The evolving demands of the global workforce have intensified the need for flexible, competency-based models within higher education. Micro-credentials have emerged as a promising mechanism to bridge the gap between academic qualifications and industry requirements by offering clearly defined competencies. This study examines the integration of micro-credentials into undergraduate programmes at a higher education institution in the United Arab Emirates (UAE), focusing on their role in enhancing graduate employment readiness. Adopting a pragmatic research paradigm and an explanatory sequential mixed-methods design, the study first analyses quantitative data and subsequently interprets these findings through qualitative inquiry. It explores the perceptions of students, faculty, and employers regarding the acceptance, perceived benefits, and implementation challenges of micro-credentials, while identifying priority skills considered critical for workforce alignment. The findings highlight broad stakeholder support for micro-credentials as instruments for enhancing employability, alongside concerns related to quality assurance, standardisation, recognition, and institutional integration. Situated within the UAE’s national strategies for economic diversification and human capital development, the study provides context-sensitive insights into the governance and sustainability of alternative credential models. By offering an empirically grounded, multi-stakeholder analysis, this research contributes to the growing scholarship on micro-credentials in higher education and presents actionable recommendations for policymakers and institutional leaders seeking to strengthen workforce readiness through modular credentialing frameworks.