Global HR Compliance in the United Arab Emirates

Employment in the UAE is governed primarily by the Federal Decree-Law No. 33 of 2021 and its executive regulations, which apply across all seven emirates to most private sector employers.
The system establishes clear standards for employment contracts, working hours, benefits, and termination procedures while maintaining flexibility to attract international talent and investment.

Each employment relationship must be formalised through a registered contract filed with the Ministry of Human Resources and Emiratisation (MoHRE) for mainland entities, or with the relevant free zone authority for free zone companies.

Employment contracts must specify job title, duration, remuneration, leave entitlements, and end-of-service benefits.

For international employers, the UAE offers both opportunity and complexity. While it allows full foreign ownership in most sectors, it also requires strict adherence to sponsorship, visa, and payroll compliance rules. Companies hiring local or foreign staff must ensure accurate registration, payroll reporting, and timely remittance of social contributions for Emirati nationals.

Acumen International helps global employers operate compliantly in the UAE through our Global Employer of Record (EOR) solutions.
We assist with workforce cost mapping, employment documentation, payroll setup, and coordination of immigration processes through authorised local partners. This enables companies to employ local or expatriate professionals legally without establishing a legal entity, ensuring each engagement complies with UAE labour, tax, and immigration regulations.

Why Companies Hire in the United Arab Emirates

The UAE is one of the region’s most strategic locations for international business, attracting employers that need to establish a foothold in the Middle East without setting up full-scale operations immediately.
Companies typically hire in the UAE to achieve one or more of the following objectives:

• Market presence and client delivery – Engaging local representatives, sales staff, or project managers to manage contracts and clients across the Gulf region.
• Access to skilled professionals – Recruiting experienced talent in finance, construction, oil and gas, technology, and professional services.
• Regional coordination – Using the UAE as a management hub to oversee operations across MENA and South Asia.
• Operational flexibility – Employing or relocating specialists for limited-term assignments without committing to permanent establishment.
• Compliance and workforce control – Engaging foreign and local workforce compliantly to avoid contractor misclassification, sponsorship conflicts, or tax exposure.

These hiring models often arise before a company has its own licensed entity or when managing multiple short-term projects across free zones and mainland jurisdictions.
Acumen International supports such scenarios through its Global Employer of Record model, allowing businesses to onboard, pay, and manage employees in the UAE quickly and compliantly while maintaining full operational oversight.

Hiring in the United Arab Emirates Without a Local Entity

Hiring in the UAE requires an authorised employer of record registered with the Ministry of Human Resources and Emiratisation (MoHRE) for mainland operations, or the relevant free zone authority for free zone employment.
Foreign companies cannot directly place individuals on local payroll or sponsor their visas without holding a licensed entity or valid establishment card.

Acumen International enables companies to employ staff legally in the UAE without forming a subsidiary.
Through our global Employer of Record (EOR) model, we manage employment relationships on behalf of international clients, ensuring compliance with UAE labour law and visa regulations.
This includes employment contract preparation, payroll administration, local benefits alignment, and coordination with authorised partners for immigration formalities.

The model is particularly effective when:

• A company needs to engage personnel before setting up its local entity
• Expatriate experts must be deployed for project delivery or client oversight
• A regional team requires compliant payroll and administration within the UAE
• A business seeks to test the market or manage limited-scope operations without full incorporation

By using a Global EOR framework, employers can maintain full control of day-to-day work while Acumen assumes legal responsibility for employment administration and compliance filings.
This structure provides a lawful, transparent, and timely solution for operating in the UAE without permanent establishment or sponsorship risk.

Employment Contracts in the United Arab Emirates (2025)

All employment in the UAE must be governed by a written contract that complies with the Federal Decree-Law No. 33 of 2021 and its executive regulations.

Employment contracts must be registered either with the Ministry of Human Resources and Emiratisation (MoHRE) for mainland employers or with the relevant free zone authority for companies established within a free zone.

