires in 2026
Federal Decree-Law No. 33 of 2021 (as amended) and its executive regulations remain the cornerstone. Key mandatory requirements include:
- Bilingual (Arabic + English) fixed-term employment contracts registered with MOHRE (up to a 2-year term)
- Clear job description, salary breakdown, and leave entitlement
- Probation period maximum 6 months
- End-of-service gratuity for every employee completing 1+ year
- Wage Protection System (WPS) registration and on-time salary payment
- Anti-discrimination and anti-harassment policies
7 Must-Have HR Policies Every UAE Business Needs
- Code of Conduct & Disciplinary Procedure – Clear steps for verbal warning → written warning → termination
- Leave Policy – Annual (30 days), sick, maternity (60 days), paternity (5 days), Hajj, bereavement
- Gratuity Policy – Exact calculation method (21 days per year for first 5 years, 30 days thereafter)
- Working Hours & Overtime Policy – Max 48 hours/week, overtime at 125–150%
- Anti-Harassment & Anti-Discrimination Policy – Mandatory under Article 14
- Health & Safety Policy – Especially critical for mainland and industrial companies
- Remote & Flexible Working Policy – Now formally recognised by MOHRE
Key Employment Documents You Cannot Operate Without
- MOHRE-standard employment contract (signed + registered online)
- Job offer letter matching the final contract
- Employee handbook acknowledgement form
- Payslips (monthly via WPS)
- Leave application and approval records
- Warning letters and performance improvement plans
- Work permit and residency visa copies
- Gratuity calculation worksheet at termination
Common Mistakes UAE Businesses Make
- Using old pre-2022 contract templates → AED 50,000 fine per employee
- Paying part of salary in cash outside WPS → AED 5,000 per instance
- No signed addendum for salary changes or role changes
- Terminating during maternity leave or sick leave
- Incorrect gratuity calculation (e.g., forgetting to include allowances)
- Non-registration with WPS or not-processing salary through WPS
How Proper HR Documentation Protects You in Labour Disputes
Companies with complete, signed documentation won 87% of cases that reached the labour court. A properly documented three-step disciplinary process makes “arbitrary termination” claims almost impossible to win against you.
Ready to Make Your UAE Business 100% Labour-Law Compliant?
Ready to Make Your UAE Business 100% Labour-Law Compliant? Don’t wait for the next MOHRE inspection or labour complaint. Peak Group’s HR compliance specialists have helped many of UAE companies create bulletproof HR policies UAE, employment contracts, and documentation systems that eliminate risk and save millions in potential fines.
We deliver everything: MOHRE-compliant contracts, gratuity calculators, disciplinary templates, and full payroll setup — usually within 7–14 days.
👉 Book your free compliance consultation today
Call +971 56 606 4555 or email april@peakconsultancy.com to book your HR compliance audit and consultation with Peak Group today!
Stay protected, stay compliant, and focus on growing your business — not fighting fines.
Frequently Asked Questions
Q1. Do I need an employee handbook if I have only 10 staff?
Yes — MOHRE increasingly requires proof of communicated policies during inspections.
Q2. Can I still use unlimited contracts in 2026?
No unlimited contracts are acceptable anymore and fixed term is only 2 years and not 3 years for renewal.
Q3. What happens if I don’t pay gratuity?
Employees can file a case → you pay gratuity + 12% annual penalty + legal fees.
Q4. Is a verbal warning enough?
No — all warnings must be written, signed (or refusal to sign documented), and in Arabic + English.
Q5. Do remote workers need the same policies?
Yes — remote work addendum is now mandatory if the employee works from home more than 50% of the time.
Q6. How often should I update my HR policies?
At minimum every time MOHRE issues new regulations.