In This Guide
How to Hire Employees In The United Arab Emirates
Hiring in The United Arab Emirates for the first time can be overwhelming, especially when navigating unfamiliar employment laws. Whether you hire independent contractors, set up a legal entity, or use an EOR service, understanding the local employment landscape is crucial for success. SOURCEitHR’s comprehensive guide can help you get started if you’re hiring locally or relocating a team member.
Companies can hire employees in The United Arab Emirates in the following three ways:
- Setting up a local entity.
Entity establishment reduces risk exposure and enables direct hiring, but can be costly and time-consuming – making it less practical for companies seeking quick and flexible solutions for hiring in The United Arab Emirates. - Partnering with an Employer Of Record
SOURCEitHR , is a third-party entity that serves as the legal employer of your international workforce which hires, pays, and manages compliance with The United Arab Emirates’s labor laws and tax regulations. - Hiring independent contractors.
Hiring contractors gives companies a flexible, affordable alternative to hiring local employees, though it involves unique misclassification risks.
Using an Employer of Record In The United Arab Emirates
An Employer of Record (EOR) acts as the legal employer for workers in The United Arab Emirates, taking on key responsibilities to ensure compliance with local labor laws and regulations. The EOR facilitates the hiring process for businesses that want to employ workers without establishing a legal entity in the country.
The employer of record in The United Arab Emirates is responsible for:
- Employment Compliance: Ensure all employment contracts comply with The United Arab Emirates’s labor laws and regulations, including proper classification of employees.
- Payroll Management: Calculate, process, and distribute employee salaries in accordance with The United Arab Emirates’s payroll laws, including deductions for taxes and social security contributions.
- Tax Filing and Contributions: Handle the registration, filing, and payment of employer taxes and social security contributions to the relevant authorities.
- Employment Contracts: Draft and maintain compliant employment agreements, detailing salary, benefits, working hours, and termination terms in line with The United Arab Emirates’s legal requirements.
- Benefits Administration: Provide mandatory employee benefits as required by The United Arab Emirates’s labor laws, such as health insurance, pension contributions, and statutory leave.
Good To Know
Employment and Labor Laws in The United Arab Emirates
Businesses can only operate smoothly in The United Arab Emirates if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in The United Arab Emirates below, to avoid any compliance issues.
Employment Contract Requirements
Before signing the employment contract in The UAE, all employees must sign an offer letter stating the basic employment terms. The basic terms are as follows:
- Names of the employer and employee
- Beginning date of employment
- Expiry, or renewal, date of employment
- Salary information
- Usual working hours and days
- Annual leave and pay
- Sick leave and pay
- National holidays
- Employees working title
- Notice period for termination of the employment relationship
- Place of employment
- Employers disciplinary rules, if applicable
- Free Zone rules, if applicable
Onboarding Process
We can help you get a new employee started in The United Arab Emirates quickly, with a minimum onboarding time of just 1–2 working days. The timeline starts once the employee submits all required information onto the SOURCEitHR platform and completes any necessary local authority registrations.
For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. SOURCEitHR‘s payroll cut-off date is the 10th of each month unless otherwise specified.
Working Hours in The United Arab Emirates
Employees work 8 hours a day, up to 48 hours a week, from Monday to Friday. During Ramadan, working hours are reduced by 2 hours daily. Workers must have a break after five consecutive hours, totaling at least an hour, which should not be counted within the working hours.
Overtime in The United Arab Emirates
Employees can work a maximum of two extra hours per day. If the job demands work beyond regular hours, employees receive overtime pay, computed at different rates.
Fridays and Nighttime overtime, between 9 pm and 4 am, is compensated at 150% of the regular salary rate, while other overtime periods are paid at 125%.
Probation Period in The United Arab Emirates
In The UAE, probation periods are limited to six months, and employees cannot be subjected to probation more than once. This regulation is outlined in Article 37 of the Emirati Labor Law.
How an Employer of Record Helps You Hire in The United Arab Emirates
Setting up a local legal entity in The United Arab Emirates can be time-consuming and expensive. It often involves complex paperwork, local representation, banking, registrations, and ongoing tax filings, which isn’t cost-effective if you’re simply looking to hire a few employees or test the market. An Employer of Record removes these barriers entirely. Instead of spending months establishing a presence, an EOR lets you hire and onboard employees within days while staying fully compliant.
This enables faster market entry and greater agility. Whether you’re launching a pilot program, supporting a regional client, or adding specialized talent, you don’t need to commit to long-term infrastructure to explore new business opportunities. The EOR handles local employment logistics while you retain day-to-day oversight of your hires. This model lets you scale up or down based on business needs, giving you more flexibility with less overhead and risk.
