The United Arab Emirates (UAE) labor laws can be complex. Like most countries, they have different regulations based on employment type and jurisdiction regulations. This makes handling wages and benefits overwhelming without proper support.
For first-time employers, understanding how to disburse salaries and provide employee benefits is essential for maintaining compliance. This checklist will walk you through your responsibilities as an employer in the country while effectively supporting your employees.
1. Employment Contract
Every employee in the UAE must have a written employment contract outlining job roles, salary, and benefits. This document serves as the foundation for understanding the rights and responsibilities of all parties involved.
When writing employee contracts, note that different employment types (full-time, part-time, and freelance) can impact benefit entitlements. For example, part-time workers often receive the same benefits as full-time employees, while temporary workers may have reduced benefits.
Jurisdiction also matters, especially in a country like the UAE. The Dubai International Financial Centre (DIFC), Abu Dhabi Global Market (ADGM), and UAE Free Zones have their own regulations. Employers should always tailor contracts accordingly to ensure compliance with local laws.
2. Minimum Wage
For UAE nationals, the minimum wage varies depending on education, with higher qualifications yielding higher salaries.
While there is no official minimum wage for expatriates in the UAE, fair compensation enables you to attract the right talent for your business. Many companies set internal wage standards based on industry norms.
Payroll solutions in the UAE can help businesses manage these varying structures and ensure timely payments within a monthly payroll cycle. These solutions are beneficial when handling different employee types, providing accurate compensation for both full-time and freelance workers.
3. Working Hours
In the UAE, the maximum working hours are 8 hours per day or 48 hours per week. Beyond this, overtime pay must be provided at a rate of 25 percent above the regular wage or 50 percent for hours worked between 9 p.m. and 4 a.m.
Note that overtime is limited to two hours per day, save for some exceptional circumstances. Workers are also entitled to additional pay or an offset for their rest day if asked to work on their day off. These regulations help ensure fair compensation for extended work hours.
4. Leave Entitlements
Employees in the UAE are granted various leave entitlements to ensure work-life balance and accommodate personal and family needs, including:
Annual Leave
Full-time employees are entitled to 30 days of paid leave per year after completing one year of continuous service. Part-time workers receive leave proportional to their actual working hours.
Public Holidays
There are 14 public holidays in the UAE, including New Year’s Day, Eid al-Fitr, Eid al-Adha, National Day, and others. These are fully paid days off.
Sick Leave
Employees who have worked for at least three months are entitled to 90 days of sick leave per year. The first 15 days are fully paid at 100 percent and the next 30 at 50 percent. However, the remaining 45 days are unpaid.
Employees must present a medical certificate to be eligible for paid sick leave.
Maternity Leave
Full-time female employees are entitled to a 60-day maternity leave, with the first 45 days fully paid, while those with less than one year of service get 50 percent of their daily wage. Medical complications may also allow for an additional 100 days of unpaid leave.
Parental Leave
Parents in the private sector are entitled to five days of paid parental leave, which can be taken any time within the first six months from the child’s birth.
5. End-of-Service Benefits
End-of-service gratuity in the UAE is based on the length of continuous service.
For employees with up to five years of service, the gratuity is calculated as 21 days of basic salary per year. With each additional year beyond five, this increases to 30 days of their basic salary.
As an employer, you need to clearly outline these benefits in employment contracts from the start. Gratuity payments must be made within 14 days after the employee’s final working day.
6. Health Insurance
From January 1, 2025, providing health insurance coverage for all employees in the UAE will be mandatory.
Employers are responsible for ensuring their workers have adequate insurance, covering medical expenses such as doctor visits and emergency treatments. This law applies to all residents, including expatriates and nationals, ensuring healthcare access for everyone.
7. Tax and Social Security Contributions
Employers are legally mandated to contribute 12.5 percent of the gross monthly salary towards social security for Emirati employees (15 percent in Abu Dhabi). These contributions are solely for UAE and GCC nationals, while expatriates are exempt.
Employees also contribute 5 percent to social security, with the government covering an additional 2.5 percent, ensuring essential benefits for Emirati workers.
Keeping Up With Labor Legalities
Compliance with UAE labor laws is crucial when managing salaries and employee benefits. This checklist provides valuable guidance for new employers aiming to establish a fair and legally compliant workplace.