What do you need to know to hire in the United Arab Emirates?
The UAE has zero personal income tax and a statutory gratuity that starts accruing from the first year of service. Annual leave is 30 days, notice runs 30 days to 90 days, and expatriate workers receive end-of-service gratuity instead of pension. Each guide below takes one layer.
· United Arab Emirates guide
How does Teamed handle UAE hiring for you?
Teamed becomes your legal employer of record in the United Arab Emirates for from $599 per employee per month, with zero FX mark-up in any currency.
Payroll, contracts, gratuity accrual, and the full UAE employment law stack run on one platform.
Real HR and legal experts manage every UAE hire, from the first offer letter to the final gratuity settlement. An actual person, not a chatbot or a pooled queue, handles your UAE team alongside EOR, contractor onboarding, and entity payroll on one platform. There is no setup fee and no exit fee. Employer cost passes through at cost, itemised on every invoice.
A UAE contractor who converts to employment keeps their record, and that same employee can graduate from EOR to your own UAE entity without re-onboarding. Run the Crossover Calculator to see the month the model flips. EOR is the right model for a first UAE hire, until it isn't.
- End-of-service gratuity is not pension and it is not optional. Every UAE employee who completes 1 year of service is owed a statutory gratuity on departure. The rate is 21 days of basic wage per year for the first five years, rising to 30 days per year after that, capped at 24 months. Most US buyers budget for salary and miss this entirely. The termination guide shows how the calculation works.
- Pension contributions apply to UAE nationals only, not to expatriates. GPSSA rates are 15% employer and 11% employee, but these apply only to Emirati employees. Expatriate workers sit outside the GPSSA scheme entirely. Their retirement provision is the end-of-service gratuity. Designing a compensation package without knowing which rules apply to which employees is a common and costly mistake.
- The UAE has no personal income tax. There is no income tax withholding, no payroll tax filing deadline, and no employee deductions for income purposes. Payroll is simpler than in most EOR markets, but the gratuity accrual and the Wage Protection System (WPS) monthly reporting obligation add their own compliance layer.
Hiring in the UAE adds the statutory end-of-service gratuity to every employment cost model. The gratuity accrues from year one at 21 days of basic wage per year for the first five years.
There is no personal income tax in the UAE. Payroll runs monthly under the Wage Protection System.
Teamed runs UAE payroll, contracts, and compliance through a UAE-licensed EOR entity.
This page is the map. Each guide below is the detail.
Zero FX. No setup fees. 48-hour onboarding. The price your finance team can forecast against without an asterisk.
How much does it cost to hire an employee in the UAE in 2026?
A UAE hire costs roughly 108 to 115 percent of gross salary once gratuity accrual is included.
There is no employer payroll tax for expatriate hires. The main on-cost is the end-of-service gratuity, which accrues at 21 days of basic wage per year for the first five years.
The UAE has no employer social insurance for expatriate employees. Cost above salary is mainly the gratuity accrual, any employer-paid health insurance (mandatory in Abu Dhabi and Dubai), and Teamed's fee. For UAE national employees, GPSSA pension contributions add 15% on the employer side on top of that. Teamed's UAE fee sits inside the total cost envelope.
Teamed's UAE price is a starting rate, with zero FX in any currency pairing. No setup fees. No exit fees. Salaries and gratuity accruals passed through at cost on every invoice.
The full breakdown, with worked examples at current gratuity rates, is in the cost guide.
Do you need a UAE entity to hire employees in the UAE?
No. An Employer of Record runs UAE payroll and contracts from day one.
Your own UAE entity becomes cheaper than EOR somewhere around 5 to 8 employees, depending on the free zone or mainland structure.
Setting up a UAE entity requires choosing between a mainland licence (via a local sponsor or 100% ownership in designated sectors) or a free zone licence. Free zone setups can take two to six weeks and come with ongoing trade licence fees, audit requirements, and visa processing. An Employer of Record is faster and cheaper at low headcount. Teamed runs UAE payroll, contracts, and WPS compliance from day one.
The crossover point depends on salary levels and your chosen structure. For most roles it lands around 5 to 8 employees. The EOR vs entity guide runs those numbers for both mainland and free zone scenarios.
Most EOR providers will not tell you when you have crossed it. We do, and we help you move. You progress from contractor to EOR to your own UAE entity on one platform under Teamed's Graduation Model, with tenure preserved.
What are the key employment law rules in the UAE in 2026?
Federal Decree-Law No. 33 of 2021 governs all UAE private sector employment and has been in force since February 2022.
The Wage Protection System requires monthly salary transfer within the pay cycle. Late payment is a MOHRE violation.
Federal Decree-Law No. 33 of 2021 replaced the older 1980 Labour Law and introduced fixed-term contracts as the only permitted form for new hires. All contracts must be submitted to MOHRE. The probation maximum is 6 months, with 14 days notice for employer termination during that period. Working time is capped at 48 hours per week standard, reducing to 8 hours per day.
MOHRE raised the minimum monthly wage for UAE nationals in the private sector to AED 6,000 from 1 January 2026. No statutory minimum wage applies to expatriate employees. The compliance and hiring guides cover day-one obligations, WPS registration, and the visa and work permit process in full.
What benefits must you provide UAE employees in 2026?
The statutory floor is 30 days of paid annual leave, 15 days sick leave at full pay, and 5 days of paid paternity leave.
Maternity leave is 45 days at full pay and 15 days at half pay.
