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Payroll and Benefits Guide United Arab Emirates

Last updated: May 14, 2023

Currency
UAE Dirham (AED)
Employer Taxes
Unknown
Payroll Frequency
Monthly
Employee Costs
5%
Capital
Abu Dhabi
Date Format
dd/mm/yyyy
Fiscal Year
1 January - 31 December
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Contributions

Employer

Employer Payroll Contributions

12.50% Total Employment Cost

12.50%

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 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%.

Employee

Employee Payroll Contributions

5.00% Total Employee Cost

5.00%

Social security (basic social security plus housing allowance, based on monthly minimum of 1,000 AED and maximum of 50,000 AED). These contributions are for Emiratis only, no contributions for expats.

Employee income tax

No personal income tax

Federal Corporate Income Tax (CIT) has been introduced and will apply for fiscal years starting on or after 1 June 2023 as follows:

  • 0% tax rate on income up to AED 375,000 (c. US$ 102,000)
  • 9% tax rate on profits of income above AED 375,000
  • 15% tax rate applied on large multinationals that generate consolidated global revenues above EUR 750m (c. AED 3.15 bn)

Employer taxes

Highest
Lowest

Employee taxes

Highest
Lowest

Minimum Wage

General

There is no minimum salary stipulated in the UAE Labour Law, however it broadly mentions that salaries must cover basic needs of the employees.  All employers registered with Ministry of Human Resources and Emiratisation (MoHRE) must subscribe to the ‘Wages Protection System (WPS)’ and pay the wages to their employees through it, as per the due dates.

Under this system, salaries of employees will be transferred to their accounts in banks or financial institutions, which are authorised by Central Bank of the UAE to provide the service.

MINIMUM WAGE (PER MONTH)

Highest
Lowest

Payroll

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

General

8 hours per day, up to 48 hours per week, Monday to Friday (during Ramadan, working hours are reduced by 2 hours daily). The UAE authorities have announced that for public sector employees, the working week will be reduced to four and a half days, with the weekend running from Friday afternoon to Sunday. The authorities have also confirmed that all schools and universities will operate from Monday to Friday on a four and a half day working day basis.

As of 2022, Friday is no longer specified as being the weekly rest day for employees, and most companies in the public and private sector have moved to a Monday to Friday working week. Employees who wish to attend Friday congregational prayers should be given the flexibility to work from remotely, or to be provided with an extended break to attend prayers.

Usual business hours are from 08:00 to 13:00, resuming after the temperatures have begun to cool from 16:00 and continuing until 19:00.

During Ramadan, the working day may be shorter, and Free Zones may also have different working hours.

Overtime

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 nighttime overtime, between the hours of 9 pm and 4 am, overtime is calculated at 150.00% of the regular salary rate; with 125.00% for any other time.

For work on Fridays, the employee is entitled to an additional paid day off and overtime pay at the rate of 150% of the regular pay.

Working Week

Monday–Friday

Leave

Paid Time Off

Workers are entitled to a minimum of 30 calendar days paid leave each year, following completion of 1-year service. For employment over 6 months but less than 1 year the worker accrues 2 days per month. The employer is required to pay the employee’s salary before the commencement of annual leave.

Annual leave should be used within the allotted year, unless a carryover policy has been set by the company.

Vacation Days
Public Holidays
Highest
Lowest

Public Holidays

The local government decides each year if holidays falling on the weekend are lost or moved to a working day in lieu.

Religious holidays are determined by the lunar cycle and will show as “Tentative” until they are confirmed nearer the date of the holiday.

Sick Days

All employees who have completed three months of service are entitled to paid sick leave up to a maximum of 90 days per year and must provide a medical certificate within 48 hours of the first day of sickness.

For the first 15 days of sickness, the employee is entitled to 100% of the regular salary rate of pay. This reduces to 50% for the next 30 days, and any subsequent sickness in one year is unpaid (90 days total per year).

Maternity Leave

All female employees are entitled to maternity leave of 60 days. The first 45 days are paid at 100% of the regular salary rate, reducing to 50% of the regular salary rate for the remaining 15 days. The employee can take maternity leave before and after the due date.

