Employee benefits in UAE fall into two groups. The mandatory set is fixed by Federal Decree-Law No. 33 of 2021 and related laws: paid annual and sick leave, public holidays, maternity and parental leave, end-of-service gratuity, employer-paid health insurance and, for UAE nationals, pension contributions. Everything else, from housing allowances and annual flight tickets to wellness programmes, is offered at the employer's discretion to compete for talent.
This guide covers both: what UAE labour law requires private-sector employers to provide, how the key entitlements are calculated, and which optional benefits matter most in different industries.
Scope: This guide covers mainland private-sector employers and free zones that follow the federal Labour Law. DIFC and ADGM have their own employment laws (covered below). Government employees fall under separate HR laws.
Mandatory Employee Benefits in UAE at a Glance
| Benefit | Legal entitlement | Paid by |
|---|---|---|
| Annual leave | 30 calendar days a year after 1 year of service; 2 days per month between 6 and 12 months | Employer |
| Public holidays | Paid days off on official holidays announced by the Cabinet | Employer |
| Sick leave | Up to 90 days a year after probation: 15 days full pay, 30 days half pay, 45 days unpaid | Employer |
| Maternity leave | 60 days: 45 days full pay, 15 days half pay | Employer |
| Parental leave | 5 working days for either parent within 6 months of the birth | Employer |
| Bereavement leave | 5 days for a spouse; 3 days for a parent, child, sibling, grandparent or grandchild | Employer |
| Study leave | 10 working days a year for exams, after 2 years of service | Employer |
| End-of-service gratuity | 21 days' basic wage per year for the first 5 years, 30 days per year after that; capped at 2 years' wage | Employer |
| Health insurance | Mandatory basic cover for private-sector employees in all seven emirates since 1 January 2025 | Employer |
| ILOE unemployment insurance | AED 5 or AED 10 a month, depending on basic salary | Employee |
| Pension (UAE nationals) | Monthly contributions to GPSSA or the Abu Dhabi Pension Fund | Employer, employee and government |
Leave Entitlements Under UAE Labour Law
Annual leave
Employees who complete one year of service are entitled to 30 calendar days of paid annual leave each year. Between six months and one year of service, leave accrues at two days per month.
Unused leave can be carried over with the employer's agreement. Any balance left when employment ends must be paid out at the basic wage as part of final dues.
Public holidays
The UAE Cabinet announces the official holiday calendar each year, and the private and public sectors follow the same list. It typically includes New Year's Day, Eid Al Fitr, Arafat Day, Eid Al Adha, Islamic New Year, the Prophet's Birthday and UAE National Day. Islamic holidays move with the lunar calendar, so HR teams should update leave calendars once dates are confirmed.
Employees asked to work on a public holiday must receive either a substitute rest day or their normal wage for that day plus at least 50% of their basic wage for that day.
Sick leave
After probation, employees can take up to 90 days of sick leave a year, continuous or intermittent. The first 15 days are paid in full, the next 30 at half pay and the remaining 45 are unpaid. Employees must notify the employer within three days and provide a medical report. During probation, sick leave is unpaid and granted at the employer's discretion.
Maternity, parental and family leave
- Maternity leave: 60 days, the first 45 at full pay and the next 15 at half pay. There is no minimum service requirement, and leave can start up to 30 days before the expected delivery date.
- Extended maternity leave: up to 45 additional unpaid days if the mother or baby has a pregnancy- or birth-related illness, and 30 days at full pay (extendable by 30 unpaid days) if the child is born sick or with a disability and needs constant care.
- Nursing breaks: one or two paid breaks a day, totaling up to one hour, until six months after the delivery date.
- Parental leave: 5 working days at full pay for either parent, taken within six months of the birth.
- Bereavement leave: 5 days for the death of a spouse; 3 days for a parent, child, sibling, grandchild or grandparent.
- Study leave: 10 working days a year to sit exams at an approved institution, for employees with at least two years of service.
The Labour Law has no statutory Hajj or adoption leave, though many employers offer leave for both as company policy.
Stop tracking leave in spreadsheets. Zimyo's attendance and leave module calculates leave accruals, balances and encashment, then syncs them straight into payroll.
End-of-Service Gratuity in the UAE
Gratuity is the lump sum an expatriate employee receives when employment ends, provided they have completed at least one year of continuous service. It's calculated on the last basic wage, so allowances such as housing and transport don't count.
