United Arab Emirates (UAE) Employment, Benefit and Payroll Guide

United Arab Emirates (UAE) Employment, Benefit and Payroll Guide

The UAE offers a diverse and cosmopolitan business environment, with a thriving economy, a high standard of living, and a strategic location between Europe and Asia. Expanding your business in the UAE can provide you with access to a range of opportunities in various sectors, from finance and technology to hospitality and tourism. The government of the UAE has implemented a range of economic reforms to attract foreign investment and promote economic growth, including reducing corporate taxes, streamlining business regulations, and investing in infrastructure. The UAE is also home to a highly skilled and multilingual workforce, with a strong emphasis on education and training. With its strategic location, diverse business environment, and skilled workforce, the UAE is an ideal destination for businesses looking to expand in the GCC region.
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Key Facts

Capital City: Abu Dhabi
Currency:   United Arab Emirates Dirham (AED)
Language: Arabic (official), English, Hindi, Urdu
Population: UAE National Day, December 2nd
Payroll Cycle: Monthly
VAT: 5%
Time zone: GST (Gulf Standard Time), UTC+4
International dialing code: +971
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UAE Payroll and Labor Laws

When it comes to setting up a business or expanding operations in the United Arab Emirates (UAE), it is important for companies to understand the country's payroll and labor laws.

In addition to the above, the UAE has introduced several measures to support the employment of its citizens, including the Emiratisation program, which encourages the employment of UAE nationals in the private sector. Employers are required to meet certain Emiratisation quotas, which vary depending on the size and type of business.

Overall, understanding the UAE's payroll and labor laws is crucial for companies looking to establish or expand their operations in the country. By complying with these laws and regulations, companies can ensure that they are providing their employees with fair and equitable treatment, while also avoiding any potential legal issues or penalties.


Employer Payroll Contributions
Social Security (basic social security plus housing allowance, based on monthly minimum of 1,000 AED and maximum of 50,000 AED) There is an additional 2.5% contribution made by the Government making the total contribution for social security of 20%. A higher rate of 26% is applied in the Emirate of Abu Dhabi, where the contribution of the employer is 15%, the Government’s contribution is 6%, and the employee’s contribution is 5%. 

12.50% Total Employment Cost
Employee Payroll Contributions

Social Security (contributions are for Emiratis only, no contributions for expats)
5.00% Total Employee Cost

Employee Income Tax

No personal income tax

Minimum Wage

For expatriates, there is no mandatory minimum wage.

For UAE nationals, the minimum wage is determined by the level of education:

No high school certificate- 3,000 AEDHigh school certificate- 4,000 AEDCollege degree or higher- 5,000 AED
The Federal Decree Law of 2022 will set a minimum wage, to bedetermined and announced by the UAE Cabinet after a proposal by the Minister ofHuman Resources and Emiratisation.


Payroll Cycle
The payroll cycle in UAE is generally monthly, with payment made on the last working day.
13th Salary
There is no requirement for a 13th-month salary payment in the United Arab Emirates.

Working Hours

Working hours must not exceed eight hours per day, or forty-eight hours per week, over a six-day week. It is also stated that working hours can be increased to nine hours per day for some business.  During the Islamic month of Ramadan the working hours are reduced by two hours per day.
All work above the standard weekly working hours is to be paid as overtime and is regulated by employment contract/collective agreements.  In general, there are two rates of overtime due when overtime is worked. For night-time overtime, between the hours of 9 pm and 4 am, overtime is calculated at 125.00% of the regular salary rate; with 150.00% for any other time.


Paid Time Off
Employees with greater than six months but less than a year are permitted to a minimum of two days paid leave for each month they are employed. Should the employment period be greater than one year, an employee is entitled to 30 days of paid leave annually.
Public Holidays
There are 14 official public holidays in the UAE.
Sick Days
An employee is entitled to a sick leave of not more than 90 days per year, only after the end of probationary period. The 90 days sick leave can be continuous or intermittent, and the salary is paid as follows:

- full pay for the first 15 days
- half pay for the next 30 days
- no pay for the rest 45 days.

However, during the probationary period, the employee may get a sick leave without pay, subject to the approval of the employer and based on a medical report issued by the medical entity that stipulates the necessity of the leave.
Maternity Leave
All female employees are eligible for maternity leave.  

