🇦🇪 Hiring in the United Arab Emirates

💡 Everything you need to know to hire and manage employees in the United Arab Emirates through Toku. Toku handles payroll processing, tax withholding, social contributions, and statutory compliance. This guide covers what you need to plan costs and manage your team.

At a Glance

Onboarding a New Hire

Plan for 10-25 business days between submitting a new hire and their start date. Before day one, your new hire completes a medical test and Emirates ID biometrics (plus visa stamping if applicable), while Toku arranges the work permit, health insurance, and payroll activation; all of these must be finished before the hire date, which is why UAE lead times are longer than most countries.

Submit the new hire through the Toku platform for the employment agreement, statutory registrations and payroll setup. See Onboard Contributors as a Client Admin in Toku for the steps. Toku will confirm the expected onboarding timing for your hire.

Employer Costs

The UAE has no social security contributions for expatriate employees, so ongoing employer costs are lower than in most countries. The main items to budget are:

As a rule of thumb, total cost of employment for an expatriate hire is roughly 105-110% of gross salary, mainly driven by gratuity accrual and insurance; for UAE nationals, add the pension contribution above. There is no 13th month salary requirement.

Employees pay no personal income tax in the UAE. The only payroll deductions are a small mandatory unemployment insurance (ILOE) subscription of AED 5-10 per month plus VAT, and, for UAE nationals, a pension contribution of 5-11% of pensionable salary. These come out of gross salary, not on top. Toku calculates and remits all of the above.

Compensation & Payroll

Toku runs one payroll per month in the UAE, paid in AED through the government's Wages Protection System, and employees receive an itemized payslip each cycle. From January 1, 2026 the minimum wage for UAE national employees in the private sector is AED 6,000 per month. There is no legislated minimum wage for expatriate employees, but immigration authorities apply salary benchmarks of roughly AED 12,000 per month for university graduates and AED 7,000 for skilled technicians.

Employment Contracts & Probation

• Toku issues a compliant local employment agreement for every hire, in bilingual Arabic-English form (the Arabic text prevails legally).
• All UAE employment contracts are fixed-term by law. Toku employs your team members on a 12-month fixed-term contract that renews automatically, so in practice employment continues seamlessly.
• Probation is 3 months per Toku's employment agreement (the statutory maximum is 6 months). During probation, termination by the employer requires 14 days' written notice; a resigning employee gives 1 month's notice if joining another UAE employer, or 14 days otherwise.

Working Hours

Standard hours are 8 per day and 48 per week, with a Saturday-Sunday weekend for most private-sector companies. During Ramadan, working hours are reduced by 2 hours per day for all employees. Overtime is limited to 2 hours per day and is paid at 125% of the hourly wage, rising to 150% for work on rest days, public holidays, or between 10pm and 4am. Employees in managerial or supervisory roles may be exempt from overtime provisions if their contract says so.

Leave Entitlements

Annual leave may be accumulated or carried over by agreement between you and the employee. All paid leave in the UAE is employer-funded; there is no state benefit system covering it.

Public Holidays (2026)

The UAE observes approximately 12-14 paid public holidays per year. Islamic holiday dates follow the lunar calendar and are confirmed officially shortly before each occasion, so the dates below are approximate.

When a public holiday falls on a rest day, employees are entitled to a substitute day off or an additional day's pay.

Benefits

UAE law requires end-of-service gratuity for all employees who complete one year of service, mandatory private health insurance, paid annual, sick, maternity, and paternity leave, workplace injury compensation, unemployment insurance (ILOE, employee-funded), and pension contributions for UAE nationals; these are included in Employer Costs above. Toku meets the health insurance requirement with comprehensive private cover through Sukoon Insurance (administered internationally by Bupa Global), fully sponsored for the employee. Separately, employees must subscribe personally to the government's mandatory ILOE unemployment insurance scheme.

