Payroll Services in the United Arab Emirates

The Wage Protection System is the MOHRE-monitored channel through which every mainland private-sector salary must be paid, via an agent bank or exchange house that files a monthly salary information file. On 1 June 2026, Ministerial Resolution No. 340 of 2026 replaced Ministerial Resolution No. 598 of 2022 and reset the timing entirely. Wages for the preceding Gregorian month are now due on the first day of the month. There is no grace period. The compliance threshold rose from 80% to 85%, meaning at least 85% of total wages due must be transferred by the deadline and each worker must receive at least 85% of monthly salary after lawful deductions. The exemption that gave new employees thirty days is gone – a joiner is in the WPS from their first pay cycle.

The enforcement ladder is automated and it moves quickly. Day two brings notifications and warnings. Day five suspends the issue of new work permits. Day eleven brings administrative fines and a downgrade to third category – which raises permit fees on everything you do afterwards – where the establishment has repeated the violation within six months. Day sixteen has MOHRE register labour disputes on employees’ behalf and suspend work permits. Day twenty-one opens precautionary attachment of assets, travel bans on company officials and referral to the Public Prosecution. Fines run at AED 1,000 per affected worker up to AED 20,000 per establishment.

In practice the difficulty is rarely intent. It is that a month-end payroll approved on the 28th, sent to a bank on the 29th and processed over a weekend or a public holiday no longer arrives in time – and the UAE has twelve public holidays across seven occasions in 2026, five of which move with the moon and are confirmed only weeks ahead. The exemptions are narrow: employees paid outside the UAE with employer request and employee approval, employees under a court-ordered restriction, and mission work permits of three months or less.

Emiratisation is a quota, and for most international employers it is the largest single number on the page. Private-sector companies with 50 or more employees must increase Emiratis in skilled roles by 2% a year, assessed as 1% per half-year on 30 June and 31 December, reaching a cumulative 10% of the skilled workforce by the end of 2026. A role counts as skilled only if it meets all three tests: it falls within MOHRE skill levels 1 to 5, the employee holds an attested qualification above secondary level, and the monthly salary is at least AED 4,000. The financial contribution for an unfilled position is AED 10,000 a month in 2026 – AED 120,000 a year – payable from 1 July for a first-half shortfall. Companies with 20 to 49 employees in fourteen specified sectors must employ at least two Emiratis, assessed annually, with AED 108,000 payable from January 2026 for a 2025 shortfall.

Circumventing the target is treated separately and severely: AED 100,000 for a first violation, AED 300,000 for a second and AED 500,000 thereafter, and the company must still meet the target measured on its pre-circumvention headcount. Fictitious employment also attracts AED 100,000 to AED 1,000,000 under Article 60 of the Labour Law as amended in 2024, multiplied by the number of workers.

Two 2026 changes sit alongside the quota. From 1 January 2026 MOHRE will not issue or renew an Emirati work permit showing a salary below AED 6,000 a month, and employers had until 30 June 2026 to lift existing Emirati salaries; from 1 July, non-compliant employers lose Emiratisation quota credit for those employees and face new-permit restrictions. And from September 2026 the Nafis programme stops reimbursing the 2.5% of pension contributions it currently pays on the employer’s behalf for Emiratis earning under AED 20,000, while the salary top-up is restructured from a flat AED 7,000 cap into education-banded amounts. For an employer of subsidised Emiratis this is a direct cost increase of 2.5 percentage points on contribution salary.

The arithmetic is worth stating plainly, because it usually settles the argument: an Emirati on the AED 6,000 minimum costs about AED 82,800 a year including the full 15% pension contribution. The contribution for leaving that position unfilled is AED 120,000. Compliance is cheaper than non-compliance before you count the work getting done.

There is no pension for expatriate employees in the UAE. What exists instead is end-of-service gratuity under Article 51 of Federal Decree-Law No. 33 of 2021: after one year of continuous service, 21 days of wage for each of the first five years and 30 days for each additional year, capped at two years’ wage. It is calculated on basic wage only, excluding allowances, and unpaid leave does not count toward service. Since the 2021 law there is no reduction for resignation – the entitlement is identical whether the employee resigns or is dismissed, and it is not forfeited on summary dismissal. All end-of-contract entitlements must be settled within 14 days of the contract ending.

As a monthly accrual, 21 days over a 360-day year is 5.83% of basic wage, and 30 days is 8.33%. Those are exactly the rates used by the voluntary alternative end-of-service savings scheme introduced by Cabinet Resolution No. 96 of 2023 and in force since 1 November 2023: 5.83% of basic monthly salary for employees with under five years’ service and 8.33% for five years or more, paid monthly into a MOHRE-licensed fund. Joining is the employer’s choice, but once an employee is enrolled there is no route back to statutory gratuity, and the employer must stay in for at least a year. It applies prospectively only – gratuity accrued before enrolment crystallises and remains the employer’s liability.

