Employee Benefits in UAE (2025): Legal Requirements, Best Practices & Global Hiring Tips
Understanding employee benefits in the UAE isn’t just about ticking legal boxes—it’s about attracting and retaining the people who power your business. Whether you're navigating federal mandates or unwritten cultural expectations, getting benefits wrong in the UAE can mean losing top talent to better-informed competitors.
Unlike in many countries, the UAE doesn’t require pensions or unemployment insurance, which can catch new employers off guard. But that doesn’t mean expectations are low—far from it. Employees, both Emirati and expatriate, increasingly expect tailored, competitive benefits that reflect both legal compliance and regional norms. And if you’re scaling into the UAE for the first time, reconciling these nuances across emirates can quickly become overwhelming.
In this guide, we’ll break down what’s actually required, what’s commonly expected, and where companies often go wrong. You’ll learn how to navigate eligibility, optimize both mandatory and optional benefits, and understand why partnering with an Employer of Record (EOR) isn’t just convenient—it could be your secret weapon for staying compliant and competitive in one of the region’s most dynamic labor markets.
Who Qualifies for Statutory Benefits in the UAE?
In the UAE, statutory employee benefits apply to individuals employed under standard full-time, part-time, and fixed-term contracts. These roles are typically registered with the UAE Ministry of Human Resources and Emiratisation (MOHRE) and integrated into the country's social security framework. Benefits are available from day one of employment, assuming the basic salary meets threshold requirements.
Who is Excluded?
- Freelancers and Contractors: Generally excluded from statutory protections.
- Low-Income Workers: May receive limited benefits, depending on wage levels and contract terms.
- Interns and Agency Temps: Often excluded or partially covered depending on the employer's policies.
- Employees on Non-Standard Work Permits: Entitlement may vary depending on visa classification and sponsor arrangements.
For DIFC-regulated companies, benefit schemes may differ slightly under DIFC Employment Law, and public sector workers may be governed by separate statutes.
Statutory Employee Benefits in the UAE
Understanding the minimum legal obligations under UAE labour law is crucial for avoiding compliance pitfalls. Here are the primary statutory entitlements:
- Health Insurance: All employees must be covered by employer-sponsored health insurance. In Abu Dhabi, this extends to dependents; in Dubai, employers are only responsible for the employee unless otherwise stated in the employment contract.
- End-of-Service Gratuity (EOSB): Mandated under Federal Decree Law No. 33 of 2021, this benefit compensates employees upon termination. It is calculated based on the employee's basic salary and years of service.
- Annual Leave: 30 calendar days after one year of service, with paid leave prorated if employment is less than one year. Employees are entitled to full pay based on their last drawn salary.
- Maternity Leave: 45 days of full pay, with 15 additional days at half pay for female employees. Unpaid leave may be granted in cases of extended medical need, provided a medical certificate is submitted.
- Paternity Leave: 5 days paid leave within the first six months of a child’s birth.
- Sick Leave: Up to 90 days annually, segmented into 15 days at full pay, 30 at half pay, and the remainder unpaid. Medical certification is mandatory.
- Public Holidays: UAE nationals and expatriates are entitled to paid public holidays as declared by the government, typically 11–14 days per year.
- Occupational Health and Safety: Employers are required to implement safety protocols and workplace wellness policies in compliance with UAE employment law.
- Workers’ Compensation: Required for work-related injuries or illnesses and structured around financial indemnity and rehabilitation provisions.
Common and Additional Employee Benefits in the UAE
While statutory benefits form the foundation, many organizations in the UAE offer additional perks to attract and retain talent, especially in the competitive private sector:
- Supplemental Health Insurance: Enhances core healthcare access with additional coverage like dental, vision, or mental health support.
- Private Pension Plans: Often structured for high earners or UAE nationals seeking long-term savings beyond EOSB.
- Housing Allowance: Particularly valuable in expensive cities like Dubai or Abu Dhabi, where monthly rent can exceed AED 7,000.
- Transportation Allowance: Common in areas where public transit is limited; also offered as a monthly AED stipend or company bus service.
- Company Cars: Provided to employees in field-based or senior roles.
- 13th Month Salary: Common among multinationals and DIFC-based employers as a year-end retention bonus.
