Our latest Navigating Employment Law in the Middle East webinar turned the spotlight back on the Abu Dhabi Global Market (ADGM) and the essential legal obligations employers need to understand when operating there.
The session covered a wide range of topics—from pay and working hours to leave entitlements, employer duties, and end-of-service rights. Below, we’ve pulled together the key takeaways and practical points employers should keep top of mind.
Getting Pay Right: Salary and Penalties
Pay compliance is understandably a key area under the ADGM Employment Regulations.
Employers must pay employees their agreed wages, with pay periods capped at one month and payment due within 14 calendar days of such period’s end. Employers cannot make unauthorised deductions from an employee’s salary except in limited circumstances set out in the Regulations, namely:
- The deduction is required or authorised under legislation or the employment contract
- The employee has agreed to the reduction or payment in writing
- The deduction or payment is a repayment of an overpayment, loan, or advance
- The deduction or payment has been ordered by the court
Employers must also provide a written pay statement (which can be electronic) on or around each pay date, setting out the amounts due to the employee and the deductions to be made, if any, and the reasons for those deductions.
Late Payment Can Be Costly
On termination, all wages and outstanding amounts due to an employee must be paid within 21 days. If payment is late, the employee may be entitled to a penalty equal to their daily wage for each day of delay, subject to certain thresholds and a maximum of six months’ pay. While the court has discretion to reduce penalties, the financial exposure can be significant.
It is also worth noting that variable payments, such as discretionary bonuses or profit-based incentives, can be deferred provided that they fall within the defined categories. We recommend that any variable payment (such as a bonus) is expressly identified in the employment contract as falling within the definition of “variable payment.”
Health Insurance: A Nonnegotiable Obligation
ADGM employers must provide health insurance in line with Abu Dhabi health insurance legislation. Coverage must be arranged by the employer and extends beyond the employee to include their spouse and up to three dependent children under 18 who reside in the UAE. Importantly, this obligation also applies to Golden Visa holders, a point that is often misunderstood.
Probation Periods: Scope and Limitation
Probation is permitted but can be no more than six months from commencement of employment, or half the contract term where the contract is six months or less.
Termination during probation generally requires one week’s written notice unless the dismissal is for cause. During probation, employees have more limited entitlements: they may take leave with approval but are not entitled to sick pay, gratuity, or various statutory leave rights and do not have the right to written reasons for termination.
If employment ends during probation, the employer is typically responsible for the repatriation flight subject to specific exceptions.
Working Hours, Rest, and Ramadan Adjustments
The ADGM framework allows flexibility, but with safeguards.
Working time can exceed 48 hours per week provided that the employee gives written consent, and presently there are no statutory overtime entitlements. However, employers must ensure working hours are not detrimental to health or safety.
Employees are also entitled to:
- 11 consecutive hours of daily rest
- 24 uninterrupted hours of weekly rest
- Daily breaks of at least one hour for workdays exceeding six hours
- Nursing breaks of one hour per day for up to nine months after childbirth
During Ramadan, Muslim employees are entitled to a 25% reduction in daily working hours with no reduction in pay.
Core Employer Obligations: Safety and Fair Treatment
ADGM employers have a general duty to protect employees’ health, safety, and welfare, including maintaining a workplace free from discrimination, harassment, and victimisation.
Further, employers have a general duty to ensure appropriate workplace conditions such as ventilation, lighting, and sanitation; these workplace obligations do not apply to remote working employees.
Discrimination and Harassment
The Regulations prohibit discrimination on a wide range of grounds, including sex, pregnancy, marital status, race, nationality, religion, age, and disability. Discrimination covers direct and indirect discrimination as well as harassment. Additionally, an employee is protected from suffering a detriment by reason of them bringing a complaint or claim or providing evidence in the context of a complaint or claim.
Importantly, an employer can be vicariously liable for discriminatory acts committed by its employees unless the employer can demonstrate that it took all steps to prevent the employee from carrying out that act, attempted act, or omission—for example, by having clear policies in place, requiring that employees attend training, and taking immediate steps to stop any acts that could otherwise escalate and fall foul of the Regulations.
In the event of a valid claim for discrimination (including harassment) or victimisation, a court may order an award of compensation having regard to the circumstances, including the employer’s conduct, the injury to feelings of the employee, and any loss suffered by the employee as a result, of up to three years’ wages.
Leave Entitlements: A Detailed Framework
The ADGM provides a comprehensive leave regime:
Annual Leave
Employees are entitled to a minimum of 20 working days of annual leave per year, exclusive of public holidays. Leave generally must be used within the leave year, however, at least five days may be carried over. Untaken accrued leave must be paid out on termination, calculated with reference to full wage (basic salary and allowances).
Sick Leave
Employees may take up to 60 working days of sick leave in any 12-month period. After probation, employees are entitled to sick pay, which is structured as
- 10 days at full pay
- 20 days at half pay
- 30 days unpaid
Family-Related Leave
Female employees are entitled to 65 working days of maternity leave, with pay entitlement depending on length of service. Male employees may take five working days of paternity leave, subject to qualifying service and evidential requirements.
Other statutory leave includes Hajj leave, bereavement leave, and National and Reserve Leave for UAE nationals.
End-of-Service Entitlements
On termination, non-GCC employees with at least one year of service are entitled to an end-of-service gratuity, calculated with reference to the last basic wage received prior to termination. The Regulations allow an employer to offer a pension in lieu of gratuity, however, the choice of pension or gratuity must be given to the employee in writing, who must elect an option in writing.
UAE and other GCC nationals are covered by applicable state pension schemes, and employers must register their UAE and GCC nationals within 30 days of commencement of employment.
Employers must also provide a one-way repatriation flight within 30 days of termination unless a specific exemption applies (for example, where the employee secures alternative sponsorship or was terminated for cause).
Final Thoughts
The ADGM Employment Regulations offer flexibility for employers—but only where the underlying compliance framework is understood and followed. From salary payments to leave management and termination processes, small missteps can lead to meaningful legal and financial exposure.
Our Navigating Employment Law in the Middle East series continues throughout 2026, with upcoming sessions covering other key jurisdictions in the region.
If you’d like help tailoring your employment policies to ADGM requirements—or want a deeper dive into any of the topics covered—please get in touch.