As of 2022, all contracts in the UAE follow a fixed-term model.
Open-ended contracts were phased out, and existing ones were converted to fixed-term agreements with renewal provisions.

The maximum contract duration is three years, renewable on expiry by mutual consent.

Each contract must specify the following details:

• Employer and employee information
• Job title and duties
• Duration of employment
• Basic salary, allowances, and other benefits
• Working hours and leave entitlements
• Termination terms, notice period, and end-of-service benefits
• Reference to the applicable law and jurisdiction

Contracts may be issued in Arabic or bilingual (Arabic and English), but the Arabic version prevails in case of dispute.
Both employer and employee must sign the agreement, which must then be filed electronically through the MoHRE or free zone portal before the employee can begin work or receive a residence visa.

Probation terms, confidentiality clauses, and non-compete provisions must be clearly stated and reasonable in scope to be enforceable under UAE law.

Properly executed and registered contracts are essential for payroll, visa issuance, and legal compliance, forming the foundation of every lawful employment relationship in the UAE.

Working Hours and Overtime in the United Arab Emirates (2025)

Under UAE labour law, the standard working hours for private sector employees are eight hours per day or forty-eight hours per week, excluding breaks.
Working hours may be reduced for specific industries or under approved flexible, remote, or part-time arrangements.

During the holy month of Ramadan, working hours for Muslim employees are reduced to six hours per day or thirty-six hours per week, with no reduction in salary.

Employees must receive one or more daily breaks totalling at least one hour after no more than five consecutive hours of work. Breaks are not included in paid working time.

Overtime

Any work performed beyond the standard daily or weekly limit is treated as overtime and must be compensated accordingly.
Overtime may not exceed two hours per day, except in exceptional cases required to prevent serious loss or danger.

Overtime pay is calculated as follows:

• 125% of the basic hourly rate for regular overtime
• 150% of the basic hourly rate for overtime performed between 10 p.m. and 4 a.m. (night hours)
• 150% of the basic hourly rate or a compensatory day off for work on a weekly rest day
• 200% of the basic hourly rate or time off in lieu for work on public holidays

Senior or supervisory employees with decision-making authority may be exempted from overtime payment, provided this is clearly stated in their contract.

Employers must record and maintain working hour logs for audit and inspection purposes.
Flexible, remote, or part-time work arrangements are permissible under ministerial resolutions, provided they are registered and approved by the MoHRE.

Probationary Period in the United Arab Emirates (2025)

The UAE Labour Law allows employers to place new employees on probation for up to six months from the start of employment. The probation period must be clearly stated in the written employment contract and can only be applied once for the same employer.

Either party may terminate the employment during probation by giving written notice, with the notice period depending on who initiates the termination and where the employee intends to move next:

• Termination by employer – 14 days’ written notice is required.
• Resignation by employee (remaining in UAE) – 30 days’ written notice is required.
• Resignation by employee (leaving the UAE) – 14 days’ written notice is required.

If the employee leaves without the required notice and joins another employer in the UAE, the new employer may be required to reimburse the previous employer for recruitment and visa expenses.

Time spent on probation counts toward total service when calculating future entitlements, including annual leave, gratuity, and other benefits, once the employee continues beyond probation.

Employers are encouraged to document performance evaluations during this period, as arbitrary termination without proper documentation can be challenged under UAE labour dispute procedures.

Statutory Leave Entitlements in the United Arab Emirates (2025)

Annual Leave

Employees who have completed one year of continuous service are entitled to 30 calendar days of paid annual leave.
For employment of less than one year, leave accrues at two days per month after the first six months of service.

Public holidays declared by the UAE government do not count against annual leave days.
Employers determine the timing of leave in line with business needs but must grant at least one full period of 15 consecutive days annually if requested by the employee.
Unused leave is compensated in cash at the employee’s basic salary rate upon termination or at year-end if carried over.

