Guide to Hiring in the United Arab Emirates

Employment trends and job market analysis for the UAE

Best known for its highly-developed infrastructure and celebrated diversity, the United Arab Emirates (or UAE) is an economic powerhouse of the Middle East. It is widely known as a business-friendly country in the region that welcomes foreign workers and investments.

The UAE’s economy is the fifth largest in the Middle East. As of 2023, it was valued at about $504 billion, and it's expected to grow to around $530 billion by the end of 2025. The International Monetary Fund (IMF) predicts the UAE's economy will grow by about 5.1% in 2025.

The UAE economy relies on revenue from the natural gas and petroleum industries. Tourism is one of its most significant non-oil revenue sources, and the UAE’s thriving services sector contributes to its diversification. The economy is expected to remain strong, growing around 4% in 2025 thanks to activities in tourism, construction projects, government spending, and financial services.

Payroll and taxes

Employer contributions

The UAE does not have enforced federal income tax legislation for general business. Each Emirate has enacted an income tax decree, but in practice, the decrees are only enforced by oil companies and foreign banks.

Employee contributions

There is no personal income tax law enacted in the UAE. This means that there are no individual tax registration or reporting requirements.

Employers must contribute to staff pensions, but we will cover this later in the guide.

Social security contributions

Social security contributions are only applicable to UAE nationals. Both the employer and employee will need to make these contributions. The rates are as follows:

• Employer - 12.5% of the employee’s monthly salary
• Employee - 5%
• Government - 2.5% (for Emiratis working in the private sector)

These rates differ in Abu Dhabi, where contribution rates are as follows:

• Employer - 15%
• Employee - 5%
• Government - 6%

Employee contributions are deducted from the employee’s salary on a monthly basis. Payment is due before the 15th of the following month and processed through the UAE Funds Transfer System. There is a late payment fee of 0.1% per day of the amount due. 

According to Federal Law No. 57 of 2023, which applies to employees who entered the workforce for the first time after October 31, 2023, have different contribution rates. The contribution payments amount to 26% for federal, government, and private sectors, out of which the employee bears 11% and the employer bears 15%, while the government pays 2.5% of the employer’s percentage for Emiratis working in the private sector whose contribution account salaries are less than AED 20,000

Labour laws to be aware of in the UAE

The recent implementation of the UAE Labour Law in February 2022 has brought about significant changes in the employment landscape. Companies operating in the private sector (excluding the DIFC and ADGM) are now required to employ individuals on fixed-term contracts.

However, the three-year limit initially imposed on fixed-term contracts was removed in October 2022, affording flexibility to both parties involved. This means that the duration of the fixed-term can now be tailored to the specific needs and preferences of the individuals involved, although the inclusion of a fixed-term provision remains mandatory.

Moreover, the removal of the maximum term limit, combined with the right of either party to terminate the contract before its expiration, can render the fixed-term aspect of the agreement virtually insignificant. For instance, even if a five-year fixed-term contract is agreed upon, it essentially functions as a permanent employment contract.

These recent amendments have undoubtedly introduced a unique dynamic in terms of contractual obligations within the UAE.

Minimum retirement age

Employees are entitled to a pension from the age of 50.

The minimum retirement age in the United Arab Emirates (UAE) is set at 60 years. However, there are provisions that allow employees to retire earlier under certain conditions.

Early retirement

Emirati men can qualify for an early retirement pension at age 55 if they have completed 20 years of service.

Emirati women may be eligible for early retirement at age 50, also requiring 20 years of service.

There are specific circumstances under which employees can retire before reaching the standard retirement age.

Working beyond retirement age

Employees have the option to continue working up to the age of 65, but this is contingent upon mutual agreement between the employer and employee.

It is important to note that employees cannot be compelled to retire upon reaching the retirement age.

Pension calculation

The pension amount is determined based on the average salary received during the last three years of employment and the total duration of service.

Pensioners receive their monthly pension from the General Pension and Social Security Authority (GPSSA).

Minimum wage

There is currently no minimum wage in the UAE, as there is no basic salary percentage under UAE Labour Law. However, starting January 1, 2025, specific minimum wage levels have been established based on educational qualifications:

• No high school certificate: AED 300 per month
• High school graduate: AED 400 per month
• College certificate or higher: AED 500 per month

This means that while there is no overarching minimum wage for all sectors, there are set minimums for certain categories of workers based on their education level. Additionally, common practice suggests that the average salary typically consists of around 60% as basic salary and 40% as allowances.

Working hours

In the UAE, the standard work week used to run from Sunday to Thursday, but this is changing. While some businesses still operate six days a week, closing on Fridays, the new labor law, which came into effect in February 2022, offers more flexibility. Employers are no longer required to mandate rest days on Fridays; instead, rest days can be scheduled on any day of the week, depending on what's agreed upon by all parties.

