Payroll & Employment Guide: United Arab Emirates

Hiring in the UAE

If you want to hire in the UAE—either onsite or remote while the employee is based in the UAE—you must comply with federal labour laws, MOHRE regulations, and any relevant free-zone frameworks.

Key steps when hiring include:

• Using a written employment contract that specifies working hours, salary, benefits, probation, and notice, including any Dubai/Abu Dhabi free-zone specifics.
• Registering employees with MOHRE and ensuring salary payments are processed via the Wage Protection System (WPS).
• Ensuring visa, residence, and work-permit compliance for non-national employees and meeting all sponsor responsibilities.
• Where you do not have a UAE legal entity, working with an Employer of Record (EOR) or local payroll partner to manage immigration, payroll, and statutory compliance.

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Employee Benefits & Statutory Protections

Employers in the UAE must provide specific statutory protections, and many also offer additional benefits to remain competitive—especially in Dubai, Abu Dhabi, and major free zones.

Mandatory / Statutory Benefits:

• Annual leave: 30 calendar days of paid annual leave after one year of continuous service (pro-rated if service is greater than 6 months but less than a year).
• Sick leave: Up to 90 days per year after probation, subject to medical certification. Typically, the first 15 days are on full pay, the next 30 days on half pay, and the remaining 45 days unpaid.
• End-of-service gratuity (EOSB): Payable after at least one year of service, usually 21 calendar days’ basic wage per year for the first five years, then 30 days’ basic wage per year thereafter, subject to caps and statutory rules.
• Wage Protection System (WPS): Employers must pay salaries via authorised channels and report through WPS to ensure timely, traceable wage payments—non-compliance can lead to penalties.
• Public holidays & special leave: Employees are entitled to UAE official public holidays announced by the Cabinet and MOHRE, plus certain special leaves as defined by law.

Other common employer practices:

• Providing housing and/or transport allowances as part of the total compensation package.
• Medical/health insurance, which is mandatory in many emirates and free zones and commonly offered for dependants.
• Pension and social-security contributions for UAE nationals (GPSSA), with employer and employee contributions and possible government subsidies.

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Taxes & Payroll Snapshot

The UAE is known for its zero personal income tax on employment income, making net salary particularly attractive for employees. However, employers still have important payroll-related obligations.

Personal Income Tax:
Employees in the UAE typically do not pay personal income tax on their salaries, and employers do not withhold income tax from payroll. This simplifies the payroll structure but does not remove other statutory obligations.

Employer Contributions & Costs:

• End-of-service gratuity accruals, based on the employee’s basic salary and years of service.
• Social/pension contributions for Emirati employees under GPSSA, where applicable.
• Health/accident insurance costs as required by local regulations and company policy.
• Visa, immigration, and HR onboarding expenses.

Payroll reporting & compliance:
Employers must use MOHRE and WPS channels for wage reporting and maintain accurate payslips and payroll records for potential audits and inspections. Late or non-compliant payments can result in fines or employment restrictions.

Payroll in the UAE

Payroll in the UAE is driven by AED, WPS compliance, and statutory end-of-service and leave obligations, rather than income-tax withholding.

Payroll Currency & Cycle:
Salaries are generally paid in AED, and monthly payroll is standard. Employment contracts must clearly state pay frequency, pay date, and any bonus or 13th-month arrangements.

Payslips & Record-keeping:
Employers should issue payslips that show:

• Basic salary and allowances (housing, transport, etc.).
• Any overtime, bonuses, or commissions.
• Deductions (if any, in line with labour-law limits).
• Net salary and payment date.

Wage Protection System (WPS):
Salaries must be paid through authorised channels registered under WPS, ensuring traceable and timely payments. WPS filings are mandatory for most private-sector employers, and non-compliance can lead to fines, visa blocks, or other sanctions.

Looking for help with UAE payroll setup, WPS registration, and gratuity accrual?

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Legal Regulations & Compliance

Employment in the UAE is governed by federal labour decrees and implementing regulations, with additional local rules in certain free zones such as DIFC and ADGM. Employers must understand which regime applies to their entity and employees.

Key legal requirements:

• Comply with Federal Decree-Law No. 33/2021 and subsequent implementing regulations (or applicable free-zone laws).
• Follow working-hour caps, rest breaks, overtime rules, and health and safety obligations.
• Ensure accurate administration of leave entitlements, sick leave, and public holidays.
• Use WPS for salary submission and keep up-to-date employment contracts, payroll registers, and end-of-service calculations.

Failure to comply with these regulations can result in fines, litigation exposure, and restrictions on future hiring or visa processing.

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Work Permits & Visas for the UAE

Most foreign nationals require a valid employment visa, residence permit, and Emirates ID to work legally in the UAE. Employers are responsible for sponsoring visas and completing the onboarding process.

Key employer responsibilities:

• Issuing a job offer and employment contract that meets UAE standards.
• Sponsoring the employee’s entry permit, medical tests, Emirates ID registration, and residence visa stamping.
• Ensuring ongoing compliance with visa conditions and timely renewals.

Remote hires outside the UAE:
If a worker is engaged remotely and resides outside the UAE, their local country’s employment and tax rules typically apply. Once they physically relocate to the UAE to perform work, visa and labour registration requirements become mandatory.

Where you do not have a UAE legal entity, partnering with an EOR can simplify visa sponsorship and compliance.

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EOR & PEO Services in the UAE

Using an Employer of Record (EOR) or Professional Employer Organisation (PEO) in the UAE lets you hire quickly and compliantly without setting up a local company.

Employer of Record (EOR) in the UAE:
An EOR can:

• Issue bilingual (Arabic/English) employment contracts aligned with UAE labour law or free-zone rules.
• Sponsor visas and residence permits, managing the full onboarding process.
• Run payroll via WPS, issue payslips, and handle statutory obligations such as EOSG.
• Manage terminations, gratuity calculations, and end-of-service administration.
• Provide local HR support, including medical insurance enrolment and compliance monitoring.

PEO Services in the UAE:
For businesses with their own UAE entity, PEO offers:

• HR and payroll administration.
• Benefits management and vendor coordination.
• Local compliance support and documentation management.

These models reduce risk and complexity, helping you focus on building your UAE team and business.

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Payroll Calculator

Use Dhi ADT’s UAE payroll calculator to estimate gross-to-net pay (noting the absence of income tax), employer costs such as gratuity accrual, health insurance, and visa expenses. This helps you benchmark packages across Dubai, Abu Dhabi, and other emirates.

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