What are employee benefits in the UAE?
Employee benefits are the compensation an employee receives beyond base salary, some required by law and some offered voluntarily by the employer.
In the UAE, statutory benefits are set by the Labour Law and cannot be reduced by any contract, though they can be improved on. They include end-of-service gratuity, mandatory health insurance, and paid leave. On top of these, employers commonly offer voluntary benefits to stand out, such as:
- Housing and transport allowances
- Family health insurance beyond the employee-only minimum
- Annual flight tickets home and education allowances
- A performance or discretionary bonus
Statutory minimum, market practice, and Multiplier
| Benefit | Statutory minimum | Typical market practice | Multiplier-administered option |
|---|---|---|---|
| Minimum wage | None for expatriates; nationals covered separately | Market-benchmarked pay by role and sector | Compliant compensation structuring |
| End-of-service gratuity | 21 days’ wage/year (first 5 years), 30 days/year beyond, capped at 2 years | Standard formula, little variation | Tracks accruals and final settlement |
| Health insurance | Mandatory in all seven emirates; dependent rules differ | Family and enhanced cover common | Compliant, emirate-specific enrollment |
| 13th-month pay | Not required by law | Occasional discretionary bonus | Administered only if contractual |
| Bonuses | None; discretionary | Common, often performance-based | Administered per contractual terms |
Salary and minimum wage in the UAE
The UAE sets no statutory minimum wage for private-sector expatriate employees, so their pay is determined by the role, the market, and the employment contract. The law requires only that wages meet an employee’s basic needs. For UAE nationals, qualification-linked wage benchmarks have historically applied, tied to Emiratisation and pension rules.
A UAE pay package is usually structured as a basic salary plus allowances, and the split matters because gratuity and other calculations reference defined components. Wages must be paid in UAE dirhams and through the Wage Protection System. For a full breakdown of employer costs, see our guide to the cost of employment in the UAE.
Social insurance in the UAE
Social insurance and pension contributions in the UAE apply only to UAE and GCC nationals, not to expatriates. For eligible nationals, the employer contributes a share of gross salary, the employee contributes a smaller share, and the government tops up the remainder, funding a state pension.
Expatriate employees are outside this scheme entirely. Rather than a pension, their end-of-service benefit is the statutory gratuity, and their main employer-funded benefit is mandatory health insurance. This is the central structural difference between employing a UAE national and an expatriate.
End-of-service gratuity in the UAE
End-of-service gratuity is the UAE’s version of severance and applies to any employee with at least one year of continuous service. The formula is 21 days’ basic salary for each of the first five years and 30 days’ basic salary for each year beyond, capped at two years’ basic salary in total, and it must be paid within 14 days of the last working day.
Gratuity is calculated on basic salary only, not total pay. Under the 2021 law, resignation and termination attract the same gratuity, the old reduction for resignation has been abolished. Some free zones, such as the DIFC with its DEWS savings plan, fund the entitlement through a contribution scheme instead. Multiplier’s EOR tracks gratuity accruals and processes a compliant final settlement.
Health insurance in the UAE
Health insurance is a mandatory, employer-funded benefit tied to residency visas, and as of 1 January 2025 it is required in all seven emirates. No residency visa can be issued or renewed without active coverage, and each emirate sets its own rules, so an employer with staff in more than one emirate manages more than one regime.
In Dubai, governed by the Dubai Health Authority, the employer must provide at least the Essential Benefits Plan to each employee, and dependents are the visa sponsor’s responsibility. In Abu Dhabi, governed by the Department of Health, the employer must cover the employee plus the spouse and up to three children under 18, a broader obligation than Dubai’s. In the Northern Emirates, a federal scheme under the Ministry of Health and Prevention covers the employee.
The minimum annual benefit limit isn’t uniform across emirates: Dubai’s Essential Benefits Plan sets it at AED 150,000, while the federal basic scheme in the Northern Emirates is lower, around AED 50,000, split into separate inpatient and outpatient sub-limits. The employer bears the full premium in all cases.
Working hours in the UAE
The standard working week in the UAE is 48 hours, worked as 8 hours a day, reduced by two hours a day during Ramadan. Overtime is paid at 125% of the basic hourly wage on working days and 150% on rest days and public holidays, and work on a public holiday can instead be compensated with a substitute day off.