The DIFC works differently and it is not optional. Since 1 February 2020, DIFC employers must pay 5.83% of monthly basic wage – 8.33% after five years – into DEWS or a certified qualifying scheme, by the 21st of the following month. Gratuity survives only for service before the scheme start date. ADGM keeps classic gratuity as the default, at 21 and 30 days, with basic wage floored at 50% of annual wages, and permits a savings scheme that both the employer and the employee must opt into.

The practical failure we see most often on takeover is a gratuity liability calculated on total package rather than basic wage, or an accrual that never moved to 30 days when an employee passed five years. Both are invisible until someone leaves, and then they are a dispute.

Whether anyone contributes to a pension in the UAE depends on nationality, not on salary. Expatriates who are not GCC nationals are in no scheme: no employer contribution, no employee contribution, no return to file. UAE nationals are enrolled with the General Pension and Social Security Authority, and the rate depends on when they were first registered. Nationals registered from 31 October 2023 under Federal Decree-Law No. 57 of 2023 contribute 26% in total – 11% employee and 15% employer – on a contribution account salary of basic plus cost-of-living, social and housing allowances, between a floor of AED 3,000 and a private-sector ceiling of AED 70,000. Nationals registered before that date remain on the older 20%: 5% employee and 15% employer, on gross salary including all contractual allowances, capped at AED 50,000.

In both cases the government currently meets 2.5 percentage points of the employer’s share where contribution salary is below AED 20,000, so the employer effectively pays 12.5% – the subsidy that Nafis withdraws from September 2026. Contributions for a month are payable between the 1st and the 15th of the following month, and late payment carries 0.1% of the outstanding amount per day from the 16th. GPSSA began enforcing that penalty against employers of GCC nationals from 1 July 2025.

Two variations matter. Emiratis employed by Abu Dhabi-based entities register with the Abu Dhabi Pension Fund rather than GPSSA: 26% for members joining from 1 December 2023, on a pensionable salary capped at AED 100,000. And GCC nationals working in the UAE are covered by the GCC Insurance Protection Extension Programme, insured under their home country’s system at their home country’s rates – with the rule that the employer’s share may not exceed what a UAE employer would pay, and the employee bears any difference. Registration for nationals is due within 30 days of the start date.

Separately, and often confused with pensions: unemployment insurance under Federal Decree-Law No. 13 of 2022 has been compulsory since 1 January 2023, but it is paid by the employee, not the employer – AED 5 a month plus VAT where basic salary is AED 16,000 or less, AED 10 above. There is no employer premium and no statutory duty to deduct it, though MOHRE recovers unpaid fines of AED 400 through the WPS, so most employers brief their staff rather than leave it.

Mainland working hours are 8 a day or 48 a week, reduced by two hours a day through Ramadan for all private-sector staff regardless of religion. Overtime is paid at basic wage plus at least 25%, or plus 50% for hours between 22:00 and 04:00, with a maximum of two overtime hours a day. Working on a rest day earns a substitute day or normal pay plus 50%. Outdoor work in direct sunlight is banned between 12:30 and 15:00 from 15 June to 15 September. There is a break of not less than an hour after five consecutive hours. The DIFC and ADGM cap the week at 48 hours but mandate no overtime premium at all – a difference that surprises employers moving staff between jurisdictions.

Annual leave is 30 calendar days after a year’s service, or two days a month between six and twelve months, paid on basic salary and payable on termination however short. Sick leave is up to 90 days a year – the first 15 at full pay, the next 30 at half pay, the remaining 45 unpaid – and there is no paid sick leave during probation. Maternity leave is 60 days, 45 at full pay and 15 at half, with up to 45 further unpaid days for post-natal illness and a paid nursing hour a day for six months. Both parents get 5 working days of parental leave within six months of the birth. Bereavement leave is 5 days for a spouse and 3 for a close relative. The DIFC and ADGM both give 20 working days of annual leave and 60 working days of sick leave on a 10-day full, 20-day half, 30-day unpaid scale.

All mainland contracts are fixed-term, though the original three-year maximum was removed in 2022 and any term may now be agreed; a contract that is not renewed but continues in practice renews automatically on the same terms. Probation is a maximum of six months and cannot be repeated or extended, with 14 days’ notice from the employer, one month from an employee moving to another UAE employer, and 14 days from an employee leaving the country. Notice after probation is between 30 and 90 days. Compensation for arbitrary dismissal is capped at three months’ wage. Since the 2024 amendments MOHRE issues binding decisions on claims up to AED 50,000, and the limitation period is two years.

Employing someone without a work permit is the offence that carries the heaviest penalty: AED 100,000 to AED 1,000,000, multiplied by the number of workers. It is also the easiest to commit by accident, by letting someone start before the permit issues.