The UAE’s tax-free salaries attract expats, but how much employees take home depends on the benefits you provide as their employer. Offer the wrong package and you’ll lose candidates to competitors, or face fines for missing mandatory requirements.
The UAE is RemotePass’s home turf, and our in-house employment experts work with companies hiring across the region every day.
This guide covers the legally required benefits you must provide, including visa expenses, emirate-specific health insurance, gratuity, and leave entitlements, plus the optional benefits that help you compete for talent.
Key takeaways for employee benefits in the UAE
Health insurance is mandatory in all seven emirates. Coverage rules differ significantly between Dubai, Abu Dhabi, and the Northern Emirates.
End-of-service gratuity applies to all employees. You must pay it within 14 days of their last working day.
Total employment costs typically run from 20% to over 50% above base salary, accounting for mandatory benefits and commonly offered perks such as allowances.
RemotePass automates UAE payroll, gratuity calculations, and benefits administration, whether you have a local entity or not. Book a RemotePass demo to see how it works.
The six mandatory employee benefits in the UAE
Federal Decree-Law No. 33 of 2021 governs employee benefits in the UAE. This guide covers six key mandatory benefit areas that every private-sector employer must provide.
1. Employment visa and emirates id sponsorship
When you hire someone in the UAE, you’re responsible for sponsoring their employment visa and Emirates ID. The law requires all residents to hold an Emirates ID, which they use for everything from opening bank accounts to accessing government services.
All costs associated with visa processing (including medical tests) and Emirates ID issuance are your responsibility. Passing these expenses to the employee violates UAE labor law.
2. Health insurance that covers from day one
UAE law requires all employers to provide health insurance, with coverage beginning from the employee’s visa issuance date. The core obligation is the same across all seven emirates, but specific coverage requirements vary by location.
| Emirate | Governing Body | Coverage Requirements | Dependents |
|---|---|---|---|
| Dubai | Dubai Health Authority (DHA) | DHA-approved plans including inpatient and outpatient care | Optional |
| Abu Dhabi | Department of Health | DAMAN-compliant or equivalent; more comprehensive than other emirates | Required (spouses and children) |
| Northern Emirates | Federal mandate (UAE-wide) | Mandatory as of 2026 for all private sector employees and domestic workers; basic plans start from around AED 320–600 per year | Optional |
3. End-of-service gratuity
Gratuity (also called EOSB, or end-of-service benefits) is a lump-sum payment owed to employees when their employment ends. Mainland and free zone employers must provide EOSB under UAE law.
Gratuity is calculated on basic salary (not total compensation) and length of service. Because it represents one of your largest ongoing liabilities, accrue for it throughout the employment term rather than waiting until someone leaves.
The calculation follows a tiered structure:
- First 5 years: 21 days of basic salary for each year of service
- After 5 years: 30 days of basic salary for each additional year
- Maximum cap: Total gratuity cannot exceed 2 years’ worth of salary
Example: An employee earns AED 15,000 basic salary per month and leaves after 7 years.
First, calculate their daily rate: AED 15,000 ÷ 30 = AED 500 per day
Then, calculate each period separately:
- Years 1–5: 21 days × 5 years × AED 500 = AED 52,500
- Years 6–7: 30 days × 2 years × AED 500 = AED 30,000
Total gratuity owed: AED 82,500
Employees may forfeit gratuity or receive a reduced amount in certain circumstances:
- Termination for gross misconduct: no gratuity owed
- Resignation before 1 year: no gratuity owed
- Resignation after 1 year: full gratuity applies using the standard calculation
How DEWS replaces gratuity for DIFC employers
If you operate in the Dubai International Financial Centre (DIFC), you’ll use DIFC Employee Workplace Savings (DEWS) instead of traditional gratuity.
DEWS is a defined-contribution savings scheme. You contribute a percentage of the employee’s basic salary into an investment account in their name each month. The employee owns the account and can take it with them if they move to another DIFC employer. Contribution rates depend on length of service:
- Years 1–5: 5.83% of basic salary per month
- Years 6+: 8.33% of basic salary per month
These contributions replace your gratuity obligation entirely for DIFC employees.
4. Repatriation flight costs
When an employee’s contract ends, you must cover their return flight to their home country. This applies whether the employee resigns or is terminated, with an exception when the employee is moving directly to a new employer within the UAE.
5. Involuntary loss of employment insurance
The UAE introduced mandatory unemployment insurance in 2023, providing temporary income support to employees who lose their jobs involuntarily. Employees pay the premiums (AED 5 or AED 10 per month, depending on salary tier), but you’re responsible for ensuring your workforce enrolls.
6. Leave entitlements
UAE labor law specifies minimum leave entitlements for all private-sector employees.
| Leave Type | Entitlement | Payment | Key Rules |
|---|---|---|---|
| Annual leave | 30 days/year | Paid | Prorated at 2.5 days/month for employees under 1 year. Employees can carry forward unused leave or have it paid out |
| Sick leave | 90 days/year | First 15 days: full pay. Next 30 days: half pay. Remaining 45 days: unpaid | Medical certificate required after 2 days |
| Maternity leave | 60 days | First 45 days: full pay. Last 15 days: half pay | No minimum service requirement |
| Paternity leave | 5 working days | Paid | Must be used within 6 months of child’s birth |
| Parental leave | 5 days | Unpaid | Available to either parent within 6 months of child’s birth. Separate from maternity/paternity leave |
| Hajj leave | 30 days | Unpaid | Muslim employees only; once per tenure with each employer |
| Study leave | 10 days/year | Paid | UAE nationals only. Must be studying at an approved institution |
| Compassionate leave | 5 days for death of a spouse. 3 days for death of a parent, child, sibling, grandchild, or grandparent | Paid | |
| Public holidays | Announced annually (dates shift due to the lunar calendar) | Paid | Typically includes Eid Al Fitr, Eid Al Adha, Islamic New Year, Prophet’s Birthday, National Day, and New Year’s Day |
Optional benefits that win competitive hires in the UAE
In a market where skilled professionals receive multiple offers, the right perks can be the deciding factor. Here are the optional benefits that make UAE compensation packages stand out.
