Mercans CountryIntel ® United Arab Emirates Global Payroll And HR Insights
A constitutional federation of seven emirates, the UAE (United Arab Emirates) is politically and economically stable. A progressive policy of economic diversification, free zones and increased foreign direct investment has contributed to UAE’s robust economy.Download PDF
The UAE is stable economically and its positive features include a strategic location, strong financial reserves, consistent government spending, several multi-specialty free zones and a progressive policy of economic diversification.
Entity Registration & Incorporation Requirements
Setting up a new business or expanding an existing one in the UAE is straightforward. Choose how your company operates from a range of entity types which suit your individual circumstance.
Banks are open from Monday to Friday 9 am to 4 pm.
The standard working week is 40 hours per week usually worked from Monday to Friday
The UAE is implementing a strategic plan to promote Emiratisation in the private sector, that is an initiative to employ its citizens in a meaningful and efficient manner in the public and private sectors. Federal Law No. 8 of 1980 (also known as the Labour Law) governs the labour rights of employees in the private sector and applies to all employees working in the UAE, whether individuals are UAE nationals or expatriates.
Petroleum, petrochemicals, travel and tourism
Dates & Numbers
Official State Name
The United Arab Emirates
International Dialing Code
Private sector employers should pay staff salaries through the Wages Protection System to avoid penalties or fines. In particular, wages must be received once a month on due dates and generally, no later than 10 days after the end of each salary period. The UAE Labour Law does not provide guidelines on the percentage of the basic salary to be paid by an employer; this should be negotiated with individuals.
It is acceptable to provide employees with online pay slips
Payroll reports must be kept for 10 years
90 days sick leave where only the first 15 days are paid
45 days of paid maternity leave and 5 days of paid paternity leave
Maternity & Paternity Leave
On provision of 30 days prior notice
No requirement by law for provision of a 13th month salary. This payment is made based on employer's discretion
Employees must receive an overtime wage equivalent to regular hour pay with a 25 per cent increase.
First 5 years : 21 working days' basic salary 5 years and above : 30 working days' pay
Companies that manage multi country payroll (whether this is managed internally or outsourced) should take note of the unique situation in the UAE. The UAE does not levy income tax on individuals. Social security contributions are applicable only for UAE and GCC (Gulf Cooperation Council) nationals.
Corporate tax is, however, levied on oil companies and foreign banks. Value added tax is levied on the majority of goods and services.
Corporate Income Tax
Personal Income Tax
If UAE or GCC nationals are employed, both the employer and employee are required to make contributions to the General Pension and Social Security Authority (GPSSA). Neither the employer of an expatriate employee nor the expatriate employee are required to make any social security contributions in the UAE.
Social Security Rate
Social Security Rate for Employers
Social Security Rate for Employees
If an individual is offered a job in the UAE, they must be provided an offer letter issued by the UAE’s Ministry of Human Resources and Emiratisation (MOHRE). Visa or tourist entry permits do not provide the right to work in the UAE and default may result in penalties being incurred and deportation.
There are two types of employment contracts: limited term contracts (fixed term) or unlimited term contracts. The difference between the two lies in the provisions for end of service gratuity and termination.
The Labour Law provides rules about safety and the protection of employees of the private sector including the midday break rule which bans labourers from working outdoors directly under the sun during the afternoons in the summer. Several decrees have been passed to protect worker rights covering recruitment, pay, housing and health.
Private sector employees in the UAE are entitled to annual leave, sick leave, maternity leave, parental leave and leave to complete the Hajj (annual Islamic pilgrimage to Mecca)
Either party can singly terminate a limited contract provided the legal consequences of early termination are complied with. In the case of unlimited contracts, the employment relationship is terminated if both employer and employee mutually agree on termination.
30 days prior
Terminating Employment Minimum notice period for terminating an employee
Total number of public holidays
Working hours per week
Total number of days for Compassionate & Bereavement Leave
Employment, once accepted, must be reported to the Labour Office to avoid violation of the law. Additionally, should an employer not present an individual with a work contract within a week of arrival or if the individual is not able to start work immediately following that, the individual should report to the nearest Labour Office who will assist them with securing alternative employment.
An individual’s residency permit must be paid for by the employer who must also pay for recruitment costs and the individual’s travel costs to the UAE. There is no such thing as an independent employment visa as all employers must be clearly identified. Additionally, residence visas can only be issued when the applicant is within the UAE having entered on an entry permit.
Work Permit validity
Valid travel records including a passport, visa, etc
Financial records including pay slips
An invitation from immediate family members residing in UAE on family visa status
Visa documentation requirements for Dubai – Transit visa, residence visa, visit visa as applicable
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