🇦🇪 Payroll in United Arab Emirates: employer costs, taxes & compliance (2026)

Running payroll in the UAE is relatively straightforward compared to many markets, but it has its own shape. Each month, employers calculate gross salaries, deduct the employee's social insurance contribution, add their own employer contribution on top, and transfer wages through the government's Wage Protection System. There is no income tax to withhold, which removes a whole layer of complexity that payroll teams in other countries deal with every cycle.

That said, there are still moving parts: social insurance obligations, leave accruals, end-of-service calculations, and the rules around notice periods all feed directly into what you owe and when. This guide walks through employer costs, pay cycle mechanics, leave and termination rules, and when it might make sense to bring in outside help.

The gap between what an employee earns and what they actually cost you comes down to the employer's social insurance contribution. It lands at a meaningful premium on top of gross salary, so you should factor it in from the first offer letter. See the table below for the exact rate. One thing worth noting: because the UAE has no personal income tax, the overall tax wedge is low by global standards. That means the difference between what you pay and what the employee takes home is smaller than in many other jurisdictions, which can make compensation packages feel more competitive.

The social insurance rules apply to UAE and GCC nationals. Expatriate employees, who make up the large majority of the private-sector workforce, fall outside the social insurance scheme entirely. That distinction matters a lot when you are modelling total headcount costs, because your actual employer contributions will depend heavily on the nationality mix of your team. Check the table below for the rates that apply to each group.

Salaries are paid monthly, and there is no mandatory 13th-month payment in the UAE, so you will not find an annual bonus obligation baked into local law. The UAE does not set a universal statutory minimum wage for private-sector workers in the way many countries do, though wage floors exist for certain categories. The practical pressure point is the Wage Protection System, which requires wages to be paid on time through approved channels. Late payments get flagged automatically, so your payroll run date matters operationally, not just administratively.

Annual leave sits at 30 days, and you need to be accruing it each month so the balance is ready when an employee takes time off or exits. Public holidays add another 14 days to track across the year. Maternity leave runs just under nine weeks, and paternity leave is under a week, so neither creates a long payroll gap to manage. On termination, notice is roughly four weeks, and you will need to pay out any accrued but unused leave as part of the final settlement. The end-of-service gratuity calculation is the piece that catches people off guard: it is based on length of service and final salary, and it sits outside the social insurance system, so it is a direct employer liability you need to be setting aside mentally, even if not always in a dedicated fund.

If you are hiring in the UAE without a local entity, or you only have a handful of employees and do not want to build out a local payroll function, a global payroll provider or employer of record can handle the mechanics for you. They manage the Wage Protection System filings, keep pace with any social insurance rate changes, and make sure end-of-service calculations are done correctly at termination. For companies expanding into the region for the first time, the administrative lift of setting up locally and staying current with the rules is often more than the team has for, and that is where outside support earns its cost.