The government sector has already transitioned to a Monday to Friday work week, with a half-day on Fridays. While this isn't mandatory for private companies, many are considering or have already made the shift to a similar Monday to Friday schedule.

Typically, business hours in the UAE are structured with a break in between, running from 8 AM to 1 PM, then resuming from 4 PM (to avoid the hottest part of the day) and continuing until 7 PM.

Officially, private-sector employees should work a maximum of 48 hours per week, usually spread over six days with eight hours per day. During Ramadan, working hours are reduced by 2 hours each day. Employees must have breaks.

Standard overtime is compensated with a basic salary plus a 25% premium. Night shift overtime (10 PM - 4 AM) is compensated with a basic salary plus a 50% premium. Weekend/off-day work is compensated with a basic salary plus a 50% premium or a compensatory day off.

Employee benefits

Mandatory benefits

In the UAE, it is compulsory to register employees with the national government pension programme and contribute to it regularly. All employees working in the UAE that come from countries that make up the Gulf Cooperation Council (Saudi Arabia, Kuwait, Qatar, Bahrain, and Oman) are entitled to pension programmes of their home countries.

The total mandatory pension contribution required by employers is 20% of the employee’s overall salary. These contributions are subject to a statutory minimum and maximum salary amount (AED 1,000 and AED 50,000, respectively), against which the pension contribution is calculated.

As of January 1, 2025, all private-sector employers and domestic workers in the UAE are required to have basic health insurance coverage. This extends mandatory health insurance beyond Abu Dhabi and Dubai to the remaining emirates. Employers must purchase this insurance as a prerequisite for issuing or renewing residency permits. The cost of this basic health insurance package is around AED 320 annually.

The basic health insurance package includes inpatient and outpatient care. Inpatient services typically have a 20% co-payment, capped annually, while outpatient services have a 25% co-payment. The insurance also covers chronic illnesses without a waiting period.

Supplementary benefits

When it comes to providing benefits for employees in the UAE, it’s useful to have a strong understanding of the economy and local expectations so that you can provide genuine value for your employees. Your benefits plan must address your workers’ needs as well as give you a competitive advantage in the careers market.

You can offer a variety of supplementary benefits to set your company apart, including:

• Performance awards
• Access to mental health support and counselling
• Training and development courses
• Financial advisory services
• Wellness and health events

Employee rights

Employees in the United Arab Emirates are entitled to certain rights and protections under the labour laws mentioned above. These rights include:

Equal treatment

Employees have the right to be treated fairly and without discrimination on the basis of race, nationality, religion, gender, or age. Discrimination in hiring, promotion, or any other employment-related decision is prohibited.

Written employment contract

Employees have the right to a written employment contract that clearly outlines the terms and conditions of employment, including job description, compensation, working hours, benefits, and other relevant details.

Wages and payment

Employees have the right to receive their wages on time, usually within a month of completing the work. Wages should be paid in the local currency (UAE Dirhams), and there are regulations in place to ensure the timely payment of wages.

Workplace safety

Employers are required to provide a safe and healthy working environment for their employees. They should adhere to safety standards and regulations to ensure the well-being of workers.

Types of leave available

Annual leave

• Two days' leave for every month if their service is more than six months and less than one year of continuous employment
• A minimum of 30 vacation days a year if their service exceeds one year of continuous employment

Annual leave is usually calculated on the basis of a calendar month rather than by working days.

According to the New 2022 Labour Law, employees can be required to use up all their annual leave in the applicable annual leave year, and employers are encouraged to update any policies that limit carry-over of leave.

Sick leave

If an employee is sick or has injuries that prevent them from working, they should report to their employer within a maximum of two days.

Employees in the UAE are not entitled to sick pay during their probationary period, but after a period of three months following probation, sick leave is applicable as follows:

• The full wage for the first 15 days
• Half wage for the next 30 days

Any sick leave exceeding 30 days must be taken unpaid. If the illness has been directly caused by misconduct, e.g. excessive drinking, the employee is not entitled to sick pay. Employees are required to provide evidence of their illness via an official medical certificate.

Workers can resign during their sick leave, provided that the reason for resignation is approved by a physician. In this case, employers must pay all the wages the employee is entitled to until the end of the 45-day period of sick leave entitlement.

Employers are not permitted to dismiss an employee during their sick or annual leave unless the employee has used up all of their sick leave and is unfit to return to work. In this instance, the employee should receive a full gratuity and end-of-service entitlement. They will not be entitled to wages for the days they have not reported to work after the end of their leave.

If an employee does not report back to work within seven days from the day they were due back, employers are within their rights to terminate the employment agreement.

Maternity and paternity leave

Maternity leave in the UAE is applicable for 50 calendar days. Maternity pay is as follows:

• Full pay for the first 45 days
• Half pay for the remaining 15 days

Employees are also entitled to take maternity leave if they have miscarried after six months of pregnancy or in the event of a stillbirth or death of the child following birth. This leave will be the same as is detailed above.