- Education Allowances: Support expatriate families with international schooling costs, often up to AED 50,000 per child annually.
- Life Insurance: Emerging as a differentiator in benefits packages, often bundled with healthcare.
We manage EOSB by treating it like a financial obligation rather than a one-time payout. We set aside monthly reserves based on each team member’s tenure and salary, using a separate ledger reviewed quarterly. This gives us a clearer picture of liability and helps with retention planning.
Benefits That Attract Top Talent in the UAE
Leading employers are tailoring their benefits plan beyond statutory minimums to better reflect the diverse needs of their workforce, including expatriates and UAE nationals alike:
- Flexible Working Hours: Supporting religious observances like Ramadan, school schedules, and long commutes.
- Remote Work Options: More prevalent in the post-pandemic workplace, especially among DIFC-registered and tech-sector employers.
- Wellness Programs: These include fitness subsidies, meditation apps, and stress reduction workshops tailored to a high-performance workweek.
- Employee Assistance Programs (EAPs): Confidential support for mental health, family challenges, or financial advice.
- Professional Development: Offering skills-based training, coaching, and leadership development through LMS platforms or external partners.
- Volunteer Time Off: Companies integrate CSR by offering employees time to contribute to causes important to them.
These initiatives signal a commitment to employee well-being, fostering loyalty and productivity—particularly in a market with no income tax, no universal pension, and a high proportion of expatriates.
Offering leave flexibility during Ramadan, childcare allowances, and remote work options for staff with long commutes has kept our UAE-based teams engaged and committed.
How to Set Up and Manage Employee Benefits in the UAE
Establishing a legally compliant and culturally aligned benefits program in the UAE requires a strategic approach:
- Partner with Local Providers: Understand emirate-specific healthcare rules and source competitive plans. Gratuity calculations, insurance mandates, and leave policies can vary slightly by emirate, so be sure to consult local guidance and update policies accordingly.
- Stay Current with UAE Labor Law: Regularly consult updates from MOHRE, DIFC Authority, and the Federal National Council.Unless you have an established entity in the UAE, consider a UAE-based payroll provider to manage WPS (Wage Protection System) compliance and benefits deductions
- Leverage EOR Services: An Employer of Record can simplify payroll, benefits, and compliance. Compare top UAE EOR providers here to fully outsource hiring, onboarding, benefits, and compliance—ideal for distributed teams or market entry.
- Communicate Clearly: Use multilingual onboarding and accessible employee handbooks. With a multicultural workforce, clarity and accessibility are essential: provide onboarding materials in multiple languages (Arabic, English, Hindi/Urdu where relevant). Use digital HR platforms to centralize access to benefits, payslips, and leave records. Also, ensure line managers understand entitlements to avoid misinformation during onboarding or exit.
- Review and Optimize Regularly: Benchmark your benefits plan against peers and adjust annually based on employee feedback. Labor law in the UAE evolves—especially in free zones and emirate-level authorities. Stay current by auditing your policy and benefits annually against industry benchmarks!
Stay Compliant with Local Employment Law
Non-compliance with UAE labour law can derail even the best business plans. Here’s what to watch out for:
- Misclassifying workers: Avoid treating full-time employees as contractors to sidestep benefits.
- Underfunding EOSB: This is a legal liability—maintain a reserve based on year of service and basic salary.
- Inconsistent Entitlements: Ensure parity across nationalities and departments to avoid discrimination claims.
- Improper Handling of Sick or Unpaid Leave: A medical certificate should always be required, and all leave tracked per the employment contract.
Use a compliance calendar and periodic audits to stay ahead of shifting regulations.
Get Support Setting Up Benefits in the UAE
Understanding employment law and managing benefits in the UAE—where each emirate may have slightly different interpretations of federal law—requires vigilance and expert support.
To reduce administrative burden and mitigate risk, many global companies choose to work with an Employer of Record. This ensures payroll, visa sponsorship, healthcare, and compliance are managed under one roof.
10 Best UAE Employer of Record Service Shortlist
Here's my pick of the 10 best software from the 10 tools reviewed.
What’s Next?
Stay ahead of regulatory updates and workforce trends by subscribing to our newsletter for CHROs, HR leads, and people managers. We share expert insights and actionable tools to help you drive impact.
