Payroll in United Arab Emirates

The United Arab Emirates has no single statutory pay period in the dossier. Payroll is monthly in practice, and the pay frequency and due date belong in the employment contract. For a monthly salary, budget 12 regular payments a year. A monthly payroll convention does not excuse paying after the contractual due date.

Payday and the Wage Protection System

Employers registered with MOHRE must pay on time through the Wage Protection System or another approved system. Employers in other jurisdictions, such as DIFC and ADGM, need their own payment checks. The federal Labour Law generally covers private-sector employers and workers, so ask which authority registers the employer before assuming the federal rules apply. A Dubai address alone does not establish DIFC coverage.

Payslips and pay components

The federal law distinguishes basic wage from wage that includes contractual allowances and benefits. State each component clearly in the offer and the payroll record. Basic wage matters because several entitlements, including foreign-worker gratuity and unused leave paid on exit, are calculated from it. There is no single percentage split that fits every UAE employment regime.

Keep salary, allowances, overtime and any bonus on separate lines. Deductions are restricted to the grounds and limits in Article 25, such as certain loans, overpayments, approved schemes and court orders. The combined deduction or withholding generally cannot exceed 50% of wage, and individual categories have lower limits. An employee's signature does not turn every proposed charge into a lawful deduction.

No 13th-month payment

The federal Labour Law does not establish a general thirteenth-month salary for every employee. A bonus or additional payment can become part of the agreed package. If you offer one, state the amount or calculation, eligibility, payment date and treatment when the employee joins or leaves. Include any guaranteed payment when comparing annual offers.

Tax and contributions

The UAE does not levy personal income tax on individuals, so there is no income tax to withhold from wages. This does not settle a worker's tax obligations in another country or the client company's own tax position.

Social security applies to UAE nationals, not to expatriates. Contribution rates and bases depend on which law the employee is registered under, so confirm the registered law and base instead of applying one rate to every Emirati. Under Law 57/2023, an employer must register a covered employee with GPSSA within 30 days of joining and notify the end of service within 15 days. Contributions are paid monthly, due in the first 15 days of the following month. Registration and contribution duties continue even when an employer of record administers the payroll. Abu Dhabi has its own pension fund rules, so check which fund applies.

Working hours that affect pay

The general federal limit is eight normal working hours a day or 48 a week. Sectors, roles and work patterns have exceptions. During Ramadan, normal working hours are reduced by two hours for workers within the federal regime. Do not apply this automatically to a financial free zone.

A worker generally must not work more than five consecutive hours without breaks totalling at least one hour, excluded from working time. At least one paid weekly rest day is required, set by contract or work rules. It does not have to be Friday. Rest-day work requires the statutory substitute rest or additional pay.

Overtime generally cannot exceed two hours a day except for specified emergencies. Ordinary overtime is paid at basic wage plus at least 25%. Overtime between 10 p.m. and 4 a.m. attracts at least 50%, with a shift-worker exception. Paying a premium does not make an excessive schedule lawful.

Employees are entitled to official public holidays with full pay. If required to work, they receive a substitute day off or the normal day's wage plus at least 50% of basic wage for that day. Confirm the announced dates each year, including lunar-calendar holidays.

The UAE does not levy personal income tax on individuals. The income tax bracket data for 2026 shows a single band from AED 0 upward at a 0% rate. There is no top rate to quote and no withholding calculation to run on salary.

Income tax bands

The Federal Tax Authority also excludes wages from the business income used for natural-person corporate tax. An employee's salary is therefore not taxed through that route either.

How withholding works

Payroll does not withhold income tax from UAE salaries. Net pay is gross pay less lawful deductions only. Those deductions are restricted to the grounds and limits in Article 25, such as certain loans, overpayments, approved schemes and court orders. The combined deduction or withholding generally cannot exceed 50% of wage, and individual categories have their own lower limits. An employee's signature does not turn every proposed charge into a lawful payroll deduction.

No tax allowances or credits are needed, since there is no personal tax to reduce. This does not settle a worker's tax obligations in another country, for example if they also live or work elsewhere. It also does not settle the client company's own tax position. Check both separately.

Employee social security and other deductions

Pension contributions apply to Emirati nationals, not to most expatriates. Which rate applies depends on the employee's registered pension law, so confirm membership history rather than applying one rate to every Emirati.