If an employee gives birth to an infant with an illness or disability, they are entitled to an additional 30 days of leave, which can be further extended by another 30 days of unpaid leave if necessary.

At the end of the maternity leave, employees are allowed to extend their leave for a maximum of 45 days without pay.

During the six months following the birth of a child, employees who are nursing are entitled to two daily half-hour intervals to nurse their baby. These intervals are considered working hours and should not incur a wage deduction. According to the New 2022 Labour Law, employers cannot terminate an employee because they are pregnant or taking maternity leave.

Male employees are entitled to 5 days of fully paid paternity leave, which can be taken within six months of the child’s birth.

Compassionate leave

In the UAE, compassionate leave is as follows:

• Five days in the event of the death of a spouse
• Three days in the event of the death of a parent, sibling, child, grandchild or grandparent

Study leave

Employees who have worked at a company for more than two years can take ten days of study leave per year. This leave allows them to sit examinations. They will need to be affiliated with an approved UAE educational institution to qualify for this leave.

Hajj leave

Muslim employees may be eligible for up to 30 days of unpaid leave for pilgrimage

Public holidays

The UAE observes the following national holidays:

• New Year’s Day
• Eid al-Fitr (celebrated on five consecutive days)
• Arafat Day
• Eid al-Adha (celebrated on three consecutive days)
• Islamic New Year
• Prophet Muhammad’s Birthday
• Commemoration Day
• National Day (celebrated on two consecutive days)

Attracting talent

The UAE’s low-tax environment, low crime rate and advanced business culture make it an excellent choice for business expansion.

However, these factors also make the UAE a competitive environment for companies looking to attract talent. To differentiate your organisation from others in the UAE, consider employee benefit programs that provide a unique experience reflective of the rewarding nature of the UAE market.

Here are some tips on how to hire people in the UAE:

Provide opportunities for career development

High performers are always looking for ways to learn new things and will more than likely want to join a company that provides career growth opportunities. These opportunities could take the form of professional development plans or 1-2-1 mentorship.

Regardless, organisations should focus on offering potential employees clear information about potential career pathways they can take within the company.

Build policies that promote a good work-life balance

The COVID–19 pandemic introduced some significant changes in the way organisations around the world do business. Employee perspectives changed, and now workers place a high amount of value on companies that promote flexibility and employee well-being.

Interestingly, the Michael Page study found that the majority of UAE employees would prefer to work partially in the office and partially at home. Reasons for wanting to work at least partly in a non-home work environment included wanting to feel more engaged in their job, to take part in face-to-face meetings and to maintain social connections.

Where possible, organisations should offer a flexible working routine that incorporates both remote and non-remote arrangements. 

Exciting projects to work on

A small local population and wealth of energy resources creates opportunities for expat expertise. Because of the huge growth potential in the region, this is even true in areas with strict local content policies. Large capital development projects on the horizon could provide jobs for locals and expats for the next two decades.

Not only are they investing $40-60bn dollars to increase oil production, but the nation also plans to invest into diversified energy projects. Consider the Barakah Nuclear Plant, The Mohammed bin Rashid Al Maktoum Solar Park projects, and the showcase event, Expo2020. These three projects place sustainable energy as a key agenda focus.

Hiring best practices

Expanding a business to the United Arab Emirates (UAE) involves a series of strategic decisions, including hiring the right talent to ensure the success of the venture. Here are some hiring best practices for companies expanding to the UAE:

Understand local labour laws

Before you start hiring, familiarise yourself with the UAE's labour laws and regulations. Seek legal counsel if needed to ensure full compliance with employment laws and visa requirements.

Local market knowledge

Leverage the knowledge of local experts or global employment outsourcing consultants who understand the UAE job market. They can help you navigate cultural nuances and employment trends specific to the region.

Competitive compensation

 Research salary benchmarks in the UAE to offer competitive compensation packages. Consider benefits such as housing allowances and healthcare, which are often part of employment packages.

Onboarding and orientation

Develop a comprehensive onboarding process that helps new hires acclimate to the company's culture and work expectations. Cultural sensitivity training may be beneficial.

Legal contracts

Ensure all employment contracts comply with local laws and clearly define the terms and conditions of employment, including benefits, termination clauses, and probationary periods.

Performance evaluation

Implement performance evaluation systems that align with local expectations and standards. Regular feedback and goal-setting can help motivate employees.

Employee benefits

Offer competitive benefits packages, including healthcare, retirement plans, and wellness programs, which can be attractive to potential hires.

Talent retention

Focus on employee retention strategies, as turnover can be costly. Provide opportunities for growth and development, as well as a positive work environment.

