Employee benefits in UAE are the non-salary advantages provided by employers to their employees. It includes mandatory entitlements like salary, paid leave, health insurance, end-of-service gratuity, and pension contributions. Employers also offer optional supplemental benefits to attract and retain talent.
In the UAE, full-time, part-time, and contractual workers, covering Emiratis, expatriates, GCC nationals, and domestic employees, are entitled to have these employee benefits under the UAE Labour Law and MOHRE regulations. While understanding these employee benefits helps employers to stay compliant, employees can ensure fair compensation and long-term security in the UAE labour market.
What Are the Mandatory Employee Benefits Required by UAE Labour Law?
Mandatory employee benefits in the UAE are those benefits that employers must legally provide to eligible employees under UAE law. They are not optional or discretionary. These benefits set the baseline of employment entitlements in the UAE labour market.
Salary, Wages, and Overtime Rules
The UAE labour law has clear guidance on salary, wages, and overtime for UAE employees. As for the minimum wages for the UAE employees, it is not stipulated in the UAE labour law. However, it mentions that the salary must be sufficient to meet the basic needs of the employees. The employee must be paid at least once a month if the salary payment period is not specified in the employment contract.
The UAE labour law sets the normal working hours and caps total hours. The law set the normal working hours for the private sector as 8 hours per day, or 48 hours per week. If the employer asks the employee to work overtime, he has to pay equal to the normal working hours’ remuneration plus 25% of that pay. The rate will increase to 50% if the employee does the overtime work at night between 10 pm and 4 am.
Statutory Leave Entitlements
Under the UAE labour law, employees are entitled to have different types of statutory leave. Each of them has specific conditions and entitlements.
Annual Leave
According to the UAE labour law, employees are entitled to 30 days of paid annual leave per year after one year of continuous service. If the employee has completed more than six months but less than one year of service, they are entitled to two days of paid leave each month of paid leave. In the UAE, employees can carry forward their unused paid annual leave to the next year with the approval of the employer.
Sick Leave
Employees are entitled to 90 days of sick leave per year after completing their probation period. The payment will be calculated as follows:
- First 15 days: Full pay
- Next 30 days: Half pay
- Remaining 45 days: Unpaid leave
However, the law mentions that if the illness is a result of the worker’s misconduct, the sick leave will not be paid.
Maternity, Paternity, and Parental Leave
Female employees are entitled to 60 days of maternity leave. Here, the first 45 days are fully paid and the remaining 15 days at half paid leave. However, the employee may take 30 days with full pay and can extend it 30 days without pay if she gives birth to a sick or disabled child.
Furthermore, Male employees are entitled to five working days of paid paternity leave. They can take paternity leave within six months of the child’s birth.
Bereavement and Study Leave
Employees are entitled to have paid leave on the death of a close family member. It is as follows:
- 5 days for the death of a spouse
- 3 days for the death of a parent, child, sibling, grandparent, or grandchild
As for the study leave, the employee enrolled in an accredited institution can take 10 days of paid study leave per year to sit for examinations after completion of at least two years of service.
Weekly Holidays and Public Holiday Entitlements
As mentioned in the UAE labour law, employees can take at least one paid rest day per week and paid leave on official public holidays observed in the country.
Gratuity and End-of-Service Benefits
In the UAE, employees are entitled to have end-of-service benefits after the termination of their contract. It applies to both limited and unlimited term contracts, and full-time, part-time, and other work models (pro-rated for part-time). To be eligible for the end-of-service benefits, employees must have at least one year of continuous service with their employer.
Health Insurance and Social Protection
In Abu Dhabi, employers are required to provide health insurance coverage for all non-UAE national employees and their dependents under Law No. (23) of 2005. In Dubai, employers must enroll their employees in health insurance schemes that meet or exceed the basic coverage standards set by the Dubai Health Authority (DHA), according to Law No. (11) of 2013.
As for other emirates, the MOHRE mandates that employers provide health insurance for all private sector employees and domestic workers in Sharjah, Ajman, Fujairah, Ras Al Khaimah, and Umm Al Quwain As of January 1, 2025.
The Health Insurance Scheme offers its package at AED 320 per year. Employers are responsible for providing employees with health insurance cards during enrollment. If the employer fails to comply with the health insurance requirements, they face penalties. For instance, in Dubai, fines for non-compliance can range from AED 500 to AED 500,000, depending on the severity of the violation.
In the UAE, the private and federal government sector, excluding investors, domestic workers, temporary employees, minors under the age of 18, and retirees who receive a pension and have joined a new employer, can participate in the Unemployment Insurance Scheme.
Pension and Social Security Contributions
In the UAE, gratuity and pension are two different benefits. End-of-service gratuity is a lump sum payment an employee gets after the termination of their employment contract. In contrast, a pension is a regular income paid to employees upon retirement. It is given based on their contributions to the pension scheme during their working years.
Emirati nationals are entitled to have a pension after reaching the retirement age of 60 years and completing at least 15 years of insured service. Here, both the employer and employees contribute to the pension scheme with specific percentages outlined by the General Pension and Social Security Authority (GPSSA).
The monthly GPSSA pension contributions are 26% of an employee’s salary. Here, employees pay 11% and the employer pays 15%. The government contributes 2.5% of the employer’s 15% share on behalf of the employer. The pension contribution is also the same for Abu Dhabi Pension Fund for New Active Members.