Employees are also entitled to take up to an additional 45 days (consecutive or intermittent) of unpaid leave due to a medical condition related to pregnancy or delivery upon producing a professional medical certificate.

It is not permitted terminate employment due to pregnancy or absence due to maternity leave.

PAID MATERNITY LEAVE (DAYS)

Highest
Lowest

Paternity Leave

There is no additional paternity leave in UAE.

Parental Leave

Private sector employees are entitled to 5 days’ paid parental leave. Employees may take leave until the child reaches the age of 6 months. Proof of birth of a child must be provided when requesting this leave.

Other Leave

Under the labor law, the following leaves are available to workers:

Bereavement 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 affiliated/studying with an approved UAE education instruction will be entitled to 10 days study leave once they have completed 2 years of service.

Termination

Termination Process

Either party to the employment contract may terminate the contract for any legitimate
reason, provided that the other party is notified in writing and with the correct notice given. Legitimate reasons includes performance or behavioral issues, redundancy, bankruptcy and insolvency, and failure of the worker to renew a work permit.

Notice Period

According to UAE labor 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 – 2 weeks’ notice
  • Up to 5 years of employment- 1 month’s notice
  • 5+ years of employment- 90 days’ notice

During the probation period only 14 days must be given; if a worker resigns during probation to move to a new company in the UAE they must give 30 days’ notice, however, if a foreign worker is leaving the UAE then they just need to give 14 days’ notice.

Severance Pay

A worker is entitled a severance pay after completing a full year of service.

The severance pay is 21 days’ wage for each year of the first 5 years of service and 30 days’ wage for each year exceeding such period. The severance pay for the time worked above a full year will be paid prorated. Severance pay for foreign employees is capped at two years’ wage. The severance pay will be calculated based on the last basic wage the employee was entitled to.

If the reason for termination is not recognized by UAE law, the employee may be entitled to additional compensation of 3 months’ pay. With changes implemented in the new labor law, employees will still be entitled to their full EOSG (provided that they have at least one year of service with the employer) where they resign from employment. This is also relevant to employees terminated for gross misconduct.

Probation Period

Probation period may not exceed 6 months.
During probation, any party desiring to terminate employment during probation give at least 14 days’ notice, and where an employee is joining another UAE-based company, at least 30 days’ notice. Additionally, employers have the right to demand payment from the new employer for the costs incurred in hiring the employee.

Common Benefits

General

  • Health Insurance for the employee’s spouse and dependents
  • Meal vouchers
  • Gym/wellness allowance
  • Transportation/commuting allowance
  • Private health insurance
  • Bonus – around 10% of salary per month
  • Additional leave – maximum 40 days (10 more days in addition to the statutory entitlement)
  • Family health care allowance
  • Child education allowance
  • Cell phone allowance

VISA

VISA

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.

To work 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.

VAT

General

The standard rate is 5%.

Stay up to date on payroll & employment law changes

Version History

September 2, 2020
Updates on paternity and parental leave as the law has changed.
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Questions & Answers

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Kay
Kay
2 years ago

Is overtime pay based on the employee’s basic salary, or the gross salary that includes housing allowance, transportation allowance, etc.?

Alex Margolin
Editor
Alex Margolin
2 years ago
Reply to  Kay

All overtime bonuses must be based on the gross salary of the employee.

Salma P
Salma P
2 years ago

Can an employer dismiss an employee who exceeds their annual leave?

Erez Greenberg
Erez Greenberg
2 years ago
Reply to  Salma P

Hi Salma, An employer can dismiss an employer if they have exceeded their leave by 7 or more days.

Kannadhasan
Kannadhasan
2 years ago

Super, Can we get PayItems that is more important and special information to be captured as a part of personnel information specially for Dubai payroll

Emily Kuhnert
Emily Kuhnert
2 years ago
Reply to  Kannadhasan

Hi, can you please clarify what you are looking for?