Annual leave is 30 days for employees who have completed one year of service, counted separately from the 7 official public holiday occasions. Sick leave runs 15 days at full pay, then 30 days at half pay, then 45 days unpaid in any 12-month period. Sick pay is the employee's responsibility to claim; it does not require employer-paid insurance at the federal level.
Maternity leave totals 45 days at full pay and 15 days at half pay under Federal Decree-Law No. 33 of 2021, Article 30. Paternity leave is 5 days of paid leave. The benefits guide covers each entitlement and the employer obligations in detail.
What are payroll taxes in the UAE in 2026?
There is no personal income tax in the UAE. Employees pay zero income tax on their salaries.
For UAE national employees only, GPSSA pension contributions are 15% employer and 11% employee. Expatriate employees sit outside the pension scheme entirely.
The UAE has no payroll income tax withholding and no employee tax filing requirement. PwC Tax Summaries confirms verbatim: there is currently no personal income tax in the United Arab Emirates. Payroll compliance is about WPS monthly wage transfer and MOHRE registration, not tax filing.
GPSSA pension applies to UAE national employees only. The employer contributes 15% and the employee contributes 11% of the contribution account salary under Federal Decree-Law No. 57 of 2023. Expatriate employees receive the end-of-service gratuity in place of any pension scheme. The tax and payroll guide covers WPS obligations, GPSSA registration for Emirati hires, and the gratuity calculation in full.
How do you terminate an employee in the UAE?
Post-probation notice runs 30 days to 90 days. The contract sets the exact term within that range.
Any employee who has completed 1 year of service is owed end-of-service gratuity on departure, regardless of the reason for leaving.
Notice post-probation is set by contract within the statutory 30 days to 90 days band under Federal Decree-Law No. 33 of 2021, Article 43. During probation the employer can terminate on 14 days notice. The employer must pay all final dues within 14 days of the last working day under Article 53.
End-of-service gratuity is owed to every employee who completes 1 year of continuous service. The rate is 21 days of basic wage per completed year for the first five years, then 30 days per year after that. Total gratuity is capped at 24 months of basic wage. If the employer terminates arbitrarily, an additional compensation of up to 3 months of last wage may be awarded. The termination guide covers the full process and worked examples.
What should you know before hiring in the UAE?
Two things catch US buyers out. The first is that expatriate and UAE national employees operate under different cost and compliance rules.
The second is that the gratuity is calculated on basic wage only. Allowances and variable pay are excluded.
Expatriate and Emirati employees are not on the same compliance track. Emirati employees require GPSSA pension registration and contributions. Expatriate employees do not. Most UAE workforces are majority expatriate, but Emiratisation quotas (Nafis programme) are expanding which sector by sector requires Emirati hires. Budgeting uniformly for one cost model across a mixed workforce creates real gaps.
Gratuity calculates on basic wage, not total compensation. The UAE formula uses basic wage only. Allowances (housing, transport, education) and variable pay (bonuses, commissions) are excluded from the calculation. A high-allowance package reduces the gratuity liability for the employer but also reduces what the employee receives on exit. The termination and cost guides show how to model this correctly.
Frequently asked questions
How much does it cost to hire an employee in the UAE?
For expatriate employees, plan on roughly 108 to 115 percent of gross salary. There is no employer payroll tax, but end-of-service gratuity accrues at 21 days of basic wage per completed year for the first five years. For UAE national employees, add GPSSA pension contributions at 15% employer. Teamed's UAE fee is one flat number per employee per month, with zero FX mark-up in any currency pairing.
Can a US company hire in the UAE without an entity?
Yes. An Employer of Record like Teamed runs UAE payroll, contracts, and MOHRE compliance through its own licensed entity. You direct the work. Teamed becomes the legal employer of record. Setup takes 48 hours once terms are confirmed. Setting up your own UAE entity requires a mainland or free zone licence and takes two to six weeks at minimum.
What is the UAE end-of-service gratuity in 2026?
Every employee who completes 1 year of continuous service is owed end-of-service gratuity on departure. The rate is 21 days of basic wage per completed year for the first five years, then 30 days per year after that. Total gratuity is capped at 24 months of basic wage. Gratuity is calculated on basic wage only, not total compensation.
What are the UAE statutory notice periods?
Post-probation notice runs 30 days to 90 days as set by contract within those statutory bounds under Federal Decree-Law No. 33 of 2021, Article 43. During probation, the employer can terminate on 14 days notice. Final pay must be settled within 14 days of the last working day.
Is there income tax in the UAE?
No. There is no personal income tax in the UAE for residents or employees. There is no income tax withholding, no payroll tax filing, and no employee tax registration. Payroll compliance in the UAE is about the Wage Protection System monthly transfer obligation and MOHRE contract registration, not income tax.
What is the minimum annual leave for a UAE employee?
The minimum paid annual leave is 30 days for employees who have completed one year of service, under Federal Decree-Law No. 33 of 2021, Article 29. Annual leave and the 7 official public holiday occasions are counted separately. Employees with less than one year of service accrue leave proportionally.
The UAE reads as a low-regulation hire because there is no income tax and no employer social insurance for expatriates. The actual compliance layer is the Wage Protection System, the gratuity accrual, and the MOHRE contract registration. Miss any of those and you are not just non-compliant, you are at risk of a WPS freeze on your payroll account. These guides exist so the first UAE hire lands correctly from day one.
The UAE has no income tax and no employer pension for expatriate hires. That simplicity ends at the gratuity calculation and the WPS monthly reporting obligation.
Every year of service accrues 21 days of basic wage as a future liability. After five years it becomes 30 days. That number compounds.
Read the right UAE guide before the first hire, not after the first MOHRE dispute.