As for the GCC nationals who work in another GCC country, they have the right to receive a pension as per the respective law of his/her country. Non-GCC nationals are not subject to social security in the United Arab Emirates.
Repatriation and Other Contractual Obligations
In the UAE, employers are obligated to bear the cost of repatriating an employee to their home country or an agreed-upon location upon termination of employment. Moreover, terminated employees are entitled to have a final settlement, including all dues, and notice period compensation applies if terminated without notice.
What Supplemental and Common Employee Benefits Do UAE Employers Offer?
In the UAE, employers generally offer two types of employee benefits – Statutory Benefits and Supplemental Benefits. Statutory benefits are mandated by the UAE Labor Law. On the other hand, Supplemental benefits are the non-mandatory benefits that employers provide to remain competitive in attracting and retaining talent.
Enhanced Health and Wellness Benefits
Apart from the mandatory health insurance, the employer may offer different wellness benefits to its employees. It can include Yoga, Fitness, Physical therapy, Women’s wellness, EAP & Diabetes.
Relocation and Housing Benefits
The employers also offer relocation and housing benefits to the expatriate employees, like moving expenses or temporary housing.
Performance Bonuses and Incentives
Employees in the UAE are entitled to receive rewards and incentives, based on their performance and achievements at the entity, and on their contribution to the workplace. For example, federal government employees generally get three types of rewards and incentives. It includes
- Annual Performance Rewards
- Outstanding Achievement Rewards
- Contribution to any National Achievement Rewards
Flexible Work and Lifestyle Benefits
In the UAE, some employers also offer flexible work schedules and remote work options to enhance work-life balance. Some also offer transportation allowances, meal vouchers, and educational support to attract and retain talent.
How Do Employee Benefits Differ for Expatriates and UAE Nationals?
In the UAE, employee benefits are defined under Federal Decree-Law No. (33) of 2021 and are closely tied to the employment contract in UAE, which outlines each worker’s rights and entitlements. Most of these rights and entitlements apply to both expatriates and UAE nationals, it shows some differences.
Here, expatriates are not eligible for pension schemes. Instead, they receive end-of-service gratuity. As for the UAE nationals, they contribute to the UAE pension scheme and get benefits from it.
Expatriates must have a valid work visa and residency permit to live and work in the UAE. These visas are typically sponsored by their employers and related to the duration of their employment contracts. The employers are required to renew these visas and ensure compliance with immigration regulations. In contrast, UAE nationals do not require work visas or residency permits.
Employers in the UAE often provide family status benefits to expatriates. These benefits are typically outlined in the employment contract and are subject to the policies of the employer. They can also get educational benefits through sponsorship, with special benefits available to Golden Visa holders. UAE nationals are not typically provided with family status benefits by their employers, as they are entitled to various government-provided services and allowances.
How Are Employee Benefits Taxed and Regulated in the UAE?
In the UAE, typically, employee benefits are not subject to personal income tax. There is no personal income tax on salaries, and VAT does not apply to wages. However, these benefits are strictly regulated by the UAE labor law and MOHRE. That is why the employer must comply with the calculations and entitlements of the employees. Moreover, the contributions of the employers to the UAE national social security or pensions are mandatory.
How Can Employers Calculate and Manage Employee Benefits in UAE?
In the UAE, employers must calculate statutory entitlements exactly according to the UAE Labour Law and MOHRE guidance. They first have to calculate statutory benefits such as paid annual leave, public holidays, mandatory health insurance and end-of-service gratuity. Then add the supplemental benefits like allowances or wellness programs and assign estimated cost values to each. HR managers can use employee management software to track benefit costs, monitor utilization rates, and forecast budgets for the upcoming year.
How to Measure the ROI of Employee Benefits?
First, employers need to choose key metrics such as employee productivity, retention, engagement, and benefits utilization. Then, they should calculate the return by comparing the cost of benefits offered against the value of those improvements, such as fewer sick days or higher engagement levels. Finally, review and refine the process as needed.
How Can Employers Build a Competitive Benefits Package in the UAE?
A competitive benefit package in the UAE should first comply with the UAE labor law and MOHRE guidelines. Apart from covering the mandatory benefits like leaves, end of service gratuity, or health insurance, employers also offer supplemental benefits to attract both UAE nationals and expatriates.
Plus, they should compare their offering with other companies through regular salary benchmarking and market surveys to stay competitive in the UAE labor market. Customized rewards for Emirati and expatriates supports Emiratization goals and talent retention. Employers who offer clear total rewards communication with periodic pay reviews retain high-performing staff in the competitive UAE labor market.
How Does HRMS Help in Employee Benefits Management?
An HRMS like Huduri automates gratuity calculation, leave and attendance tracking, payroll management, and stores the necessary records of the employees. Thus, it effectively reduces the manual errors, keeps statutory calculations and the settlements at termination accurate and auditable.
Final Words
The employee benefits in the UAE require compliance with the regulations and strategic planning. The employers calculate benefits precisely under the UAE Labour Law using tools like Huduri to ensure compliance. The employees should understand their benefits comprehensively to ensure they receive fair compensation and enjoy a better work-life balance.
