For businesses operating in the UAE, it is essential to understand the mandatory employee benefits as per local labor laws. These benefits ensure employee welfare while maintaining a healthy balance between employer obligations and employee rights. Companies expanding into the UAE or employing UAE nationals must comply with these regulations, which are designed to create a secure and supportive work environment.
Below is a breakdown of the key mandatory benefits for employees in the UAE:
1. Social Security Contributions (Pension and Insurance)
Description:
In the UAE, social security benefits apply only to UAE nationals. Expatriates are not required to contribute to social security and are generally covered by their home country’s pension system. UAE nationals are enrolled in a pension plan provided by the government.
| Contribution Type | Employer Contribution | Employee Contribution | Coverage |
|---|---|---|---|
| Pension Fund | 12.5% | 5% | Retirement benefits for UAE nationals |
| Expatriates | None | None | Expatriates are exempt from contributions |
Outcome:
These contributions provide financial security for UAE nationals during retirement. Expatriates are exempt from contributing to the pension system.
2. Paid Annual Leave
Description:
Employees in the UAE are entitled to a minimum of 30 days of paid annual leave after completing one year of continuous service. For employees with less than one year of service, the leave is prorated, granting two days of leave for each month worked.
Outcome:
Paid annual leave allows employees to rest and recharge, fostering a healthier work-life balance, reducing burnout, and improving overall productivity.
3. Maternity and Paternity Leave
Description:
- Maternity Leave: Female employees are entitled to 45 days of paid maternity leave, with the first 15 days fully paid and the remaining 30 days paid at half salary.
- Paternity Leave: Male employees are entitled to 5 days of paid leave following the birth of a child.
| Leave Type | Duration | Payment |
|---|---|---|
| Maternity Leave | 45 days | 15 days at full salary; remaining 30 days at half salary |
| Paternity Leave | 5 days | Full salary |
Outcome:
These leave provisions provide essential support to employees during critical family events, promoting a family-friendly workplace culture.
4. Sick Leave
Description:
Employees are entitled to up to 90 days of sick leave per year with varying pay depending on the duration of the illness:
- 1st – 15th day: Paid in full
- 16th – 30th day: Paid at half salary
- 31st – 90th day: No pay (unless otherwise specified in the contract)
| Sick Leave Duration | Payment Terms |
|---|---|
| 1st – 15th day | Full salary |
| 16th – 30th day | Half salary |
| 31st – 90th day | No salary |
Outcome:
Sick leave ensures that employees can recover from illness without the added stress of financial loss, helping maintain a healthy workforce.
5. End of Service Benefits (Gratuity)
Description:
Employees who have completed at least one year of continuous service are entitled to end-of-service gratuity payments when they leave the company. The gratuity payment is based on the employee’s last drawn salary and the length of employment.
| Duration of Employment | Severance Pay Entitlement |
|---|---|
| 1 – 5 years | 21 days’ salary per year of service |
| 5+ years | 30 days’ salary per year of service |
Outcome:
End-of-service benefits provide employees with a financial cushion as they transition out of employment, supporting their future stability.
6. Public Holidays
Description:
The UAE observes several national public holidays. Employees are entitled to paid leave on these days. If an employee is required to work on a public holiday, they are entitled to premium pay, typically 1.5 times their regular wage.
| Key Public Holidays | Date |
|---|---|
| New Year’s Day | January 1 |
| Eid Al Fitr | End of Ramadan (varies) |
| Eid Al Adha | Approximate (varies) |
| National Day | December 2 |
Outcome:
Public holidays give employees the opportunity to rest, recharge, and participate in cultural and religious observances, helping to maintain a healthy work-life balance.
7. 13th Month Salary (End-of-Year Bonus)
Description:
Although not legally mandated, many employers in the UAE offer a 13th-month salary or end-of-year bonus. This is commonly paid during the holiday season and serves as an additional financial benefit to employees.
Outcome:
The 13th-month salary boosts employees’ financial security, especially around the festive season, contributing to higher morale and job satisfaction.
8. Extra Legal Benefits
Description:
In addition to the mandatory benefits, many UAE employers offer extra benefits such as health insurance, meal allowances, transportation allowances, and performance bonuses. These benefits are not legally required but help attract and retain top talent.
Outcome:
Extra legal benefits enhance employee satisfaction and loyalty, making it easier for businesses to compete in the labor market for skilled employees.
Managing Benefits with EOR/PEO Services
Using EOR/PEO services, such as GlobainePEO, simplifies the management of employee benefits in the UAE. These services ensure compliance with local labor laws and handle all administrative aspects of HR, such as payroll, leave entitlements, social security contributions, and more.
Final Thoughts
UAE’s mandatory employee benefits are designed to provide employees with essential protections while promoting fairness in the workplace. Understanding and fulfilling these legal obligations is crucial for employers. Partnering with an EOR/PEO service like GlobainePEO helps businesses navigate the complexities of labor law compliance, allowing them to focus on growth and employee satisfaction.
GlobainePEO – Your Trusted Partner
At GlobainePEO, we simplify employee benefits management in the UAE, ensuring full compliance with local labor laws. We handle essential benefits such as social security contributions, paid leave, maternity/paternity leave, and other mandatory benefits, allowing you to focus on business growth while we protect your workforce’s welfare. Let us manage your employee benefits with confidence and ease.