Employee Benefits in the UAE: What Should You Offer?

Offering a competitive salary is crucial in attracting top talent, but it’s not the only thing prospective employees take into consideration when choosing where to work. 

In fact, 92% of employees say benefits are important for overall job satisfaction, productivity, and retention, so a generous benefits package can help you stand out from competitors and hire the best people in your industry.

This article will cover employee benefits in the United Arab Emirates (UAE), including the government-mandated benefits and optional add-ons employers can offer to both UAE nationals and expats living in the economic powerhouse of the Middle East. 

Legal Overview of Employee Benefits in the UAE

If you’re hiring or plan to hire remote employees based in the UAE, you’ll need to familiarize yourself with the laws and regulations that govern employment contracts and employee benefits.

The UAE Labour Law (Federal Law No. 8 Organisation of Labour Relations, 1980) was amended by Federal Decree-Law No. 33 in February 2022, which sets out the mandatory benefits employers must offer their employees. 

The Federal Decree-Law No. 33 — also known as the New Labour Law — applies to all private companies but is not applicable to the following employees:

• Federal and local government officers and workers
• Armed forces, police, and security officers
• Workers who come under DIFC (Dubai International Financial Centre) Employment Law no. 2 of 2019 and workers who come under the ADGM (Abu Dhabi Global Market) Employment Regulations 2019

Employees in the DIFC and ADGM are exempt from UAE employment laws because the Free Trade Zones operate under their own legal systems and employment regulations that govern everything from the employment of foreigners to minimum wages, health and safety, and contract termination.

Additionally, international companies looking to hire in the UAE must establish a legal entity in one of the Emirates to operate within the relevant legislative framework unless they partner with an Employer of Record (EOR) organization — more on that later.

Now let’s take a look at the mandatory benefits all employers must offer in the UAE.

Mandatory Employee Benefits in the UAE

Annual Leave

Employees with more than one year of service are entitled to 30 calendar days of annual leave per year, while those who have been in their job for six to 12 months are entitled to two days for each month worked. Employees can choose when to take time off but must request leave with at least one month’s notice.

It’s important to note that in the UAE, any public holidays or sick leave days that fall within the holiday period are considered part of the annual leave allowance. 

If an employee has unused leave days at the end of the entitlement year, employers can decide at their discretion whether to allow them to carry unused leave over into the following year. 

Sick Leave

Employees are entitled to a maximum of 90 days of sick leave per year, continuously or in parts, as long as the employee provides a medical certificate within three days of stopping work. 

When on sick leave, employees receive full pay for the first 15 days, half pay for the next 30 days, and no pay for the remaining 15 days. People on probation don’t receive any pay if they take sick leave during their trial period.

Parental Leave

• The New Labour Law sets out the minimum maternity leave entitlements: 45 days of full pay plus 15 days of half pay for women working in the private sector, with no minimum qualifying period. 
• Women who work in government departments in the public sector are entitled to 90 days of paid maternity leave. 
• A woman’s employment cannot be terminated while she is pregnant or after she informs her employer that she is pregnant. 
• When a woman becomes ill during her pregnancy, she is entitled to an additional 45 days of unpaid leave. 
• If the child is disabled, the mother receives an additional 30 days of paid leave and 30 days of unpaid leave. 
• A female employee is entitled to full maternity leave for stillbirth at any stage of the pregnancy if she has worked at the company for at least six months. 
• Fathers are entitled to five working days of paid paternity leave which can be taken at any time during the first six months after birth — consecutively or not.

Overtime

When working overtime, employees receive overtime pay as follows:

• 25% above their basic hourly wage for extra working hours on normal days.
• 50% above their basic hourly wage for overtime worked between 10 pm and 4 am. 
• 50% above their basic hourly wage if they have to work on weekends (bear in mind that the UAE workweek runs from Sunday to Thursday) or holidays. Employers can also compensate with a rest day.

End-of-Service Gratuity

The end-of-service gratuity is a statutory monetary entitlement that employees must receive from employers upon the termination of their employment contract, as long as they are eligible for it. 

If the employee has been in service for more than one year but less than five, they are entitled to 21 days’ salary for each year of work. If they have been at the company for over five years, they receive 30 days’ salary for each year of work after the first five years. 

According to the updated law:

• All end-of-service benefits must be paid within 14 days of the end of employment.
• Employee contracts cannot be terminated without payment of end-of-service benefits (EOSB).

Additional Benefits Employers Can Offer

Below is a list of additional benefits that you might want to consider including in your employee benefit plans — although they aren’t required under UAE law, they can make your company a more attractive employer.

• Health insurance
• Life insurance
• Retirement benefits and pension plans
• 13th-month salary
• Employee assistance programs
• Flexible working hours
• Additional holidays
• Work permits
• Gym memberships
• Wellness programs

Employee Protections Under UAE Law

Although not technically benefits, it’s important to be aware of the legal protections in place to protect employees in the UAE. They include the following:

• Protection against discrimination: The law prohibits discrimination against any person on the grounds of race, color, sex, religion, national origin, ethnic origin, or disability.
• Equal pay for women: The New Labour Law of 2020 introduced provisions requiring women to receive the same pay as men for undertaking work of equal value.
• Protection against harassment: The law expressly prohibits harassment, bullying, or any verbal, physical, or mental violence against employees. 
• Employers must provide a safe work environment for employees.

Give Your UAE Employees the Benefits They Deserve

Providing a comprehensive and competitive benefits package for your UAE employees requires understanding corporate culture in the UAE, complying with local labor laws, and meeting employees’ expectations — all while staying within the company budget. 

If you’re looking for an easy and cost-efficient way to hire employees in the UAE without having to establish a legal entity, consider partnering with an EOR like RemoFirst. We take the hassle out of ensuring legal compliance when hiring remote employees so you can focus on the work that matters most.

Check out our UAE country guide to learn more about our services.