Paying people in the UAE: WPS, pensions and mandatory insurance
UAE payroll has no personal income tax. Pay wages on time through MoHRE's Wage Protection System, or risk losing work permits. Pension contributions apply to UAE nationals only: 26% of pensionable salary for those who started on or after 31 October 2023. Employees subscribe to unemployment insurance at AED 5 or AED 10 a month, and the employer must provide health insurance.
UAE payroll through Teamed
- Salaries on time through WPS
- GPSSA pensions for UAE nationals
- Health insurance before each visa
Health insurance becomes a condition of UAE work visas
What happened
From 1 January 2025, employers must buy a health insurance policy before they apply for or renew residence permits for private sector employees and domestic workers. The rule extends mandatory cover beyond Abu Dhabi and Dubai to workers in Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah.
What it means for you
No policy, no visa. Workers whose permits were issued before 1 January 2024 are covered by the rule when their residence permit is next renewed. The basic package costs AED 320 a year.
Dates to know
- Each residence permit renewalA valid health insurance policy must be in place before the employer applies.
Source: The Official Portal of the UAE Government. We check this page every week. Last checked .
Running payroll in the UAE means paying wages on time through the Wage Protection System, MoHRE's electronic salary transfer system, and handling a small set of contributions that depend on who the employee is. There is no personal income tax. Pension contributions to the General Pension and Social Security Authority (GPSSA) apply to UAE nationals, not to expatriates, who instead receive end-of-service gratuity. UAE nationals working for employers in Abu Dhabi are covered by the Abu Dhabi Pension Fund, and nationals of other Gulf states are covered through the GCC insurance protection extension. Unemployment insurance, the ILOE scheme, is a low-cost policy employees take out themselves. Health insurance is the employer's duty and is tied to the work visa.
Is there income tax on salaries in the UAE?
No. The UAE does not levy income tax on individuals, so there is no income tax to deduct from pay.
That does not make UAE payroll deduction-free. Pension contributions apply to UAE nationals, and any deduction from a worker's wage must fall within the cases the Labour Law allows, such as pension contributions under the legislation in force.
What is the Wage Protection System and who must use it?
The Wage Protection System (WPS) is MoHRE's system for paying private sector salaries electronically, so the Ministry can see that wages are paid in full and on time. The Labour Law requires employers to pay wages on their due dates under the rules the Ministry approves.
An establishment that does not comply with WPS can have MoHRE refuse, not renew or cancel its work permits. WPS compliance also feeds into the company's MoHRE classification (A, B or C), which sets its work permit fees, and companies with a history of violations are placed in category C. Workers can report late salary through MoHRE's salary complaint service. Wages are paid in UAE dirhams unless the contract agrees another currency.
What pension contributions apply to UAE nationals?
For a UAE national who first joined the labour market on or after 31 October 2023, contributions are 26% of pensionable salary: 11% from the employee and 15% from the employer. For private sector nationals with a pensionable salary under AED 20,000, the government pays 2.5% on the employer's behalf.
This is Federal Decree-Law No. 57 of 2023 on Pension and Social Security, which covers private sector employers in every emirate except Abu Dhabi. Employees registered before 31 October 2023 stay under Federal Law No. 7 of 1999. The maximum pensionable salary for private sector nationals rose from AED 50,000 to AED 70,000 a month. UAE nationals working for employers in Abu Dhabi are covered by the Abu Dhabi Pension Fund instead. Expatriates do not pay into the federal pension; they receive end-of-service gratuity.
How does the GCC rule work for nationals of other Gulf states?
A national of another Gulf state working in the UAE keeps their home country's pension cover through the GCC Insurance Protection Extension Program, and the employer registers them in coordination with the GPSSA.
Contributions follow the employee's home country's pension law, not the UAE rates for UAE nationals.
What is the ILOE unemployment insurance scheme?
The Involuntary Loss of Employment scheme, mandatory since 1 January 2023, pays a worker who loses their job, other than for disciplinary reasons or resignation, up to 3 months of cash compensation. Employees with a basic salary of AED 16,000 or less pay AED 5 a month; above AED 16,000 they pay AED 10 a month, plus VAT.
Compensation is 60% of the average basic salary over the last 6 months, capped at AED 10,000 a month in the lower category and AED 20,000 in the higher one, for up to 3 consecutive months per claim. A worker must have subscribed for at least 12 consecutive months to claim. UAE nationals and residents in the federal government and private sectors subscribe; investors who own the company they work for, domestic workers, temporary contract workers, under 18s and pensioners who take a new job are excluded. MoHRE described the scheme as costing employers nothing, because the employee pays the premium.