Employees who have completed one year of service are entitled to 60 days paid at 100% of the regular salary rate of pay for the first 45 days, reducing to 50.00% of the regular salary rate of pay for the remaining 15 days.  Maternity pay is no longer reduced to 50% for employees who have not completed one year of service.

The employee can take maternity leave before and after the due date.
Employees are also entitled to take up to 45 days (consecutive or intermittent) of unpaid leave due to a medical condition related to pregnancy or delivery upon producing a professional medical certificate.

The New 2022 Labour Law confirms that employers may not terminate, or threaten to terminate, a female employee’s employment because she is pregnant or on maternity leave.

In the private sector can be extended to 60 days (being 45 days fully paid leave and 15 days of half-paid leave). Employees can also opt in to an additional 45 days of unpaid leave following the 60-day period in case of any post-partum complications.
Paternity Leave
There is no additional Paternity leave in UAE.
Parental Leave
There is no additional parental leave in UAE. For private-sector employees, both parents are entitled to 5 days’ paid leave. The employees can take leave until the child reaches the age of 6 months.
Compassionate Leave
5 days in the event of the death of an employee’s spouse;  

3 days in the event of the death of an employee’s mother, father, son, brother, sister, grandson, or grandparent.
Study Leave
Employees are entitled to a 10-day study leave per year provided they are enrolled in an accredited institution in the UAE and have completed a minimum of 2 years with their employers.
All work above the standard weekly working hours is to be paid as overtime and is regulated by employment contract/collective agreements.  In general, there are two rates of overtime due when overtime is worked. For night-time overtime, between the hours of 9 pm and 4 am, overtime is calculated at 125.00% of the regular salary rate; with 150.00% for any other time.


Termination Process
The termination process is standard in UAE and based on labour law requirements unless an employer can provide sufficient cause for dismissal without notice (due to misconduct, etc.) Notice of termination must be in writing and sent to the relevant governmental authorities.
Notice Period
According to UAE Labour law, a minimum of 30 days mandatory notice period is required.

The amount of notice period for employees who work under the DIFC employment law is determined by length of employment. This can be as notice days to be worked or paid in lieu, as below:

1-5 months of employment - 1 weeks’ notice
Up to 5 years or employment - 1 month’s notice
5+ years of employment- 90 days’ notice

End of Service Payment
In the UAE, severance pay is mandatory if applicable and determined by length of service and must be paid within 14 days of the termination date.

An employee who has completed one year or more of continuous service is entitled to end of service gratuity of 21 calendar days’ basic pay for each year of the first five years of service; and 30 calendar days’ basic pay for each subsequent year of service, provided that the entire total remuneration does not exceed two years pay.
Probation Period
The probation period in UAE for permanent employees is generally between 3 and 6 months, however, the New Labour Law now requires a minimum of 14 days’ notice when terminating an employee on probation.
Notice Period
An employee may resign by providing the employer with the contractual notice period (which must be a minimum of 30 calendar days, or longer, as per the contract of employment). Alternatively, the employee may resign without notice asset out under Article 121 of the law.


Any foreigners coming to work in UAE will need to be registered with the UAE immigration authorities. All foreigners must have secured a job offer from a company operating in the UAE, and some require specific qualifications that the ministry of foreign affairs may require.

For working in Dubai, a UAE Employment Permit/work permit is required.  In general, these are valid for up to two years for anyone offered a job in the UAE and provides the right to live and work in the UAE for the duration of the visa, which is renewable after two years.

Value Added Tax (VAT)

The standard rate is 5%.

Employ Your Staff Compliantly in the GCC with Auxilium's Expert Guidance

Are you planning to expand your business in the GCC region and looking to employ staff compliantly?

Look no further than Auxilium! Our team of experts can provide you with guidance on the complex payroll and labor laws in the GCC countries, ensuring that you are fully compliant with local regulations.

We can help you with everything from setting up payroll and social security contributions to navigating the various labor laws and regulations in the GCC countries.

With our expert guidance, you can focus on growing your business while we take care of the compliance. Contact us today to learn more about how we can help you employ your staff compliantly in the GCC region and ensure peace of mind.
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