Dependent visa sponsorship
Sponsoring visas for an employee’s spouse and children is one of the most valued benefits for expatriate hires with families. Costs typically run AED 3,000–5,000 per dependent for visa and Emirates ID processing. To qualify for dependent sponsorship, the employee must earn a minimum salary (currently AED 3,000 per month plus accommodation, or AED 4,000 per month all-in).
Housing allowance
Housing is one of the largest expenses for expatriates in the UAE, and most employees treat a housing allowance as a standard expectation. Many employers provide a cash allowance (often 25–30% of base salary), company-provided accommodation, or a choice between the two.
Transport allowance
Transport allowances and company cars are common, particularly for roles that require commuting across emirates or frequent client visits. Allowances typically range from AED 1,500 to AED 3,000 per month, depending on seniority.
Education allowance
Private school fees in the UAE range from AED 20,000 to over AED 100,000 per year per child. For employees with families, education allowance is often a make-or-break benefit. Many employers cover a portion of school fees or provide a fixed annual allowance per child.
Relocation support
For new hires moving to the UAE, relocation support typically includes shipping costs for personal belongings, temporary housing for the first few weeks, and a settling-in allowance to cover initial expenses.
Wellness and fitness benefits
Gym memberships and wellness programs are increasingly standard. A solid wellness offering signals genuine investment in employee retention.
Flexible and remote work
Hybrid work policies and home office equipment allowances have become baseline expectations since 2020. Employers who don’t offer flexibility are at a disadvantage when competing for talent.
Annual airfare
Providing annual return airfare to the employee’s home country is a long-standing UAE tradition. Many employers extend this benefit to dependents, covering flights for the entire family.
What UAE employee benefits will cost you
Here’s a breakdown of what mandatory and common benefits add on top of salary:
- Health insurance: Standard group plans typically cost AED 1,500–5,000 per employee annually, though new low-cost schemes for eligible workers can start from around AED 320. Costs in Abu Dhabi tend to be higher given the dependent coverage requirement.
- End-of-service gratuity: Accrues at roughly 5.8%–8.3% of annual basic salary per year of service. Plan for the lower end of the range during the first 5 years and a higher percentage from year 6 onward.
- Repatriation flights: Budget around AED 1,500–4,000 for a one-way economy ticket to the employee’s home country at end of service. The exact cost depends on destination and season.
- Visa and Emirates ID: Plan on approximately AED 3,000–5,000 per employee for initial employment visa processing, including medical testing and an Emirates ID. The amount varies by emirate and PRO fees.
Allowances vary significantly by seniority and role. For a mid-level expatriate hire in Dubai or Abu Dhabi, housing, transport, and annual airfare can easily add AED 50,000–100,000 or more per year to a competitive package.
As a rough benchmark, total employment cost ranges from around 20% above base salary for junior or minimal-allowance roles to well over 50% for senior or executive expatriate hires with housing and dependent benefits. The more senior the hire and the more dependents they bring, the higher that multiplier climbs.
How to simplify UAE benefits administration
Managing UAE employee benefits means tracking multiple regulations, emirate-specific health insurance rules, gratuity accruals, and leave entitlements. That complexity increases for companies with a mix of local employees, contractors, and international hires.
Common pain points include:
- Manual gratuity tracking: Calculating and accruing gratuity across your workforce
- Emirate-specific compliance: Meeting location-specific health insurance rules in Dubai, Abu Dhabi, and the Northern Emirates
- Wage Protection Service (WPS) compliance: Ensuring payroll runs through the WPS
- Leave management: Tracking multiple leave types with different rules
RemotePass automates WPS-compliant payroll and benefits administration from a single system, eliminating manual gratuity spreadsheets and reducing the risk of missed compliance deadlines.
Book a RemotePass demo to see how you can manage UAE employee benefits and payroll from one platform.
FAQ about employee benefits in the UAE
Does the UAE require 13th month pay?
No. UAE labor law doesn’t mandate 13th month pay or annual bonuses. Some employers offer discretionary bonuses, but it’s not a legal requirement.
What makes a competitive salary package in the UAE?
Competitive packages typically include base salary plus a housing allowance, a transport allowance, health insurance, and annual airfare. Candidates compare offers based on full package value, not base salary alone.
How do employee benefits differ in UAE free zones?
Most free zones follow UAE labor law, but DIFC and ADGM have their own employment regulations. The biggest difference is gratuity: DIFC uses DEWS instead of the standard calculation.
Can employers provide benefits to remote workers based in the UAE?
Yes, but employing someone directly in the UAE still requires compliance with visa sponsorship and health insurance requirements. Paying someone as a contractor doesn’t remove these obligations if the working relationship looks like employment.
How do Employer of Record providers handle employee benefits in the UAE?
An Employer of Record (EOR) such as RemotePass becomes the legal employer and handles all mandatory benefits on your behalf, including visa sponsorship, health insurance, gratuity, and WPS-compliant payroll. You manage the day-to-day work; the EOR handles compliance.
