Consultancy agreement in the UAE: Template, Key Clauses and Local Law (2026)

What a consultancy agreement is under UAE law A consultancy agreement in the UAE engages an independent consultant or another company to provide advice or professional services for a fee. The key point is which law applies. A genuine independent consultant is not an employee, so the engagement falls outside the Labour Law (Federal Decree-Law No. 33 of 2021) and under the Civil Transactions Law (Federal Law No. 5 of 1985, the UAE Civil Code). Where the consultant produces a defined piece of work, the arrangement is often a muqawala, a contract for work, dealt with in the Civil Transactions Law (around articles 872 and following). That classification brings a practical rule that surprises many foreign clients: to provide services legally in the UAE, the consultant usually needs the right licence or permit. A consultant operating without a valid trade licence or freelance permit is working outside the system, which can affect whether invoices are valid and whether the contract is fully enforceable. ## What local law requires A valid licence or freelance permit. A consultant should hold a trade licence covering the activity, or a freelance permit issued by a mainland authority or a free zone. The UAE has expanded freelance and self-employment permits, and some free zones issue them specifically. The client should confirm the consultant is licensed for the service being bought, and record the licence or permit details in the contract. Civil Code, not Labour Law. Because the consultant is not an employee, the Labour Law protections (gratuity, statutory notice, annual leave) do not apply. The relationship is governed by what the parties agree and by the Civil Transactions Law. Equally, the Labour Law non-compete under Article 10 does not apply to a consultant; any restraint between a client and a consultant is a matter of ordinary contract under the Civil Code and must be reasonable to be enforced. Watch for a disguised employee. If the consultant works only for one client, to that client's hours and direction, with the client's tools and no real independence, there is a risk the arrangement is really employment in substance. Keeping the consultant genuinely independent, free to serve others and in control of their own methods protects the classification. VAT. UAE VAT at 5 percent generally applies to consultancy services supplied in the UAE where the consultant is VAT-registered. State whether fees are inclusive or exclusive of VAT, and record the consultant's TRN (tax registration number) where applicable. No automatic IP transfer. IP created by a consultant does not pass to the client automatically; assign it expressly in the contract. ## Mainland or free zone, and muqawala duties Where the consultant is based changes the picture. A consultant licensed in a free zone, such as a Dubai or Abu Dhabi free zone, is generally licensed to operate within that zone and may need extra steps to service a mainland client. A mainland-licensed consultant can usually contract more freely onshore. Confirm that the consultant's licence actually permits the work in the place it will be done, because a licence mismatch is one of the most common problems in UAE service arrangements. If the engagement is a muqawala, a contract for work, the Civil Code attaches real duties to the consultant. They must complete the work to the agreed standard and on time, and they carry liability for defects in what they deliver. Build in a clear acceptance step, a defects or rectification clause, and a timeline, so both sides know when the work is accepted and what happens if it is faulty. For professional advice rather than a tangible deliverable, define the standard of care and the scope of the advice instead, so expectations are clear. ## Secondment and exclusivity Two practical points often come up. First, if the consultant will place its own people inside the client's business, keep the arrangement a genuine services engagement rather than a disguised secondment that looks like employment, because the substance is what the authorities assess. Second, exclusivity: a consultant may be free to work for several clients at once unless the contract commits them to a project exclusively. If you need exclusivity or a non-solicitation of your staff or clients, state it clearly and keep it reasonable, since any restraint on a consultant is enforced only so far as it is reasonable under the Civil Code. ## A usable template Adapt to your facts and have a UAE lawyer review it. CONSULTANCY AGREEMENT (UAE) 1. Parties. [Client, trade licence number] and [Consultant, licence or freelance permit number, address]. 2. Independent status. The Consultant provides services independently and is not an employee. The Consultant controls its own methods and may serve other clients. 3. Services. [Describe the advice, scope or defined work (muqawala) and the deliverables.] 4. Term. From [date] to [date / completion], renewable by agreement. 5. Fees. [Amount], exclusive of VAT at 5 percent where applicable. Payment within [X] days of a valid invoice. 6. Intellectual property. [Express assignment of IP in deliverables to the Client.] 7. Confidentiality. The Consultant keeps Client information confidential during and after the engagement. 8. Restraint. [If used, any non-solicitation or non-compete must be reasonable in time, area and scope to be enforceable under the Civil Code.] 9. Data protection. Where personal data is processed, the parties comply with the UAE Personal Data Protection Law, or the applicable free-zone data law. 10. Liability and termination. [Cap, carve-outs, notice and consequences.] 11. Governing law and jurisdiction. UAE law; the competent UAE courts [or DIFC / ADGM courts if agreed]. Signatures, dated. ## A short walk through the key clauses Independent status and the licence recital are the clauses that keep the engagement outside the Labour Law and inside the law that was intended. A consultant with no licence and no independence is the configuration most likely to cause problems. Scope and deliverables should be defined, especially for a muqawala, because the Civil Code attaches specific duties to a contract for a defined piece of work, including acceptance and defects. Restraint clauses are contractual here, not statutory. A court will only enforce a reasonable restriction, so keep any non-solicit or non-compete narrow. ## Red flags to check before signing - A consultant with no trade licence or freelance permit for the service.

• An engagement that looks like employment: single client, fixed hours, close control, client's tools.
• Fees silent on whether VAT is included.
• No IP assignment clause.
• A wide, open-ended restraint that a UAE court is unlikely to enforce. ## Keeping the arrangement sound after signing A UAE consultancy agreement needs attention after signing: whether the consultant's licence stays valid, whether the relationship has drifted toward looking like employment, when the term renews, and whether deliverables were accepted and IP assigned. Drafting a UAE consultancy agreement that keeps the consultant properly independent and licensed, checking the scope, VAT, IP and restraint clauses, and tracking the term and deliverables can sit in one AI workspace tuned to how your company engages advisers. Adira follows that shape: it drafts from a template, models the contract as linked clauses so it can flag a missing IP assignment or an unreasonable restraint, and keeps the term and obligations in one place. Adira is India-first today, with jurisdictions set per contract and an international mode for others; in-language Arabic support and deep, verified coverage of UAE law are on its roadmap rather than established, so treat UAE specific output as a draft for a UAE lawyer to confirm. This page is general information, not legal advice.