United Arab Emirates: Employment & Benefits – 2025 Highlights and 2026 Outlook
“The UAE introduced notable updates to its employment laws, emphasizing stronger employee protections and more efficient dispute resolution in the labour courts. As these measures bed in, they are expected to shape 2026 in meaningful ways, particularly for legal proceedings, employer compliance, and employee rights.”
Throughout 2025, key employment developments in the United Arab Emirates (UAE) have continued to influence employer‑employee relationships and offer insight into what they mean for businesses operating in the UAE. This article summarizes the main highlights from the years 2024/2025 and considers their implications for 2026.
2025: Highlights
1. Longer window to file labour claims: Employers and employees now have two years from the end of the employment relationship to bring a labour claim, up from the previous one‑year limit.
2. Streamlined dispute resolution for smaller claims: Claims under AED 50,000 are handled exclusively by the Court of First Instance (with no appeal to higher courts), expediting the resolution of small cases. Higher‑value claims continue to follow the standard process.
3. Higher penalties for employer violations: Fines for labour law breaches have risen substantially, now ranging from AED 100,000 to AED 1 million depending on the violation.
4. Stronger employee protections during disputes: When an employee’s wages are withheld during a dispute, the Ministry of Human Resources and Emiratisation (MOHRE) may direct employers to continue wage payments for up to two months during the process, helping to prevent financial hardship while awaiting resolution.
2026: Outlook
1. Extended limitation period effects: The two‑year timeline for filing employment claims is likely to keep filing activity elevated in 2026, as parties who once faced pressure under the one‑year cutoff now have more flexibility to proceed.
2. Compliance under higher penalties: The substantial increase in fines is expected to reinforce employer focus on compliance in 2026 and beyond. Priorities include ensuring all employees hold the correct work permits and fully settling employee entitlements, particularly during restructurings or wind‑downs.
Overall, the changes introduced in 2024 and carried into the years 2025 and 2026 point to a more robust regulatory landscape in the UAE, prioritizing better treatment of employees and a more efficient judicial process, while nudging employers toward strict compliance and fair employment practices.
Insights: Employment | Benefits | Mobility – Q4 2025
Our last edition of the year highlights the most significant employment, benefits and mobility developments during 2025 and looks at what the future holds for businesses in 2026 across key jurisdictions.
This year has seen many changes, with new laws, regulations and standards impacting a wide range of employment rights, the pensions and benefits landscape, and immigration policies. 2026 will be a year of yet more change and uncertainty requiring businesses to navigate a broad array of new challenges and opportunities affecting their workforce, planning and strategy.