The UAE observes paid public holidays declared by the government through the year, and the weekend is generally Saturday and Sunday.
Leave and holidays in the UAE
The UAE’s statutory leave entitlements are set by the Labour Law and administered by MOHRE.
- Annual leave: 30 calendar days per year after one year of service, accruing at two days per month between six months and one year, with unused leave paid out on exit.
- Sick leave: up to 90 days per year after probation, paid as the first 15 days at full pay, the next 30 at half pay, and the final 45 unpaid, subject to a medical certificate.
- Maternity leave: 60 days, being 45 days at full pay and 15 at half pay, with additional unpaid leave available for complications.
- Parental leave: five working days of paid leave for either parent, to be taken within six months of the birth.
13th-month pay and holiday allowance in the UAE
13th-month pay is not required by UAE labour law. There is no statutory 13th salary and no government-mandated holiday allowance. The only guaranteed end-of-contract payment in the UAE is the end-of-service gratuity, which is a separate, mandatory entitlement based on years of service, not an annual bonus.
The confusion usually comes from other markets where a 13th-month payment is a legal entitlement. In the UAE, some employers choose to pay an annual or holiday bonus to stay competitive, but it is a discretionary bonus rather than a legal right unless it is written into the employment contract. If you want to offer one, define it clearly so both sides know whether it is guaranteed or discretionary. Ready to structure this compliantly? Explore UAE EOR.
Bonuses and discretionary benefits in the UAE
Bonuses in the UAE fall into two categories. A contractual bonus, such as a signing bonus or a commission with defined targets, is guaranteed once its conditions are met, and the employer must pay it. A discretionary bonus, such as a performance or year-end bonus, is at the employer’s discretion and is not guaranteed.
The trap for employers is that discretion can be lost. A bonus paid regularly over time, or promised in writing, can become an implied contractual entitlement even if it was meant to be optional. To keep a bonus genuinely discretionary, reserve that discretion clearly in the contract and any bonus communication, and record whether each payment is a one-off.
Wage Protection System (WPS) in the UAE
The Wage Protection System is the UAE’s electronic salary-transfer network, run by MOHRE together with banks and exchange houses authorized by the Central Bank. Employers registered with MOHRE must pay employee wages through the WPS, on time and in full, and the system flags late or short payments automatically.
For employers, WPS is a compliance obligation rather than an option. Salaries have to move through it on the agreed pay cycle, and failure to comply can lead to fines and blocks on issuing new work permits. Multiplier’s EOR ensures WPS-compliant salary transfers for your UAE-based team.
How employee benefits are taxed in the UAE
There is no personal income tax on employment income in the UAE, so salaries, allowances, and end-of-service gratuity are received without income-tax deductions. This is a major reason the UAE attracts internationally mobile talent, since the gross offer is close to the take-home figure.
Because there is no income tax, the employer’s cost sits in gratuity accruals, mandatory health insurance, social insurance for nationals, and the allowance layer, rather than in payroll tax. Benefits in kind are therefore a tax-efficient way to build a competitive package.
Supplemental and voluntary benefits in the UAE
Beyond the statutory minimum, the market-standard package in the UAE runs heavily on allowances, and this is where a competitive offer is built. The most common supplementary benefits are a housing allowance and a transport allowance, added to basic salary.
On top of those, employers regularly provide family health insurance beyond the employee-only minimum, annual flight tickets home for the employee and sometimes their family, education allowances for children’s schooling, and mobile allowances. Because there is no income tax, these allowances flow to employees efficiently, which is why they are close to standard in competitive hiring.
Employee benefits for expatriates in the UAE
The UAE workforce is overwhelmingly expatriate, and a few points are specific to foreign employees.
Expatriates are outside the national social insurance and pension scheme, so their retirement benefit is the end-of-service gratuity rather than a pension.
Mandatory health insurance is the expatriate’s main health benefit, funded by the employer and, in Abu Dhabi, extended to the spouse and up to three children.
Expatriates need a sponsored work visa and residency, and their ability to work legally depends on both the visa and active health cover being in place.