Sick Leave

Employees who have completed the probation period are entitled to 90 calendar days of sick leave per year, provided a medical certificate is presented.
Sick pay is calculated as follows:

• First 15 days: 100% of salary
• Next 30 days: 50% of salary
• Remaining 45 days: unpaid

No sick pay applies if the illness arises from misconduct, alcohol, or drug use.

Maternity Leave

Female employees are entitled to 60 days of maternity leave:

• 45 days fully paid
• 15 days at half pay

An additional 45 days of unpaid leave is available if illness resulting from pregnancy or delivery is certified by a medical practitioner.
Mothers of children with disabilities may take up to 30 extra paid days, renewable once.

Paternity Leave

Fathers are entitled to five working days of paid paternity leave, to be taken within six months of the child’s birth.

Bereavement and Study Leave

Employees are entitled to:

• 5 days of paid leave on the death of a spouse
• 3 days on the death of a parent, child, sibling, grandparent, or grandchild
  Employees enrolled in accredited institutions are entitled to 10 days of study leave per year after two years of continuous service.

Public Holidays

Private sector employees receive the same public holidays as the public sector, currently totalling around 13–14 days per year, depending on lunar dates.

Holidays include New Year’s Day, Eid Al-Fitr, Arafat Day, Eid Al-Adha, Islamic New Year, Prophet Muhammad’s Birthday, and UAE National Day.

Termination of Employment and End-of-Service Benefits in the United Arab Emirates (2025)

Termination and Notice Periods

Employment contracts in the UAE may be terminated by either party, provided that written notice is given according to the terms stated in the contract.
The statutory minimum notice period is 30 days, and the maximum permitted by law is 90 days.

Termination may occur for several reasons, including mutual agreement, contract expiry, redundancy, or valid disciplinary cause.
Dismissal without notice is permitted in cases of serious misconduct, as defined under Article 44 of the UAE Labour Law (e.g., falsification of documents, disclosure of trade secrets, or repeated violation of company policies).

If the employer terminates the contract without valid reason, the employee may claim compensation of up to three months’ total salary (basic pay plus allowances).

Resignation

Employees may resign with notice according to contract terms.
During the probation period, special notice rules apply (as covered earlier).
If an employee leaves the UAE without proper notice, the employer may recover visa and recruitment expenses in accordance with MoHRE procedures.

End-of-Service Gratuity

Employees who complete at least one year of continuous service are entitled to an end-of-service gratuity, calculated on their basic salary only, as follows:

• 21 days’ basic salary per year for the first five years of service
• 30 days’ basic salary per year for each additional year thereafter

The total gratuity may not exceed two years of total wage.
For incomplete years, payment is made on a pro-rata basis.

End-of-service benefits are not payable in cases of dismissal for serious misconduct (Article 44).
For resignations before five years of service, the full gratuity is still payable under the current law (the previous reduction for early resignation was abolished).

Gratuity vs. Pension

UAE nationals and GCC citizens are covered by mandatory pension and social security schemes instead of the gratuity system.
Employers of Emirati nationals must contribute to the General Pension and Social Security Authority (GPSSA) as follows (2025 rates):

• Employer: 12.5% of contributory salary
• Employee: 5%
• Government: 2.5% subsidy

Foreign employees (non-GCC nationals) are not covered by GPSSA and remain eligible for the standard end-of-service gratuity.

Statutory Benefits and Social Contributions in the United Arab Emirates (2025)

Employers in the UAE must comply with payroll registration, wage protection, and benefits requirements under federal and emirate-level regulations. While the framework is straightforward, compliance varies by employee nationality and location.

Minimum Wage

There is currently no unified national minimum wage for the private sector.
Salary levels are determined by employment contracts, professional category, and visa classification.
Market-driven pay scales and sector norms define most remuneration structures.

