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United Arab Emirates — 9 min
Employee benefits in the UAE: all you need to know
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Rhiannon Payne
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The right candidate can be a game-changer for your business — but they may not always be in your own country. This is why more companies are now looking beyond their borders to hire top employees, with the United Arab Emirates (UAE) one such pool of potential talent.
To retain the best people in the UAE though, you need to offer a competitive benefits package — and that means understanding the relevant laws and legislation. Non-compliance can lead to a whole host of complications and potential penalties, resulting in damage to your business.
In this article, we’ll cover everything you need to know about employee benefits in the UAE, including what you must provide by law.
Jump straight to a key chapter
So let’s dive right in.
Who is entitled to benefits in the UAE?
Nearly all employees are entitled to benefits in the UAE (including local and foreign nationals), although there are some benefits that expatriate workers do not qualify for. There are also some key differences between the public and private sectors.
Note, too, that different regulations apply for employees in different jurisdictions, such as the Dubai International Financial Centre (DIFC), the Abu Dhabi Global Market (ADGM), and the UAE Free Zones.
Most part-time workers receive the same paid holiday and gratuity as full-time employees, although this can vary depending on location. Temporary workers who are employed for less than 30 days are entitled to reduced benefits.
Self-employed freelance workers are not eligible to receive statutory benefits in the UAE.
Statutory and common employee benefits in the UAE
Under UAE labor law, there are multiple statutory benefits that employers must provide. These are:
Employer contributions
The UAE does not charge income tax for nationals or foreign employees, but employers must make social security contributions for workers. These are calculated as a percentage of the employee's gross monthly salary, as follows:
15% in Abu Dhabi
12.5% in the rest of the UAE
Leave entitlements
Employees in the UAE are entitled to receive 30 days of paid vacation each year (provided they have completed at least three continuous months of service).
There are 14 official public holidays workers can take, including:
New Year's Day
Prophet's Ascension
Eid al-Fitr Eve
Eid al-Fitr
Day of Arafat
Eid al-Adha
Islamic New Year
Prophet's Birthday
Commemoration Day
National Day
Sick leave
The UAE only grants sick leave if the employee has worked at the same company continuously for at least three months. If this is the case, they are entitled to 90 days of leave per year, which can be taken intermittently or all at once.
Sick leave payments are calculated in the following way:
First 15 days: 100% pay
Next 30 days: 50% pay
Subsequent 45 days: unpaid
Employees must obtain a medical certificate to qualify for medical leave.
Maternity and paternity leave
Females are entitled to maternity leave but, like other benefits, the amount and level of pay depend on how long they have been at their company. Maternity leave pay is structured as follows:
At least one year of service: 45 days leave with 100% pay
Less than one year of service: 45 days leave with 50% pay
Women who suffer medical complications in pregnancy or birth can also claim an additional 100 days of unpaid leave.
Note that maternity leave allowances can vary across the UAE. For example, in the DCIF, women can take 65 days of maternity leave, with the first 33 days at 100% pay and the rest at 50%.
There is no paternity leave in the UAE.
Parental leave
Private sector employees are entitled to five days’ parental leave. They can take this at any time up until the child is six months old.
Pension plans and retirement contributions
Employees with UAE citizenship are entitled to join the federal employment scheme.
Expatriates are not entitled to monthly pension payments. Instead, they receive an "end of service" payment, also known as gratuity.
The retirement age for UAE citizens is 49, and 60 for expatriates.
Minimum wage
Recent laws have introduced a three-tiered minimum monthly wage structure based on education levels for UAE nationals:
No high school education: 3,000 AED
Certified high school education: 4,000 AED
University degree or higher: 5,000 AED
There is no mandatory minimum wage for expatriates.
Overtime
Legislation states that maximum working hours in the UAE should be no more than 8 hours per day and 48 hours per week.
Overtime pay is based on when the overtime hours are worked. For instance:
At night (9pm to 4am): 125% of standard wage
At any other time: 150% of standard wage
On a Friday: 150% of standard wage plus an extra paid day off
Health insurance
Health insurance contributions are not mandatory for UAE citizens, with the exception of:
Abu Dhabi: The Abu Dhabi Health Insurance Law requires employers to provide a compliant insurance plan for their employee and their family members in the UAE.