HR officer
HR officer
2 years ago

Dear Sir,

Our management has decided to change the salary structure where we use to pay 60% of Gross Salary as Basic Salary. Now the management want to change the basic salary of employee to 40% and remaining amount to be included as other allowance. There will not be any salary decrease but there will be change in the basic salary percentage is it allowed. (This company is in UAE – Dubai, mainland company)

Is it legal to take this step if yes then under which article can the change take place.

Erez Greenberg
Erez Greenberg
2 years ago
Reply to  HR officer

Unfortunately, we’re not able to offer legal advice with regard to your issue. Please seek legal advice in this matter

Sal Mal
Sal Mal
1 year ago

For salespeople that also get a commission, does the employer pay the 12.5% social tax on the commission too?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Sal Mal

12.5% is only paid for by local workers, not expat workers – which worker type are they referring to? Expat workers do not pay taxes.

Reysie
Reysie
1 year ago

What if I want to request cancelation of visa to my employer is their anything I pay and if I pay how much I pay

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Reysie

Typically it is the employer who cancels your work visa and pays for it. The cost is usually between 100 and 200 AED.

M Raja
M Raja
1 year ago

How much shall be the basic salary from the package in Dubai mainland?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  M Raja

For expatriates, there is no mandatory minimum wage. For UAE nationals, the minimum wage is determined by their level of education.

Daniel Ofori
Daniel Ofori
1 year ago

If my visa is cancelled how many months do I have until it expires

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Daniel Ofori

Visa cancellation typically takes 1 to 2 days. When a visa is canceled, a tourist has a grace period of 10 days, and a resident has a grace period of 30 days.

Asheerwad Vincent
Asheerwad Vincent
1 year ago

As per the new Labour law from Feb 2022, is the vacation salary paid only on Basic Salary including housing or Gross salary ?

Erez Greenberg
Erez Greenberg
1 year ago

Under the new labor law, employees will be entitled to full payment of annual leave if they take annual leave during the working period. Employees who resigned or were terminated will be paid for annual leave on their basic salary.

DILIP THAPAMAGAR
DILIP THAPAMAGAR
7 months ago
Reply to  Erez Greenberg

Now my employer has revoked my visa.” It’s been almost three years since I worked here. Can I now issue instructions to provide the amount i deserve for my service here?

Stacey
Stacey
1 year ago

What is the average travel allowance for Sales staff in the UAE?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Stacey

Companies have complete discretion as to whether they will offer travel allowance and how much they will offer. Companies can give fixed amounts for these expenses for travel.

Elena
Elena
4 months ago
Reply to  Erez Greenberg

Dear Erez,
Kindly advise what law/notes regulates the per diem limits traveling for business from UAE abroad in 2023? I find no information in the internet/ Thank you!

marly van den bosch
marly van den bosch
8 months ago

Do burden cost apply to employees that are working on a visa?

Ash
Ash
3 months ago

Do you have a guide to what figures are typically offered as Transport Allowance in the UAE?

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Payroll and Benefits Guide in United Arab Emirates

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Payroll and Benefits Guide
in United Arab Emirates

What’s covered in this guide:

  • Employer/employee contributions
  • Minimum wage
  • Working hours
  • Visa requirements

And more...

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All questions are answered by our in-house compliance department working in conjunction with our local in-country partner for this specific country

Public Holidays Calendar

United Arab Emirates 2023
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ICS
Day Date Holiday Notes
Sunday Jan-1 New Year's Day
Thursday Apr-20 Eid al-Fitr Tentative
Friday Apr-21 Eid al-Fitr Tentative
Saturday Apr-22 Eid al-Fitr Tentative
Sunday Apr-23 Eid al-Fitr Tentative
Tuesday Jun-27 Arafat Day
Wednesday Jun-28 Eid al-Adha
Thursday Jun-29 Eid al-Adha
Friday Jun-30 Eid al-Adha
Saturday Jul-1 Eid al-Adha
Sunday Jul-2 Eid al-Adha
Friday Jul-21 Islamic New Year
Friday Sep-29 Prophet's Birthday
Saturday Dec-2 National Day
Sunday Dec-3 National Day Holiday Day Off in Lieu