• Law 7/1999: the employee share is 5% and the employer share is 15%. The government bears 2.5 percentage points of the private-sector employer share, which leaves 12.5% for the covered private employer. The private-sector contribution-salary ceiling is AED 50,000.
• Federal Law 57/2023: the employee contributes 11% and the employer share is 15% of the contribution salary. For private-sector members with a contribution salary below AED 20,000, the government bears 2.5 percentage points of the employer share. The contribution base is contractual salary, with an AED 3,000 floor and an AED 70,000 ceiling.
• Abu Dhabi: it has its own Pension Fund rules, with its own ceiling. The AED 70,000 figure is not a UAE-wide rule.

GCC nationals working outside their home country in another GCC state may have coverage under the GCC insurance extension system, so do not assume non-Emiratis have no pension contributions. Ask the provider to calculate the actual scheme.

Eligible employees must also subscribe to the Involuntary Loss of Employment scheme, subject to its exclusions. The published premium is AED 5 plus VAT a month for basic salary up to AED 16,000, or AED 10 plus VAT above that. Mandatory health insurance is arranged by the employer in all seven emirates.

Business taxes are a separate matter

The corporate tax rate is 9% and the VAT rate is 5%. These are business and transaction taxes. Neither is an extra percentage taken out of an employee's salary. Gratuity is an accrued employer obligation, not a payroll tax or an employee deduction.

Who pays employer contributions in the UAE

The UAE does not levy personal income tax, so there is no income tax withholding on payroll. Employer social security contributions apply only to covered UAE nationals, and the rate depends on which pension law and fund the employee is registered under. Expatriates do not generally attract social security contributions. Their main statutory employer cost is end-of-service gratuity, which is an accrued obligation, not a monthly contribution.

Contribution rates for UAE nationals

A new job does not automatically move an existing member out of the older law. Confirm the employee's registered law, fund and joining history before applying any rate.

Ceilings and floors

The contribution base differs by regime. Under Law 57/2023, the private-sector base is the contractual salary, with an AED 3,000 floor and an AED 70,000 ceiling. Under Law 7/1999, GPSSA identifies a private-sector ceiling of AED 50,000. The Abu Dhabi reform for new members sets an AED 100,000 contribution-salary ceiling. The AED 70,000 ceiling is not a UAE-wide rule, so check the employee's registered base.

What is and is not included

• Pension contributions: UAE nationals only, at the rates above. Registration with GPSSA is due within 30 days of joining, and contributions are due in the first 15 days of the following month.
• GCC nationals: eligible GCC nationals working in the UAE may be covered by the GCC insurance extension, with contributions following their home-country system. Ask the provider to calculate the actual scheme.
• Expatriates: no social security contribution, but end-of-service gratuity accrues, based on basic wage.
• Unemployment insurance: eligible employees subscribe to the Involuntary Loss of Employment scheme at AED 5 plus VAT a month for basic salary up to AED 16,000, or AED 10 plus VAT above that. This is separate from employer pension contributions.
• Health insurance: mandatory across all seven emirates. Get the actual policy cost, as there is no universal budget figure.

Worked cost example: foreign employee

Take a full-time foreign employee outside GCC pension coverage on AED 15,000 monthly total salary, including AED 10,000 basic pay, paid in 12 payments, with a full qualifying year within the first five years.

That subtotal is before health insurance, permits, EOR fees, equipment, expenses, overtime, bonuses, taxes on invoices and other exit costs. Gratuity is an accrued obligation, not an extra monthly cash salary. If the employer has joined the voluntary funded alternative to gratuity, do not charge both without checking the arrangement. DIFC employees have a separate qualifying savings scheme regime.

Which leave rules apply depends first on the regime that covers the employee. The federal Labour Law generally covers private-sector workers. DIFC and ADGM have their own employment regimes. A Dubai address alone does not place an employer in DIFC, so confirm which authority registers the employer before applying any figure below.

Annual leave

Under the federal law, a covered full-time worker receives 30 calendar days of paid annual leave for each year of service. With more than six months but less than one year of service, the entitlement is two days for each month. Part-time entitlement needs a separate calculation, and leave during probation can be agreed.

A worker can carry forward up to half of annual leave into the following year, or agree a cash allowance based on the wage at the time of entitlement. On termination, unused statutory leave is paid using basic wage. Do not erase accrued leave because employment ends.

DIFC works differently. Covered DIFC employees receive 20 working days after at least 90 days of employment. Do not copy the federal calendar-day rule into a DIFC contract.