Health Insurance

Health insurance is mandatory for private-sector employees in Dubai and Abu Dhabi, where employers must provide coverage for each employee.
In Abu Dhabi, dependants must also be covered.
In other emirates, employers are strongly encouraged to provide insurance, and this is increasingly seen as a compliance best practice.

Social Security and Pension Contributions

Mandatory social insurance applies only to UAE nationals and, in some cases, GCC nationals under reciprocal agreements.
The standard contribution framework is:

• Employer: 12.5% of contributory salary
• Employee: 5%
• Government: 2.5% subsidy

Employees who joined after the introduction of the Ma’ashi pension scheme in late 2023 may fall under a higher contribution structure of 26% in total (15% employer, 11% employee).
Foreign nationals outside the GCC are not subject to UAE social insurance and instead receive end-of-service gratuity.

Unemployment Insurance

All eligible employees in the UAE are required to contribute to the Involuntary Loss of Employment (ILOE) scheme.
The contribution is paid by the employee and set at:

• AED 5 per month for basic salaries up to AED 16,000
• AED 10 per month for basic salaries above AED 16,000

This provides compensation for up to three months if employment ends involuntarily, subject to eligibility rules.

Personal Income Tax

There is no personal income tax on salaries or wages in the UAE. Employers do not deduct income tax at source. Corporate tax introduced in 2023 applies to company profits, not to employee earnings.

Minimum Wages and Payroll Compliance in the United Arab Emirates (2025)

Minimum Wage

There is no universal private-sector minimum wage in the UAE.
Salaries are agreed contractually and must reflect the employee’s skill level, occupation, and visa category.

For Emirati nationals employed under Emiratisation programmes, sector-specific wage guidelines may apply, but no federal minimum has been declared.

The Ministry of Human Resources and Emiratisation (MoHRE) continues to review wage levels for national workers, but expatriate salaries remain fully market-driven.

Wage Protection System (WPS)

All employers registered with MoHRE must pay salaries through the Wage Protection System.
WPS ensures that wages are transferred electronically via authorised financial institutions within the statutory timeframe, typically within fifteen days after the end of each wage period.

Failure to pay through WPS can result in fines, suspension of new work permits, and public blacklisting.
Employers operating in free zones must comply with equivalent systems managed by their respective authorities.

Payroll Frequency

Most employers pay wages on a monthly basis, aligned with the employment contract and WPS requirements. Salaries must be calculated on a Gregorian-calendar month basis, with full transparency on allowances and deductions.

Payslips and Record-Keeping

Employers must issue detailed payslips showing basic pay, allowances, deductions, and leave balances. Employment and payroll records must be retained for a minimum of two years after contract termination. Digital record-keeping and WPS reconciliation are accepted as legal proof of compliance.

Currency and Payment Rules

Wages must be paid in UAE dirhams through a UAE-licensed bank. Alternative currencies or cash payments are not accepted under WPS. Employers must ensure that all salary and benefit components declared in employment contracts are reflected consistently in WPS filings.

Global Payroll Calculator: Plan Employment Costs in the United Arab Emirates

Expanding your workforce in the UAE requires visibility into every employment-related cost, not just the salary. The Global Payroll Calculator (GPC) gives employers an accurate picture of total expenditure before hiring decisions are made.

The tool uses verified local data and up-to-date statutory rates to model real employment costs, covering items such as end-of-service gratuity, health insurance, pension contributions for Emirati nationals, ILOE deductions, and visa or relocation expenses.

Through the GPC, you can:

• Estimate the total cost of employment for specific roles and salary levels
• Compare hiring costs in the UAE with other countries in real time
• Run both gross-to-net and net-to-gross salary calculations
• Identify all mandatory contributions and benefits in advance
• Plan compliant, predictable budgets for local and expatriate staff

The Global Payroll Calculator helps HR, finance, and mobility teams forecast accurately, structure compensation correctly, and maintain compliance from the first hire to payroll delivery across all seven emirates.