Why work with SOURCEitHR’s Employer of Record Solution?
With decades of experience in global compliance and deep local knowledge, we ensure smooth adherence to local laws and regulations across borders.
- Unmatched coverage for employment across 180 countries.
- An employee portal paired with dedicated, human support.
- Reliable, cost-effective services with no annual commitments.
Payroll Management in The United Arab Emirates
Fiscal Year in The United Arab Emirates
1 January – 31 December is the 12-month accounting period that businesses in the United Arab Emirates use for financial and tax reporting purposes.
Payroll Cycle in The United Arab Emirates
The payroll cycle in The United Arab Emirates is usually monthly, with employees being paid first day of the month.
Minimum Wage in The United Arab Emirates
As of May 2025, the United Arab Emirates (UAE) does not have a universal minimum wage that applies to all industries. Instead, salaries are negotiated directly between employers and employees.
However, the Ministry of Human Resources and Emiratisation (MoHRE) provides salary recommendations based on education levels:
- University Graduates: AED 12,000 per month
- Skilled Technicians: AED 7,000 per month
- Skilled Laborers: AED 5,000 per month
To protect workers and ensure they’re paid on time and in full, the UAE uses the Wage Protection System (WPS) – an electronic system that tracks and enforces wage payments.
Bonus Payments in The United Arab Emirates
In the United Arab Emirates, there is no obligation for employers to provide a 13th-month salary payment.
Employment Taxes in The United Arab Emirates
Employer Tax Contributions
Employer payroll contributions are generally estimated at an additional 12.5% on top of the employee salary in The United Arab Emirates.
| Tax Type | Tax Rate |
|---|---|
| Social Security (basic social security plus housing allowance, charged on a minimum monthly salary of 1,000 AED and capped at 50,000 AED) | 12.5% |
Employee Payroll Tax Contributions
| Tax Type | Tax Rate |
|---|---|
| Social security (applicable only to Emiratis, expats exempt) | 5% |
Individual Income Tax Contributions
| Income Bracket | Tax Rate |
|---|---|
| 0 – 375,000 AED | 0% |
| 375,001 AED – 3.15Bn AED | 8% |
| 3.15Bn AED And above | 15% |
Pension in The United Arab Emirates
In the UAE, The General Pension and Social Security Authority (GPSSA) provides pension services for old-age retirement, disability, death, and occupational illnesses. Employees are eligible for an old-age retirement pension if they achieve 50 years of age with 20 years of service.
- The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in The United Arab Emirates tailored to your needs.
How an EOR Helps You Run Payroll in The United Arab Emirates
One of the biggest risks in global hiring is payroll mismanagement. In The United Arab Emirates, even small errors in tax reporting or social contribution payments can trigger audits, fines, or reputational damage. For companies without in-country expertise, the risk isn’t worth taking. An Employer of Record removes this burden by owning the legal responsibility of payroll, executing every step with built-in compliance.
Key Ways an EOR Supports Payroll in The United Arab Emirates:
- Mitigates Compliance Risk: Oversees all legal obligations for payroll, tax filings, and recordkeeping.
- Local Regulatory Expertise: Interprets and applies The United Arab Emirates’s latest labor and tax changes in real time.
- Free Processing: Reduces mistakes in wage calculations and reporting through built
- Payroll Record Management: Maintains compliant payroll audit trails and documentation for each employee.
Annual Leave & Company Policies In The United Arab Emirates
Mandatory Leave Entitlement in The United Arab Emirates
The annual leave entitlement in The United Arab Emirates is 30 days for a full-time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.
Public Holidays in The United Arab Emirates
In the UAE, there are 15 public holidays each year. These holidays are separate from the minimum paid leave entitlement and are taken in addition to annual leave. The following holidays are recognized as national holidays in the UAE:
| Holiday | Date |
|---|---|
| Gregorian New Year | 1 January |
| Eid Al Fitr | 4 Days |
| Islamic New Year | August or July; the specific day varies every year |
| Prophet Mohammeds Birthday | October; the specific day varies every year |
| Commemoration Day | 1 December |
| National Day | 2nd & 3rd December |
Paid Time Off in The United Arab Emirates
Employees in the UAE are entitled to annual leave after six months of service. Employers must pay the employee’s salary before the start of their annual leave, and the leave should generally be utilized within the stipulated year unless the company has a carryover policy in place. Annual leave is accrued as follows:
- For six months to a year of employment: accrual of 2 days per month
- After completing a year of service: a minimum of 30 calendar days of paid leave
Maternity Leave in The United Arab Emirates
Female employees are entitled to a 60-day maternity leave in the UAE, comprising 45 days with full wage followed by 15 days with half wage. They can apply for this leave up to 30 days prior to the expected delivery date and may extend absence without pay for up to 45 days after utilising the maternity leave. The following details are also applicable to maternity leave in The UAE:
- Employees can take up to 45 unpaid days for medical conditions related to pregnancy or delivery, backed by a professional medical certificate.