Cost of employing an employee in the UAE
A UAE hire costs more than gross salary once mandatory on-costs and market-standard allowances are included. For an expatriate, there is no income tax and no pension contribution, so the statutory employer cost is relatively light: mandatory health insurance and accruing end-of-service gratuity. For a UAE national, social insurance contributions apply on top.
The larger driver of total cost is usually the allowance layer, housing, transport, schooling, and flights, that makes an offer competitive. To estimate the full cost of a specific role, use Multiplier’s employee cost calculator.
How to design a compliant employee benefits program in the UAE
Designing a benefits program that is both compliant and competitive comes down to four steps.
Step 1: Set objectives and budget. Decide what the program is for, and set the budget to include gratuity accruals, health insurance, and the allowance layer.
Step 2: Assess employee needs. Understand what your workforce values, and factor in the different expectations of UAE-national and expatriate hires.
Step 3: Build the benefits plan. Layer allowances and enhanced cover onto the statutory base of gratuity, health insurance, and leave, never dropping below the legal minimum.
Step 4: Review and gather feedback. Revisit the plan against employee input and changes such as the emirate health-insurance rules and any new labour-law amendments.
How Multiplier helps you manage employee benefits in the UAE
Staying on top of gratuity, emirate-specific health insurance, WPS wage transfers, and leave in the UAE takes local expertise and constant attention, and the complexity multiplies when a team spans Dubai, Abu Dhabi, and the Northern Emirates.
Multiplier’s Employer of Record employs your team in the UAE without a local entity, arranges emirate-compliant health insurance, pays wages through the WPS, tracks and settles gratuity, and runs statutory leave, with full compliance and no local entity. That means you can extend a compliant offer to a candidate in the UAE in days rather than months.
Hire and manage benefits in the UAE with Multiplier
Multiplier’s EOR handles gratuity, health insurance, WPS-compliant payroll, and statutory benefits compliance in the UAE, with no local entity required.
Talk to our team or explore UAE EOR.
FAQs
Is 13th-month pay required in the UAE?
No. UAE labour law does not mandate a 13th-month salary or holiday allowance. It is a discretionary payment some employers make to stay competitive, not a statutory entitlement. This is different from end-of-service gratuity, which is mandatory, and a 13th-month payment only becomes guaranteed if it is written into the employment contract.
What is the end-of-service gratuity formula in the UAE?
Gratuity is 21 days' basic wage for each of the first five years of service and 30 days' basic wage for each year beyond, capped at two years' basic salary. It is payable to any employee with at least one year of continuous service, within 14 days of their last working day.
Does health insurance coverage differ between Dubai and Abu Dhabi?
Yes. In Abu Dhabi the employer must cover the employee plus their spouse and up to three children under 18. In Dubai the employer's mandate covers the employee, and dependent coverage is the visa sponsor's responsibility. Health insurance is now mandatory in all seven emirates, each with its own regulator.
Is there a minimum wage in the UAE?
There is no statutory minimum wage for private-sector expatriate employees; their pay is set by the market and the employment contract. UAE nationals are covered by qualification-linked wage benchmarks tied to Emiratisation and pension rules.
Is there income tax on salaries in the UAE?
No. The UAE does not levy personal income tax on employment income, so salaries, allowances, and gratuity are received without income-tax deductions. The employer's cost sits in gratuity, health insurance, social insurance for nationals, and allowances rather than payroll tax.
What is the Wage Protection System (WPS) in the UAE?
The WPS is the UAE's electronic salary-transfer network, run by MOHRE with Central Bank-authorized banks and exchange houses. Employers must pay wages through it, on time and in full, so the system can monitor timely and accurate payment. Non-compliance can lead to fines and blocks on new work permits.
Are employers required to have a transparent bonus policy in the UAE?
Bonuses are discretionary for private-sector employees, so there is no general legal duty to pay one. However, a bonus written into a contract or paid consistently can become an enforceable entitlement, so employers should state clearly whether a bonus is discretionary and document each payment.
How can an Employer of Record help manage employee benefits in the UAE?
An EOR like Multiplier arranges emirate-compliant health insurance, pays wages through the WPS, tracks and settles end-of-service gratuity, runs statutory leave, and can administer allowances, all without a UAE entity, so you can hire and pay compliantly.