Public holidays

Covered employees are entitled to the official public holidays with full pay. If an employee is required to work on one, they receive a substitute day off or the normal day's wage plus at least 50% of basic wage for that day. Confirm the announced dates each year, including lunar-calendar holidays, instead of using a fixed date or an annual-day count.

Sick pay

After probation, covered workers can take up to 90 days of sick leave a year. The employer pays the first 15 days at full pay and the next 30 at half pay. The remaining 45 days are unpaid.

The worker must report sickness within three working days and provide medical evidence. Paid sick leave does not ordinarily apply during probation, though unpaid leave may be granted. Work injuries follow separate rules for wage support and compensation, so do not run them through the sick-leave table.

Maternity, parental and other family leave

Federal maternity leave is 60 days: 45 at full pay, then 15 at half pay. It does not require a full year of service. An employer cannot dismiss or give notice because of pregnancy or maternity leave.

Extensions exist. A worker unable to return because of pregnancy- or childbirth-related illness can take up to 45 additional unpaid days with medical evidence. A child needing constant care because of illness or disability can trigger an additional 30 days at full pay and a further 30 unpaid. After return, nursing breaks can total up to one hour a day for six months from birth.

Parental leave is five paid working days, taken continuously or intermittently within six months of the child's birth. It applies to the mother or the father and is separate from maternity leave. Keep the birth evidence and record the leave as working days.

Bereavement leave is five paid days for the death of a spouse, or three for a parent, child, sibling, grandchild or grandparent, with supporting evidence.

Who pays and what to record

For the federal leave types above, the dossier describes the employer's obligation to pay. It does not identify a state-funded payment for these leave types, so confirm funding with your provider for each case. Separate statutory entitlements from additional benefits, and record eligibility, limits and what happens on termination. The federal law preserves better contractual rights, so a promised benefit cannot be removed because the statutory minimum is lower. There is no general thirteenth-month salary, so any bonus must be defined in the contract.

Most compliance risk in UAE payroll sits in five places: knowing which employment regime applies, the written contract, the work permit, pension and insurance registration, and the exit process. Settle the regime first, because it changes the rules for the rest.

Which regime applies

The federal Labour Law generally covers private-sector employers and workers. Government employment, the armed forces and domestic workers sit outside its ordinary scope. DIFC and ADGM run their own employment regimes, and a Dubai address alone does not place an employee in DIFC. Ask which authority registers the employer and which rules apply to the employee's actual work. Do not copy federal leave, gratuity or contract terms into a free zone contract. Likewise, do not apply DIFC's savings scheme rules to a federal hire.

Work permit and registration

The federal law prohibits employment without the required work permit. Confirm the actual employing entity, its permitted activity and the candidate's current residence status, then complete the employment and immigration steps before work starts. A visit visa or a promise of sponsorship is not proof of permission. If you use an employer of record, ask for its current permission to supply employees, because a recruitment or HR consultancy licence alone does not establish it.

Under Law 57/2023, an employer must register a covered Emirati employee with GPSSA within 30 days of joining and notify the end of service within 15 days. Contributions are paid monthly and are due in the first 15 days of the following month. Check each employee's membership history, because a new job does not automatically move an existing member out of the older law. Registration duties continue even when an EOR runs the payroll.

Eligible employees must also subscribe to the Involuntary Loss of Employment scheme, and mandatory health insurance now applies across all seven emirates.

Contracts and written terms

Use the required employment form and give both employer and employee a copy. Record the role, workplace, work pattern, salary and allowances, hours, leave, probation, contract term and exit arrangements. State basic wage separately from allowances, because gratuity and unused leave on exit use basic wage. Arabic is the approved language, with the worker's language added where needed, and Arabic prevails if versions differ. Fixed terms are renewable, and the old three-year cap was removed by the 2022 amendment.

Payroll and records

Record the salary frequency and due date in the contract. MOHRE-registered employers must pay on time through the Wage Protection System or another approved system. Deductions are limited to the grounds in Article 25, and an employee's signature does not make every charge lawful. Employers cannot charge workers recruitment costs or hold their official documents.

Notice and termination

Probation can last up to six months, and ending employment during it needs at least 14 days' written notice. After probation, either party needs a legitimate reason and written notice of 30 to 90 days as agreed in the contract. Dismissal without notice is limited to the serious grounds in Article 44 and needs a written investigation and a written, reasoned decision. Dismissing someone for a serious MOHRE complaint can be treated as unlawful under Article 47.

Final wages and other entitlements are due within 14 days of the employment ending.