- It’s not permissible to terminate employment due to pregnancy or absence resulting from maternity leave.
Paternity Leave in The United Arab Emirates
UAE law doesn’t mandate separate paternity leave beyond the five days allotted for parental leave. There’s currently no additional statutory paternity leave in the UAE.
Sick Leave in The United Arab Emirates
After the probation period, employees are entitled to 90 days of paid sick leave per year, subject to the following terms:
- 100% of regular salary for the initial 15 days of sickness
- 50% of regular salary for the subsequent 30 days
- No salary for the remaining 45 days
Parental Leave in The United Arab Emirates
Private sector employees in the UAE are granted 5 days of paid parental leave, which can be taken until the child reaches 6 months of age. Proof of the child’s birth is required when requesting this leave.
Bereavement Leave
Employees are granted 5 days of paid time off in case of their spouse’s death and 3 days off in case of the death of their mother, father, son, daughter, brother, sister, grandson, or grandparent.
Study Leave
Employees associated with an accredited UAE educational institution will receive 10 days of paid study leave after completing 2 years of service.
Using an Employer of Record to Administer Benefits in The United Arab Emirates
In The United Arab Emirates, benefits play a central role in attracting and retaining top talent. Employees often expect more than just a paycheck – they’re looking for stability, healthcare coverage, pension plans, and other perks that show a company is invested in their well-being. If you’re not familiar with what’s standard or required, you risk falling short. An Employer of Record helps bridge that gap by administering a locally competitive benefits package that meets both legal requirements and employee expectations.
An EOR doesn’t just check boxes, they make sure your employees receive benefits that are timely, properly communicated, and well-managed from the moment they’re onboarded. From managing healthcare contributions to adjusting for regional differences in leave or bonus entitlements, an EOR acts as both a legal and operational partner. The result is a better employee experience, less administrative burden on your internal team, and greater confidence that your offer is aligned with what top candidates in The United Arab Emirates actually want and need.
Employment Termination and Severance Policies in The United Arab Emirates
Termination Process in The United Arab Emirates
In the UAE, both parties in an employment contract can terminate for legitimate reasons. This requires notifying the other party in writing, following the correct notice period, and informing the relevant authorities accordingly. Legitimate reasons may include:
- Performance or behavioral issues
- Bankruptcy
- Insolvency
- Worker’s failure to renew a work permit
Notice Period in The United Arab Emirates
In accordance with UAE labor law, a mandatory notice period of at least 30 days is stipulated. However, for employees under the DIFC employment law, the length of the notice period is determined by the duration of employment as follows:
- 1-5 months of employment: 2 weeks’ notice
- Up to 5 years of employment: 1 month’s notice
- 5 or more years of employment: 90 days’ notice
Severance in The United Arab Emirates
Severance payouts in The UAE depend on certain factors. These are described below:
- After a year of service, a worker is entitled to severance pay, calculated at 21 days’ wage for each year within the first 5 years and 30 days’ wage for each subsequent year, prorated for any time worked beyond a full year.
- For foreign employees, severance pay is capped at two years’ wage and is calculated based on the last basic wage received.
DISCLAIMER
Standard employment terms in the UAE include working hours, leave entitlements, and conditions outlined in employment contracts, governed by the UAE Labor Law. These regulations cover aspects like minimum wages, working hours, overtime, and leave benefits to ensure fair treatment of employees.
The cost of hiring an employee in the UAE includes salary or wages, contributions to the General Pension and Social Security Authority for Emirati employees, and other benefits or allowances. Employers should also account for any additional visa, medical insurance, and end-of-service gratuity costs for expatriate employees.
As of May 2025, the UAE does not have a universal minimum wage that applies to all industries.
- Salaries are negotiated directly between employers and employees.
- The Ministry of Human Resources and Emiratisation (MoHRE) provides salary recommendations based on education levels, ranging between AED 5,000 – AED 12,000 per month.
- The UAE uses the Wage Protection System that tracks and enforces wage payments.