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HR & Payroll Glossary

United Arab Emirates HR Glossary

UAE private-sector employment is governed primarily by Federal Decree-Law No. 33 of 2021 (New Labour Law) and enforced by the Ministry of Human Resources and Emiratisation (MOHRE). Employers must comply with the Wage Protection System, End-of-Service Gratuity obligations, and Emiratisation quotas. The terms below cover the essential concepts for any employer operating in the UAE.

1Wage Protection System (WPS)

The WPS is a MOHRE electronic salary transfer system that requires all private-sector employers to pay employees' wages through approved financial institutions within a set timeframe, with the transfer data reported to the ministry.

Employers must pay wages within 10 days of the agreed pay date. Late payment triggers a warning; continued non-compliance suspends the employer's ability to apply for new work permits and can result in referral to the Labour Court. The WPS covers both UAE nationals and expatriate workers. Construction companies and establishments with 100+ workers face enhanced monitoring.

How ClockIt Helps

ClockIt generates the WPS-compatible payroll file required for upload to the approved bank or exchange house, tracks payment confirmation per employee, and alerts HR teams before the 10-day deadline.

2End-of-Service Gratuity (EOSG)

End-of-Service Gratuity is a mandatory lump-sum payment that UAE private-sector employers must pay to expatriate employees upon termination of employment after at least one year of continuous service.

Under the 2021 Labour Law, gratuity is calculated as 21 calendar days' basic wage for each year of the first five years of service, and 30 days' basic wage for each year beyond five years. Total gratuity may not exceed two years' total wage. For unlimited-contract employees who resign, entitlement is reduced on a sliding scale. The UAE is also rolling out DEWS (Defined Contribution Scheme) as an alternative.

How ClockIt Helps

ClockIt tracks each employee's start date, basic wage history, and service duration, computing the accrued gratuity obligation in real time and generating the final EOSG settlement figure at termination.

3Emiratisation (Nafis Programme)

Emiratisation is a UAE government policy requiring private-sector employers to hire a minimum percentage of UAE national employees; the Nafis programme provides financial incentives and a digital quota-tracking platform.

From January 2023, companies with 50+ employees in targeted sectors must increase their Emirati headcount by 2% per year, reaching 10% by 2026. Non-compliant companies pay an AED 6,000 monthly levy per unfilled quota slot. The Nafis platform tracks compliance in real time. Smaller employers (20–49 staff) must have at least one Emirati employee.

How ClockIt Helps

ClockIt's workforce analytics show the real-time Emirati headcount ratio, project whether the company is on track for quarterly quota milestones, and generate Nafis-ready headcount reports.

4MOHRE (Ministry of Human Resources and Emiratisation)

MOHRE is the UAE federal authority responsible for regulating private-sector labour relations, issuing work permits, mediating disputes, and enforcing the Federal Labour Law.

All private-sector employment contracts must be registered with MOHRE on the Tas'heel system. MOHRE inspectors conduct workplace inspections and can impose fines for labour law violations including non-payment of wages, unsafe conditions, and Emiratisation non-compliance. Employees can file wage complaints directly through the MOHRE app, triggering a mandatory mediation process.

How ClockIt Helps

ClockIt's digital time and attendance records provide the objective data required for MOHRE labour dispute mediation — showing exact clock-in/out times, hours worked, and leave taken for any period under review.

5Annual Leave (UAE)

Under UAE Labour Law, employees are entitled to a minimum of 30 calendar days of paid annual leave per year after completing one year of service (2.5 days per month for the first year).

Leave pay is calculated on the employee's basic wage plus housing allowance. Unused leave can be accrued for up to two years, after which the employer must pay out any excess. The employer may determine when leave is taken for business reasons. If employment ends before one year is completed, the employee receives leave pay proportionate to time served.

How ClockIt Helps

ClockIt accrues UAE annual leave at the correct rate (2.5 days/month), tracks approved and pending leave requests, and calculates the leave pay amount including basic wage and housing allowance components.

6Limited vs Unlimited (Fixed-Term vs Open-Ended) Contract

The 2021 UAE Labour Law abolished unlimited contracts from 1 February 2022; all employment contracts must now be fixed-term (maximum 3 years, renewable), replacing what were previously called 'unlimited' open-ended contracts.

The transition affected all existing unlimited-contract employees, who were required to move to fixed-term contracts by 1 February 2023. End-of-Service Gratuity and notice period rules apply equally. Early termination by the employer without valid cause now triggers compensation of up to 3 months' pay. This change significantly impacts HR contract management processes.

How ClockIt Helps

ClockIt stores contract start and expiry dates for every employee, sending automated renewal reminders 90, 60, and 30 days before a fixed-term contract expires so HR can act before MOHRE compliance issues arise.

7DEWS (Defined Contribution Savings Scheme)

DEWS is a voluntary alternative End-of-Service Gratuity scheme for UAE private-sector employers where monthly contributions are made to a regulated fund managed by financial institutions, replacing the traditional lump-sum gratuity liability.

Participating employers must contribute a percentage of each employee's basic salary monthly (5.83% for less than 5 years of service, 8.33% for 5+ years). DEWS removes the large unfunded gratuity liability from the employer's balance sheet and gives employees portable retirement savings. The Dubai International Financial Centre (DIFC) has mandated DEWS for firms in its jurisdiction.

How ClockIt Helps

ClockIt calculates the monthly DEWS contribution amount per employee based on their basic salary and service tier, generating the remittance schedule for the employer's chosen DEWS fund provider.

8Probationary Period (UAE)

Under UAE Labour Law, employers may set a probationary period of up to 6 months at the start of employment during which either party may terminate with a reduced notice period.

During probation, an employee who resigns and joins a new employer in the UAE must give 1 month's notice; if they leave the country, no notice is required. If the employer terminates during probation, it must give 14 days' written notice. An employee who resigns during probation and moves to a competitor may be barred from obtaining a new work permit for 1 year without the original employer's approval.

How ClockIt Helps

ClockIt tracks each employee's probation end date and sends alerts to HR before the period expires, ensuring formal performance reviews occur within the statutory window and contract confirmation is recorded.

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