Benefits at a Glance

Health Insurance Through Toku: Sukoon / Bupa Global

Coverage highlights:

• Inpatient: private room fully covered; surgery, ICU, and cancer treatment fully covered; maternity up to AED 10,000 per delivery (higher for C-sections).
• Outpatient: consultations at 80% (20% co-insurance capped at AED 50/visit); diagnostics fully covered; medication up to AED 36,725/year; physiotherapy up to 15 sessions/year; mental health up to AED 31,217/year.
• Dental: preventive 100%; routine and major treatment 80%; orthodontics 50% up to age 19. Optical: exams and glasses up to AED 1,562/year.
• Emergency: fully covered in the UAE; outside the UAE up to AED 550,875/year (excluding the U.S.); evacuation and ambulance fully covered.
• Extras: wellness screenings up to AED 1,837; vaccinations up to AED 625/year; newborns fully covered for the first 30 days; chronic conditions fully covered; EAP included. Employees manage claims, online doctor consultations, and pharmacy delivery through the Bayzat platform.

Costs & Who Pays

Employee coverage is fully sponsored by Toku and billed to you. Premiums are age-banded, annual, in USD per covered person. Indicative points:

Dependent coverage is available, with the cost deducted from the employee's payroll. Billing typically lands one month after enrollment is processed, without affecting the coverage start date.

Mandatory ILOE Unemployment Insurance (Employee-Owned)

The UAE's Involuntary Loss of Employment (ILOE) scheme is mandatory for all private-sector employees, including EOR employees, but employees subscribe and pay personally (Toku notifies them at onboarding but doesn't administer it). Premiums: AED 5/month for basic salary up to AED 16,000; AED 10/month above that. Benefit: up to 60% of basic salary for up to 3 months. Fines for non-enrollment (from AED 400) fall on the employee. Enrollment: iloe.ae.

What You Need to Know About Benefits

• Health insurance is mandatory, and enrollment in the group policy is required for all employees (no opt-out to private cover).
• Budget for the age-banded annual premium for each hire; the employee pays nothing for their own cover.
• UAE residents can't be covered by Toku's global SafetyWing Remote Health plan; the Sukoon/Bupa plan is the health insurance route for UAE hires.
• ILOE is the employee's own obligation, not a Toku benefit, and its cost isn't billed to you. For the full employee-facing detail of the plan, see UAE WorkCo Employee Health Benefits (Sukoon/Bupa Global): the employee is fully covered, and dependents can be added with the cost deducted from payroll.

Common Extras

Other common extras include a housing allowance (often 25-40% of basic salary), transportation allowance, an annual flight ticket home, education allowance for children, and life and disability insurance. Toku can advise on the cost impact of any of these.

Ending Employment

Termination in the UAE requires a legitimate reason (such as documented poor performance, misconduct, or redundancy) and written notice, and all final entitlements must be paid within 14 days of termination, so involve Toku early if you are considering ending an employment relationship. For the process, see How to Terminate an Employee or Contractor.

Instead of statutory severance, the UAE uses end-of-service gratuity: 21 calendar days' basic salary per year of service for the first 5 years, then 30 days per additional year, capped at 2 years' total salary and calculated on the last drawn basic salary. Employees who resign after one year receive their full accrued gratuity, while dismissal for gross misconduct forfeits it.

Annual Leave at Termination

This section describes statutory annual leave. Any additional contractual or company-provided leave above the statutory minimum may follow different carryover, expiry, or payout rules under the employee's agreement or applicable policy, subject to local law.

Statutory leave termination payout: Generally required. Unused accrued statutory annual leave is generally included in the final settlement, subject to the statutory calculation rules.

Statutory carryover / look-back: Carryover is regulated and may be agreed within the statutory framework. Statutory leave should not be treated as an unlimited bank or automatically erased at year-end.

Admin responsibility: Actively schedule leave, document any agreed carryover, and keep carried balances identifiable by leave year.

Important exceptions: The amount payable at termination depends on the legally outstanding balance and statutory calculation basis. Toku should confirm the final leave settlement before amounts are communicated.

See the Annual Leave / PTO Carryover & Termination Payout Guide for the cross-country framework.

Hiring Someone from Overseas?

Every foreign national needs a work permit and residency visa to work in the UAE, sponsored and paid for by the employer, which Toku arranges as part of onboarding. Standard work permits take about 2-6 weeks to process, and long-term options such as the Golden Visa exist for higher earners and specialists. Talk to Toku before extending an offer to a candidate who needs sponsorship.

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Last updated November 5, 2026 (onboarding link only). Last verified October 2026. This guide is for general information and doesn't constitute legal or tax advice. Your Toku account manager can confirm specifics for your situation.