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Compensation & Benefits in AeUnited Arab Emirates.

Population

9,282,410

Languages

1.

Arabic

Country Capital

Abu Dhabi

Currency

UAE dirham (AED)

Compensation and benefits are essential to ensure employees’ happiness and longevity. These factors also play a crucial role in the company’s compliance with United Arab Emirates (UAE) compensation laws.

G-P makes it possible to start obtaining services in the United Arab Emirates in minutes via our global entity infrastructure – allowing your company to expand your international footprint without the hassle of entity setup or management.

UAE compensation laws

The UAE does not have a national minimum wage for expatriates, but UAE nationals have specific salary requirements based on their education. However, there are minimum salary thresholds for employees who wish to sponsor family members for visa purposes.

Employees who work on a day off are entitled to an increase of 50% or more in pay or another day off.

Guaranteed benefits in the UAE

United Arab Emirates benefits management plans must include guaranteed benefits required by law. A good place to begin this plan is with time off. Employees are entitled to days off with full pay during the country’s official public holidays. Vacation leave depends on how long the employee has worked for the company. Employees are entitled to 30 days of annual leave after working a full year.

Pregnant employees are entitled to 60 days of maternity leave with 45 days at full pay and 15 days at half pay.

Partners receive 5 paid working days of parental leave, which they can take consecutively or non-consecutively within the first 6 months after the child’s birth.

UAE benefits management

A strong United Arab Emirates benefit management plan includes both guaranteed benefits and additional perks that employees may expect in a specific position. All employees are entitled to a mandatory health insurance program that must be provided to them. It is not mandatory but common for employers in the UAE to provide employees’ dependents with employer-sponsored health insurance.

UAE competitive benefits planning

As a company grows in the UAE, employee benefits planning is a pivotal consideration to help recruit and retain top employees. Companies should create a plan that balances crucial operational requirements, legal compliance, and local market standards.

UAE employee benefits plans

When building an employee benefits plan internationally, having an in-depth understanding of the economy and local expectations can help create a program that offers more value. Beyond managing compliance, it’s important to build a benefits plan that addresses employees’ needs and shows that they are appreciated. Supporting new hires as part of the team can help set a company up for success.

The benefits plan can also give a competitive edge in the job market. Employers can provide a range of supplemental benefits to set the company apart, such as:

  • Pension contributions
  • Access to counseling services and support
  • Flexible working hours
  • Financial advisory services
  • Part-time work opportunities
  • In-house educational resources and support
  • Supplemental parental leave
  • Wellness and health events
  • Performance awards

Requirements for employee benefits in UAE

Compliance will also play a role in the benefits offered. Employees are entitled to these mandatory provisions in the UAE:

  • Paid annual leave of 30 days each year
  • Maternity leave of at least 60 days for pregnant employees
  • Parental leave of up to 5 days for either parent
  • Holiday leave
  • Sick leave
  • Health insurance

How to design an employee benefits program

Benefits requirements and market conditions will be unique to the local economy and labor laws. To successfully manage these standards, employers should follow a consistent strategy.

1. Identify a budget and objectives.

As employers establish their benefits program, they first need to determine their goals and set a budget. Setting the program’s scope and working with their available financial resources will help them develop a sustainable long-term plan.

It is important for companies to consider whether their current goal is to build and support a large team or if they will start by investing in a smaller core group of employees. It’s then easier to build a plan around these factors.

2. Examine employee needs.

The employees in the region will have unique needs. The best way to ensure they’re meeting those needs is to discuss them directly.

It’s important to plan to hold interviews with local employees or send out questionnaires to learn more about market standards and employee expectations in the area. Researching what employees look for in a benefits plan and identifying underserved needs they may have is also encouraged. Employers might also research local companies’ benefits during this stage to see if they can match them.

3. Apply research to the program.

After finding reliable data on employee needs and expectations, it’s important to integrate that research into the established benefits program. Outsourcing expenses, employee contributions, administration expenses, and cost containment features will all influence the final program costs.

Average cost of benefits per employee

Because benefits programs depend on a wide range of operational and local market factors, costs can vary from one company to another. Rather than aiming for a national average, the employer should ensure the plan works with their available financial resources and provides room for growth.

How to calculate employee benefits

National labor laws outline the specific percentages used to calculate benefits such as annual leave, parental leave, and sick leave.

Employers must contribute 12.50% of each employee’s income to social security benefits. Note that the social security system is for UAE nationals only, not for non-nationals.

As for any fringe benefits employers may provide, competitive rates in the region can be determined based on research.

How are employee benefits taxed in the UAE?

The UAE currently has no established personal income tax, so employers do not need to withhold income taxes from their employees. As such, benefits are not subject to taxes in most cases. If the employer is unsure about a specific employee’s situation, they may consult the local tax authorities.

Employee health benefits plans

Employers are responsible for providing health insurance for all employees. Many private insurance companies offer plans, so employers have several options to choose from for their employees.

Partner with G-P to build your everywhere workforce.

As your partner in global expansion, G-P will handle payroll and compliance, so you can focus on growing your team and scaling your business. Our market-leading Global Growth Platform™ is powered by the first fully customizable suite of global employment products and backed by the industry’s largest team of in-country HR and legal experts to streamline payroll management and help you offer competitive, compliant local benefits.

Learn more about our platform and request a proposal today.

Disclaimer

THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.

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