Payroll in the UAE: what an employer has to get right

The UAE levies no personal income tax, so a payslip carries no income tax deduction. The deductions that do appear are a pension contribution for Emirati staff, and anything the employee owes under the law or a court judgment, such as a loan repayment.

The rules in this guide come from Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relations and its Executive Regulations. They cover the private sector on the mainland and in most free zones, not government employees or domestic workers. The Dubai International Financial Centre has its own employment law and savings scheme, and Abu Dhabi Global Market its own regulations; check those separately.

Every establishment registered with the Ministry of Human Resources and Emiratisation (MOHRE) pays wages through the Wages Protection System, WPS, or another system the Ministry approves. WPS is an electronic transfer of wages through banks, financial institutions and exchange houses that the Central Bank has approved, and it lets MOHRE see that each worker was paid what their contract says, when it says.

A few activities and workers are exempt — among them banks, houses of worship, fishing boats and taxis owned by nationals, new employees in their first 30 days, workers on documented unpaid leave, and workers whose wage complaint has gone to court. Everyone else is paid through the system.

Each payroll run is sent to WPS as a salary information file, the SIF: the list of employees and the amounts to pay them, uploaded to and accepted by the system alongside the transfer of funds. The Central Bank’s rules require the bank, exchange house or other payment agent to train employers on the SIF format, and the format itself is defined by the system rather than by the Labour Law — it is not published as a public specification.

In practice the agent you pay wages through gives you its SIF template, or builds the file from your salary sheet. What payroll controls is the data behind it. MOHRE measures each worker’s payment against the wage in their registered contract: a worker counts as paid only when they receive at least 80% of it, with proof of any deduction. So the salary sheet, the contracts on file and the file sent to WPS have to agree.

Wages are paid at least monthly. They fall due on the first day of the month after the month they are earned in, or on the date the contract sets. An employer is late if wages are not paid within 15 days of that date.

MOHRE escalates from there. Reminders go out on the third and tenth day; on the seventeenth, the establishment can no longer get new work permits. For an establishment with more than 50 employees, continued non-payment leads to an inspection and, at 45 days, referral to the Public Prosecution. An establishment counts as compliant when more than 80% of its eligible workers are paid through WPS, and a worker counts as paid when they receive at least 80% of their contract wage, with proof of any deduction.

Normal working hours are at most 8 a day or 48 a week, two hours a day shorter during Ramadan, with a break of at least an hour after five consecutive hours. Overtime is limited to two hours a day and 144 hours in any three weeks.

Overtime is paid at the hourly rate of the basic wage plus at least 25%, or plus at least 50% for hours between 10 pm and 4 am, except for shift workers. A worker who works on their rest day or a public holiday gets a substitute day off, or that day’s wage plus at least 50% of the basic wage.

A worker is entitled to 30 days of paid annual leave for each year of service, and two days a month once they have served more than six months but less than a year. Leave not taken when the worker leaves is paid out on the basic wage. Part-time workers receive leave in proportion to their hours, with a minimum of five working days a year.

Probation may last at most six months and can be used once with the same employer; the employer gives 14 days’ written notice to end it. After probation, the notice period is whatever the contract sets between 30 and 90 days, and pay in lieu of notice is worked out on the last wage.

A full-time foreign worker with at least a year of continuous service receives an end-of-service gratuity on their last basic wage: 21 days’ wage for each of the first five years and 30 days’ wage for each year after, with part years in proportion, unpaid absence not counted, and the total capped at two years’ wage. It is paid with the worker’s other dues within 14 days of the end of the contract.

Employers may instead join the voluntary savings scheme set up by Cabinet Resolution No. 96 of 2023: a monthly contribution of 5.83% of basic salary for staff with under five years’ service and 8.33% after that, paid into an approved fund. Gratuity accrued before an employee is enrolled has to be settled first.

Emirati employees in the private sector are registered with the General Pension and Social Security Authority, GPSSA, from their first month — in every emirate except Abu Dhabi, which has its own fund. Their end-of-service benefit comes under the pensions law rather than the gratuity above. Expatriates from outside the Gulf are not covered.

The contribution depends on when the person was first insured. Under the 1999 law, still applying to people insured before 31 October 2023, it is 20% of the pensionable salary: 5% from the employee, 12.5% from the employer and 2.5% from the government. For people first employed on or after that date, Decree-Law No. 57 of 2023 sets 26%: 11% from the employee and 15% from the employer, with the government paying 2.5% of the employer’s share for private-sector salaries under AED 20,000. The pensionable salary is capped at AED 70,000 a month in the private sector.

Ledgr, the payroll tool in Orbiz, builds the salary sheet from attendance and leave already recorded in AMS, so the days behind each line are the ones the team actually logged. A tax regime can be set to no tax, and a statutory scheme such as the GPSSA contribution is a percentage of a base for each side, with a floor and a cap, applied to the pay groups it covers. Each employee’s bank account or IBAN sits on their pay profile, and a run is marked paid with its bank reference.

Ledgr does not produce the WPS salary information file; your bank or exchange house builds it from the salary sheet. Final settlements, loans with automatic recovery and claims stay on the same record, and the gratuity is added to a settlement as a payment line.