Dubai: Employers must provide medical insurance compliant with the Dubai Health Authority (DHA). They do not need to provide insurance for dependents.
If an employer does not meet the insurance policy requirements, they may face fines or restrictions on requesting visas.
It is illegal for expatriates to work without a valid medical insurance policy.
Severance pay
Severance pay is compulsory in the UAE, with compensation based on the length of service. The time periods and amounts are calculated as follows:
One to five years of service: 21 days’ salary
Five years or more of service: 30 days’ salary per every additional year after the fifth
Note that the total amount can never exceed more than two years’ salary.
The reason for termination must comply with UAE employment legislation. If not, the employer may need to pay out an additional three months' salary.
Supplemental benefits in the UAE
The benefits covered above are the bare minimum, required by law. To attract the best candidates, you'll need to offer a competitive compensation package with an attractive benefits stack.
Here are some of the most desirable supplemental benefits you can offer:
Health insurance
In some parts of the UAE, you may not be required to provide insurance by law. However, as health care is expensive, medical insurance is an attractive benefit for many candidates — especially expatriates, who need health insurance to gain a work permit.
If you are already obliged to provide a basic health insurance package, you can consider offering a more comprehensive and generous scheme to set yourself apart.
Pension benefits
As expatriate workers do not qualify for the statutory pension scheme, a private pension plan can be a big draw for foreign employees in the UAE. You may choose to offer private pension contributions, or set up a pension saving scheme to help employers save for retirement.
Bonuses
Bonuses are not mandatory in the UAE, but they are common. As a result, you will need to offer some kind of bonus scheme to stay competitive in the talent market.
Note that banks or financial companies with headquarters in the European Union (EU) must abide by EU legislation when awarding bonuses in the UAE.
Relocation packages
Relocation packages and living and travel allowances are attractive incentives for expatriates.
Additional time off
Many people choose to live in the UAE due to the country’s desirable lifestyle, and additional paid (or unpaid) leave can be a huge draw for those who want to make the most of that. Positioning yourself as a business that values freedom and flexibility will not only attract top talent, but help retain it too.
Soft benefits
If you're a small business, you may not have the funds to create lavish benefits packages to attract top candidates. However, you can still offer a multitude of attractive and affordable benefits.
These “soft” benefits — including flexible working hours, freedom of movement, and diverse teams — can be as appealing as monetary incentives.
How to set up and manage benefits for international employees
Once you’ve decided what your benefits stack is going to look like for your UAE workforce, you need to put the wheels in motion. This is where things can start to get tricky.
First, you need to walk the tightrope between your employees’ needs and your in-house resources. If you’re a smaller organization trying to scale through outsourcing, you can easily get bogged down in costly benefits packages.
And then there’s the issue of compliance. If you accidentally fall foul of the rules along the way, you can incur fines and penalties, and significantly damage your growth.
When you then factor in the process of setting up payroll, managing leave entitlements, and getting to grips with the whole whirlpool of tax consequences and obligations... well, it can all start to get a little daunting.
Which is why it’s a good idea to let a global employment services provider — like Remote — do all the heavy lifting for you.
In particular, our employer of record (EOR) service allows you to quickly and conveniently manage all the intricacies of your UAE operation, including:
Organizing payroll and leave
Distributing local employment taxes
Maintaining compliance with statutory and supplementary benefits
Offering competitive global compensation packages
Scaling your team
All you have to do is focus on hiring the right people for your organization, and our team of local, in-house, on-the-ground experts will guide you the rest of the way.
12 min
How to use an Employer of Record in the United Arab Emirates
Learn how to use an EOR in USE and find out how an employer of record platform like Remote can make it easy to hire globally with full compliance.
Staying compliant with Remote
There you have it. When it comes to offering benefits to your UAE-based employees and new hires, it doesn’t have to be a stressful experience.
However, UAE employment laws can be complex and subject to change. This can make it difficult to know if your business is doing everything by the book.
To make sure you don’t encounter any nasty surprises, check out our detailed process for hiring and managing international employees. Not only will you save yourself time, headaches, and, potentially, a world of legal trouble, but you’ll be free to focus your energy on standing out in a competitive, remote-first world.
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