Employer costs in the UAE

What are the employer costs of hiring in the UAE?

The main statutory lines for employing an expatriate in the United Arab Emirates are the salary, mandatory health insurance, end-of-service gratuity accrual and visa and work permit costs. There is no employer social insurance contribution for expatriate staff and no personal income tax on salary.

The cost model changes for UAE nationals, where pension contributions apply, and it changes again inside the Dubai International Financial Centre, where end of service works on a different mechanism entirely. Both are covered below.

How is end-of-service gratuity calculated in the UAE?

End-of-service gratuity accrues at 21 days' basic salary for each of the first five years of service and 30 days' basic salary for each year after that, capped at two years' wage in total. The basis is basic salary alone: housing, transport, utilities and furniture allowances are excluded. An employee must have completed at least one year of continuous service to qualify and days of unpaid absence do not count toward service.

The basic-salary basis is the number that most often surprises companies moving from a Gulf neighbour, because the gratuity base is not the same across the region. Saudi Arabia calculates on a broader base that includes housing and Qatar works from basic wage on a different accrual. On the mainland, a package structured with a low basic and generous allowances therefore carries a materially smaller gratuity liability than the same total package structured with a high basic, which is a live consideration when a role is being priced rather than an accounting detail discovered at exit. That lever does not exist in the DIFC, where basic wage must be at least half of annual wage.

All outstanding wages, entitlements and gratuity must be paid within 14 days of the contract ending. In the ADGM the deadline is 21 calendar days.

Is there an alternative to gratuity in the UAE?

Yes. Employers may opt into a voluntary investment-based savings scheme in place of accrued gratuity, contributing 5.83% of basic salary monthly for employees with less than five years of service and 8.33% for those with five or more. Contributions are invested and the employee receives the subscribed amount plus any investment returns, rather than a lump sum calculated at exit.

The trade is between a liability that sits on the balance sheet and grows with final salary, and a funded monthly contribution that does not. For an employer expecting salary growth over a long tenure, the funded route caps the exposure. For short tenures the traditional calculation is usually cheaper.

The employer applies at establishment level and then enrols selected employees or categories of employee. Once an employee is enrolled, participation is mandatory for them, with a minimum one-year commitment and Ministry approval needed to exit.

Why does the DIFC change the cost of employment?

Inside the Dubai International Financial Centre there is no end-of-service gratuity at all. Federal Decree-Law No. 33 of 2021 does not govern end of service in the DIFC. Instead the DIFC Employee Workplace Savings scheme applies, a defined-contribution plan funded monthly at 5.83% of basic salary for employees with less than five years of service and 8.33% for those with more.

Two differences follow and both cut against the mainland assumption. There is no one-year qualifying period, so an employee accrues from day one and takes the benefit if they leave in month three. And the contribution is a cash cost every month rather than a provision released at exit, which changes payroll cash flow even where the headline percentage looks similar.

The Abu Dhabi Global Market likewise runs its own employment regulations rather than the federal law. Any cost model that applies "21 days per year" across a UAE workforce without asking which regime each role sits in will be wrong for the DIFC population, while ADGM keeps an accrued gratuity on much the same basis as the mainland.

What does Emiratisation cost an employer?

Mainland establishments with 50 or more employees pay AED 9,000 per month in 2026 for each skilled position not filled by an Emirati against the applicable target. The contribution began at AED 6,000 per month in 2023 and has risen by AED 1,000 each year to 2026, so the figure is date-dependent and a quoted rate from an earlier year will understate it.

The target itself rises two percentage points annually, reaching 10% of skilled roles by the end of 2026, with a 9% checkpoint at 30 June 2026. An establishment three positions short of target is paying AED 27,000 a month, or AED 324,000 across a year.

A separate rule applies to firms with 20 to 49 employees in 14 designated sectors, which face annual charges rather than monthly ones: AED 96,000 in January 2025 for failing to hire one Emirati during 2024 and AED 108,000 in January 2026 for failing to hire two during 2025. The AED 108,000 figure belongs to this band and is also the annual equivalent of the 50-plus band's monthly charge, so the same number describes two different obligations.

Emiratisation obligations attach to the employing entity. Where an EOR is the legal employer, the quota, the reporting and the contribution sit on the EOR's establishment file rather than the client's.

What happens if payroll is late in the UAE?

Wages for the preceding Gregorian month are due on the 1st of each month through the Wage Protection System at establishments registered with MOHRE and lateness now has a same-week operational cost rather than an end-of-month one. Ministerial Resolution No. 340 of 2026, in force since 1 June 2026, abolished the 15-day grace period and set a fixed escalation: notification on day 2, a freeze on new work permits on day 5, administrative fines on day 11, collective dispute registration on day 16 where 25 or more workers are affected, applied on a risk-based basis weighted to labour-intensive sectors, and asset attachment with possible criminal exposure on day 21.

The day 5 work permit freeze is the line that bites first for a growing team, because it stops recruitment before it produces a fine. Compliance is assessed at 85% of total wages paid on time, with each employee receiving at least 85% of salary subject to lawful deductions.

What does an EOR charge on top?

Aspirock prices Employer of Record services in the United Arab Emirates per employee per month, on top of the statutory costs above.

Pricing is shaped by the employee's profile, the operational requirements of the deployment and whether the role sits on the mainland or in a free zone. There are no setup fees and no long-term lock-in, and a figure is confirmed after a short discovery call once the role, location and timeline are known.