The standard Salary Compensation is designed to attract, motivate, and retain employees in both the public and private sectors.
Basic Salary: The core of an employee's income, often determined by the role, industry, and individual qualifications.
Housing Allowance: A common part of the salary package in the UAE, given the high cost of living and housing.
Transportation Allowance: Provided to cover the cost of commuting to and from work.
There is no minimum wage in the UAE. The minimum wage for a High School Graduate is AED 4000 while the minimum wage for a university graduate is AED 5000.
Companies, especially private Enterprises usually work 48 hours a week.
In Dubai, certain benefits are mandatory for all employees, including health insurance and gratuity payments.
To read more about these benefits, download the UAE Hiring Guide.
Non-managerial positions are entitled to overtime payment for hours worked outside of the standard work hours. Employees are limited to a maximum of 2 hours of overtime per day or 144 hours over 3 weeks.
During Ramadan, employers are required to reduce work hours by at least 2 hours
The overtime pay rates are as follows:
Legally, employees are not entitled to receive bonuses. However, employers can choose to give voluntary bonuses, which will be taxed as part of the employee's salary.
In UAE, employers usually handle payroll on a monthly basis, and many companies adhere to the following schedule:
Payroll cut-off date: 20th of each month
Payment date: Last day of each month
Employees in UAE are not subject to income tax. However, some employees may be required to make social security (pension) contributions.
5% of the employee’s salary goes into Social security. This is matched by the employer at 12.5% and the government at 2.5%. This is payable either after 20 years of service or 50 years of age.
A contract in the UAE must contain essential details, including the employee's name, start date, employment duration, job description, and termination conditions.
Employees on fixed-term contracts should not exceed a duration of three years, with the possibility of extension for an additional three years. Backdating of contracts is strictly prohibited, and the maximum probationary period for new employees is limited to six months.
In UAE, the probation period is usually of 3 months which can be extended to 6 months.
Employees go through a thorough background check in UAE. Most professional and personal records are digitized and can be accessed after employee’s consent. Sometimes, accessing certain types of information can be challenging due to local privacy laws or lack of digitized records. For expatriate candidates, verifying foreign qualifications or experiences might require more effort and international coordination. Therefore, many companies in the UAE rely on professional background check services to conduct thorough and legally compliant checks.
Paid leave: Employees who have worked for at least 6 months, are entitled to 2 days of paid leave per month and maximum 30 paid leaves per year.
Maternity Leave: Employees are entitled to 60 days of paid leave during maternity. The first 45 days are fully compensated while in the last 15 days, employees receive 50% of the salary.
Paternity Leave: There is no paternity leave mandated by the law.
Sick Leave: An employee who has worked for at least 3 months, is entitled to a maximum of 90 days of sick leave. First 15 days of sick leave are fully paid, the next 15 days are partially paid and the remaining are considered leave without pay.
Under Article 42 of the Federal Decree Law No. 33 of 2021, which governs Labour Relations in the Private Sector in the UAE, there are several circumstances in which an employment contract can be terminated.
You can read more about these circumstances in our hiring guide.
In the UAE, employees who are terminated, except under Article 120 of the Labor Law, are entitled to receive severance pay. The severance pay is calculated as follows:
21 working days of salary for each of the first 5 years of service and an additional 30 working days per year of service beyond five years, with a maximum of 2 years' worth of compensation.
The notice period for termination ranges from a minimum of one month to a maximum of three months, depending on mutual agreement between the employee and the employer. Contracts must be in English, although bilingual contracts are also acceptable. They must be in written form and signed by both parties.