Market your brand

Build a strong employer brand in the UAE by showcasing your company's values, culture, and career opportunities through various marketing channels and within job postings. Strong marketing can also attract passive candidates who are not necessarily seeking work, but would be open to a career move if the right opportunity presented itself. 

Employee engagement

Engage with employees to understand their needs and concerns. Happy and engaged employees are more likely to contribute to the success of your expansion.

What should the ideal onboarding process look like?

The onboarding process in the UAE should be a seamless blend of legal compliance, cultural awareness, and role-specific training. 

Orientation is crucial, introducing your new hires to the company's culture, values, and local business etiquette. Cultural sensitivity training is vital for fostering an inclusive work environment.

Employees should be guided through documentation and contracts, with a clear understanding of their rights and responsibilities under UAE labor laws. Role-specific training should equip them with the skills necessary for success.

Language proficiency, if needed, should be assessed and addressed to facilitate effective communication. Clarify compensation structures, benefits, and end-of-service benefits, and ensure employees understand their rights.

Safety procedures, compliance training, and company policies should be thoroughly explained. Provide ongoing support and feedback channels and foster social integration through team-building activities. Discuss opportunities for professional growth and outline the exit process.

Termination of employment

The UAE's labor regulations are governed by Federal Decree-Law No. 33 of 2021, which establishes guidelines for employers and employees in termination scenarios. The law aims to ensure transparent and fair workplace practices.

Types of employment contracts

The UAE Labour Law distinguishes between limited-term and unlimited-term contracts, each with specific implications for termination processes.

Limited-term contracts are set for a fixed duration, and termination before the end date typically requires justifiable reasons.

Unlimited-term contracts offer greater flexibility but are bound by notice periods stipulated in the law or employment agreement.

Grounds for termination

Valid grounds for termination include performance-related issues, misconduct, and redundancy due to economic necessity. Employers may terminate an employee for consistently failing to meet job expectations or for gross misconduct, such as falsifying documents or breaching workplace safety. Terminations are also permitted due to operational changes, such as business closure or restructuring.

Arbitrary dismissal

The law prohibits arbitrary dismissal, which occurs when an employee is terminated for reasons unrelated to their performance, conduct, or operational necessity. If a dismissal is proven arbitrary, the court may order the employer to pay compensation of up to three months' salary, based on the employee’s most recent wage.

Immediate termination without notice

Under the UAE Labour Law, immediate termination without notice is permitted under specific conditions, such as:

• Submitting forged documents or assuming a false identity
• Causing significant financial loss to the employer or intentionally damaging property
• Violating workplace safety instructions
• Divulging confidential company information
• Being absent without valid justification for more than 20 non-consecutive days or 7 consecutive days in one year

An employee can leave without notice if the employer fails to meet contractual or legal obligations despite 14 days’ notice to the Ministry of Human Resources and Emiratisation (MoHRE) or assaults or harasses the employee.

Notice period

Both employers and employees must provide notice according to the employment contract terms, typically 30 to 90 days. If either party fails to give proper notice, they must compensate the other for the full notice period or the remaining duration.

Probationary periods

The legal probationary period in the UAE is a maximum of six months.

Severance pay

Employees who have completed at least one year of service are entitled to end-of-service benefits. The gratuity calculation is based on the employee’s basic wage: 21 days of salary per year for the first five years and 30 days per year after five years.

What are my options for hiring employees?

If you’re looking to expand your business to the UAE, a company like Airswift can help you get started with your remote hiring process. We offer employment solutions designed to ensure you stay compliant across all local legal requirements, including tax, payroll, termination procedures and working hour obligations.

Our in-country teams have the expertise and knowledge necessary to save your organisation from unnecessary risk, freeing up your time to focus on the other prospects of international business growth.

Talent acquisition

Airswift can source and deliver the talent you need across a wide range of industries by leveraging our expertise and employee networks across the UAE.

Whether you want to hire contractors for an urgent project or need to hire locally to cover a staffing shortage, we are committed to finding a contractor to suit your needs. Our contract hire services are catered to organisations that need temporary hires to fulfil a range of requirements.

Finally, if you’re looking to hire candidates that can grow with your company, we have professional search services that provide access to highly skilled job seekers who are ready for work. We also take care of all the administrative processes, from shortlisting candidates to screening and onboarding them.

Employer of record

We understand that hiring staff and expanding globally is a complex process and an Employer of Record in the United Arab Emirates can help you hire employees without setting up a local entity. Working with an Employer of Record in the UAE allows you to get up and running in as little as 72 hours.

Once your employee has been given the green light, we will take care of everything from onboarding and benefits management to tax filings and annual leave allowance.

*Although the information provided has been produced from sources believed to be reliable, no warranty, express or implied, is made regarding the accuracy, adequacy, completeness, legality or reliability of any information. For the latest information and specific queries regarding particular cases, please contact our team.