Who must provide health insurance?
The employer. Health insurance is mandatory in Abu Dhabi and Dubai, and from 1 January 2025 employers must buy a policy before applying for or renewing residence permits for private sector employees and domestic workers across the UAE.
In Abu Dhabi, employers and sponsors must cover their employees and their families, up to one spouse and three children under 18. In Dubai, employers must cover their employees, and sponsors must insure their resident dependants. The national basic package costs AED 320 a year and has no waiting period for chronic conditions. Workers whose permits were issued before 1 January 2024 are brought into the rule when their residence permit is next renewed.
Key figures
| Detail | Value |
|---|---|
| Personal income tax | The UAE does not levy income tax on individuals. (source) |
| Duty to pay wages on time (Article 22) | The employer shall pay wages on their due dates in accordance with the regulations approved in the Ministry and the Implementing Regulation. Wages are paid in UAE dirhams, or another currency if agreed in the contract. (source) |
| WPS non-compliance | MoHRE may refrain from issuing or renewing, or may cancel, work permits if the establishment is not compliant with the Wages Protection System. Classification (A, B or C) reflects compliance, and work permit fees range from AED 250 to AED 3,450 by classification. (source) |
| Pension contributions, UAE nationals (Federal Decree-Law No. 57 of 2023) | 26% of pensionable salary: 11% employee, 15% employer. For private sector nationals with pensionable salary under AED 20,000, the government pays 2.5% on behalf of the employer. Applies to Emiratis joining the labour market for the first time on or after 31 October 2023; earlier registrants stay under Federal Law No. 7 of 1999. Maximum pensionable salary raised from AED 50,000 to AED 70,000 a month. Covers private sector employers in all emirates except Abu Dhabi (Abu Dhabi Pension Fund). (source) |
| GCC nationals | A GCC citizen working in another GCC country has the right to a pension as in their home country, under the GCC Insurance Protection Extension Program; employers register GCC nationals in coordination with GPSSA. (source) |
| ILOE start and premiums | Subscription started 1 January 2023 (Federal Decree-Law No. 13 of 2022). Basic salary AED 16,000 or less: AED 5 a month (AED 60 a year); above AED 16,000: AED 10 a month (AED 120 a year). The ILOE site adds VAT. Payable monthly, quarterly, six-monthly or annually. (source) |
| ILOE compensation and eligibility | 60% of the average basic salary over the most recent 6 months; maximum AED 10,000 a month (lower category) or AED 20,000 (higher category); maximum 3 consecutive months per claim; at least 12 consecutive months of subscription. Not paid for disciplinary dismissal or resignation. Excluded: investors who own the company they work for, domestic workers, temporary contract workers, under 18s, pensioners who take a new job. (source) |
| Health insurance | Mandatory in Abu Dhabi and Dubai. From 1 January 2025, employers must buy a health insurance policy as a prerequisite for issuing or renewing residence permits of private sector employees and domestic workers, extending to Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah. Permits issued before 1 January 2024 are exempt while valid, then covered at renewal. Basic package AED 320 a year. Abu Dhabi: employers and sponsors cover employees and families (1 spouse and 3 children under 18). (source) |
Frequently asked questions
Do expatriates pay pension contributions in the UAE?
No. The federal pension scheme covers UAE nationals, and nationals of other Gulf states are covered through their home scheme. Expatriates receive end-of-service gratuity instead.
What pension rate applies to a UAE national joining in 2026?
26% of pensionable salary: 11% from the employee and 15% from the employer, with the government paying 2.5% of the employer's share where the pensionable salary is under AED 20,000. Pensionable salary is capped at AED 70,000 a month. UAE nationals working for employers in Abu Dhabi are under the Abu Dhabi Pension Fund.
Does the employer pay ILOE unemployment insurance?
No. The employee subscribes and pays AED 5 a month (basic salary up to AED 16,000) or AED 10 a month (above AED 16,000), plus VAT. MoHRE described the scheme as costing employers nothing.
What happens if salaries are not paid through WPS?
MoHRE can refuse, not renew or cancel the establishment's work permits, and non-compliance counts against its classification, which sets its work permit fees.
Can I hire in Sharjah without health insurance?
No. Since 1 January 2025, an employer must buy a health insurance policy before applying for or renewing a residence permit for a private sector employee, including in Sharjah and the other northern emirates.
Each of the six Gulf states writes its own labour law, its own end-of-service rules and its own quota for hiring citizens. When Teamed is your legal employer, we apply the right rules for the country each person works in and update your contracts, policies and payroll as the law changes, so you never have to read a statute to stay compliant.
