How much does it really cost to hire in the United Arab Emirates in 2026?

The UAE employer cost structure is simpler than most countries. No income tax means no withholding administration. No employer payroll levy on expatriate hires means the headline cost stack is gratuity plus leave plus any benefits you choose to offer.

These figures are illustrative. The gratuity line uses 21 days of basic wage applied to a basic monthly salary of AED 15,000, divided by 26 working days, multiplied by 21. The sick pay reserve assumes an average absence rate of two days per employee per year. These are not statutory figures. Actual totals will vary with the ratio of basic to total salary, actual absence, and any benefits provided.

Add Teamed from $599 per employee per month and the total employer cost rises. Use the Employer Cost Calculator to run your own salary figures.

1. Fix basic wage and total salary

   Separate basic wage from total package. Gratuity accrues on basic wage only. Housing and transport allowances do not count. Get the split right before you model anything else.

2. Calculate gratuity accrual

   Apply the statutory daily rate to the basic wage. For years one to five, use 21 days of basic wage per completed year. After five years the rate rises to 30 days.

3. Check national versus expatriate status

   Confirm whether the hire is a UAE national. Nationals on the GPSSA scheme attract employer pension contributions at 15% of contribution account salary. Expatriates do not attract this charge.

4. Add leave and sick pay exposure

   Budget 30 days paid leave after one year plus 7 public holiday occasions. Reserve for sick pay at the full-pay and half-pay rates for typical absence levels.

5. Include visa and onboarding costs

   Estimate visa, Emirates ID, and work permit fees as upfront costs. These are one-time per visa cycle, not monthly. Include repatriation cost in your exit model for every expatriate hire.

Gratuity is calculated on basic wage only, not on total package. Housing allowances, transport allowances, and bonuses do not count toward the gratuity base. This matters. An employee earning AED 15,000 total but only AED 10,000 basic accumulates gratuity on the AED 10,000 figure. Structure the salary clearly to avoid disputes at the end of a contract.

How the formula works in practice

One daily rate of basic wage equals the monthly basic salary divided by 30 calendar days. A 21-day gratuity year on a basic wage of AED 10,000 a month works out at AED 7,000 for the year (illustrative). After five completed years the rate moves to 30 days per year on the same basic wage base.

The cap and when it bites

The 24 months cap on total gratuity means the obligation stops growing at a certain tenure point. For an employee earning AED 10,000 basic a month, the cap is AED 240,000 of total gratuity. That point is reached somewhere around 25 to 28 years of continuous service depending on the salary. For most hires the cap is not a near-term constraint, but it matters for long-service projections.

Gratuity and resignation

Under the current law (Federal Decree-Law No. 33 of 2021), an employee who resigns after completing one year of service retains their full gratuity entitlement. The previous partial-forfeiture rule for resignations before five years was removed by the 2021 reform. Budget the full gratuity liability from the first completed year regardless of who initiates the departure.

Final settlement deadline

All final pay, including accrued gratuity, must be paid within 14 days of the last working day. Missing this deadline triggers penalties under MOHRE regulations. Teamed tracks and remits the final settlement as part of the offboarding workflow.

Annual leave

The 30 days paid leave entitlement applies after one year of service. In the first year, employees accrue leave proportionally. Many employers grant full leave from month one as a market practice, but the law sets one year as the threshold. Budget the full 30 days days from hire date one in your cost model, because you are accruing it from day one even if it cannot be taken immediately.

Public holidays

The UAE Cabinet recognises 7 official public holiday occasions in 2026. Several occasions span multiple calendar days, giving a total of approximately 13 calendar dates. The exact dates for Islamic holidays are confirmed by moon sighting close to the date and can shift by one or two days. Build 7 paid occasions into your annual cost model.

Sick leave structure

UAE sick leave runs in three phases per year of service. The first 15 days of sickness in any year are at full pay. The next 30 days are at half pay. The remaining 45 days are unpaid. The total protected sick leave window is 90 days per year. After that the employer may terminate for medical incapacity, but must still pay all outstanding entitlements including gratuity.

Maternity leave

Female employees in the private sector receive 45 days at full pay followed by 15 days at half pay. This is an employer cost with no government reimbursement mechanism in the private sector. Budget the full maternity pay obligation as an employer-funded item.

Paternity leave

Male employees receive 5 days of paid paternity leave. This is employer-funded. It is short relative to many European countries but it is a non-negotiable entitlement under the current law.

The cost split between national and expatriate hires is one of the most important structural facts in UAE employment budgeting. Get it wrong and the model is off from the start.

The GPSSA structure for national employees

UAE nationals who joined private-sector employment from 31 October 2023 onward fall under Federal Decree-Law No. 57 of 2023. The employer contributes 15% and the employee contributes 11% of the GPSSA contribution account salary. A government subsidy of 2.5% applies where the contribution account salary is below AED 20,000 per month. End-of-service gratuity does not accrue separately for these employees. It has been replaced by the pension scheme.

Emiratisation quotas (Nafis programme)

Employers in certain sectors and above certain headcount thresholds must meet Emiratisation targets set by MOHRE. If you are hiring in a covered sector, each Emirati hire on the GPSSA scheme adds 15% employer contribution on top of salary. Factor this into your cost model if Emiratisation applies to your business. Teamed advises on quota obligations as part of the onboarding consultation.

Visa and work permit fees

Every expatriate employee in the UAE requires a residence visa and a work permit. The employer sponsors both. Fees vary by emirate and by visa category but typically run in the range of AED 3,000 to AED 6,000 per hire for a standard two-year visa. Medical examination, Emirates ID, and labour card fees are separate items. These are upfront costs, not monthly running costs, but they are real and should appear in the total cost-of-hire model.

Repatriation obligation

If you terminate an expatriate employee, you are required to fund their return flight to their home country. The employer bears this cost. For most destinations this is a few hundred AED, but for distant origins it can reach AED 3,000 to AED 5,000. Budget it as part of the offboarding cost model, especially for roles that may not last beyond the first visa cycle.

Probation period and notice asymmetry

The maximum probation period is 6 months. During probation, the notice period for employer termination is just 14 days. After probation, notice must be at least 30 days and no more than 90 days. The jump from 14 days to 30 days minimum notice is a real cost step. Once an employee passes probation, the notice cost at exit rises substantially.

Working time and overtime

The standard working week is 48 hours over six days. Employees who work more than 8 hours per day are entitled to overtime pay. During Ramadan, working hours are reduced by two hours per day for Muslim employees. Build the overtime exposure into your cost model if the role involves extended hours.

Real HR and legal experts handle your UAE hires from the first offer letter through every visa renewal, WPS payroll submission, and final settlement payment. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Every employer cost passes through at cost, itemised on every invoice. You see the gratuity accrual line, the visa cost line, and the leave liability line. Nothing is hidden inside the management fee.

EOR payroll, contractor onboarding, and entity setup all live on one platform. A UAE contractor who converts to full employment keeps their record. That same employee can graduate from EOR to your own UAE entity without switching systems. EOR is the right structure for a first UAE hire, until it isn't. Teamed does not lock you in. Start from the UAE hiring overview or run the Employer Cost Calculator to see the full picture.