- First five years: 21 days' basic wage for each year of service
- Each year after five: 30 days' basic wage
- Partial years: paid pro rata
- Cap: total gratuity cannot exceed two years' wage
- Unpaid absence: days of unpaid leave don't count towards service
- Deadline: paid within 14 days of the contract ending, with other final dues
Gratuity calculation example
An employee leaves after six years with a basic salary of AED 10,000 a month:
| Step | Calculation | Result |
|---|---|---|
| Daily basic wage | AED 10,000 ÷ 30 | AED 333.33 |
| Years 1–5 | 5 × 21 days | 105 days |
| Year 6 | 1 × 30 days | 30 days |
| Total gratuity | (AED 10,000 × 135) ÷ 30 | AED 45,000 |
For a quick estimate with your own numbers, use Zimyo's HR calculators.
The alternative end-of-service savings scheme
Cabinet Resolution No. 96 of 2023 lets private-sector and free-zone employers replace the lump-sum gratuity with monthly contributions into an approved investment fund. The scheme is voluntary for employers, but once an employer enrolls a group of employees, the traditional gratuity stops for them. Gratuity earned up to the switchover date is still owed. Employees can also add voluntary contributions of up to 25% of their annual salary.
Pensions for UAE nationals
Emirati employees in the private sector receive pension contributions rather than gratuity. Contributions go to the General Pension and Social Security Authority (GPSSA), or to the Abu Dhabi Pension Fund for employees based in Abu Dhabi. Under the GPSSA scheme set by Federal Decree-Law No. 57 of 2023, which applies to new joiners from October 2023, the employee contributes 11% and the employer 15% of the contribution salary. Where that salary is below AED 20,000, the government covers 2.5 percentage points of the employer's share.
Health Insurance for Employees in the UAE
Since 1 January 2025, employers must provide basic health insurance for all private-sector employees and domestic workers in every emirate. Abu Dhabi and Dubai already had mandatory schemes. The federal rule extended the requirement to Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah, and proof of cover is now needed to issue or renew a residence permit.
- The employer pays. The cost of an employee's mandatory cover can't be recovered from their salary. An employer that does this faces a fine of AED 10,000 per case and must refund the employee.
- Dependants in Abu Dhabi: employers must also cover an expatriate employee's spouse and up to three children under 18.
- Dependants in Dubai: the employer covers the employee; family members are the visa sponsor's responsibility, usually the employee's.
Many employers top up the basic plan with enhanced cover, such as dental, optical, wider hospital networks or full family cover. It's consistently one of the most valued optional benefits.
Other Statutory Protections
ILOE unemployment insurance
Involuntary Loss of Employment (ILOE) insurance has been mandatory since January 2023 for private-sector and federal government employees, including most free zones. The employee pays the premium: AED 5 a month for a basic salary up to AED 16,000, and AED 10 above that. If they lose their job through no fault of their own, it pays 60% of basic salary for up to three months, capped at AED 10,000 or AED 20,000 a month depending on the salary band. Not subscribing carries an AED 400 fine, so many employers handle group enrolment and payroll deduction for their teams.
Overtime pay
Overtime is calculated on the basic wage. Hours beyond the normal working day are paid at the basic hourly rate plus at least 25%, rising to at least 50% for work between 10pm and 4am (shift workers excepted). Work on a rest day earns a substitute rest day or the normal wage for that day plus at least 50% of the basic wage. Use the Overtime Pay Calculator to check the numbers.
WPS and on-time salary
Mainland employers registered with MOHRE must pay salaries through the Wage Protection System (WPS), which lets the ministry verify that employees are paid in full and on time.
Free Zones, DIFC and ADGM
Most free zones, including JAFZA, DMCC and DAFZA, apply the federal Labour Law to leave, gratuity and other benefits. The two financial free zones are different: DIFC and ADGM have their own employment laws with their own leave and end-of-service rules, and DIFC replaces gratuity with its DEWS workplace savings scheme. Confirm which framework applies before you build a benefits policy.
Common Optional Employee Benefits in the UAE
Beyond the legal minimum, these are the benefits UAE employers most often use to attract and keep people:
| Benefit | What it usually looks like | Why it matters |
|---|---|---|
| Housing allowance | Monthly cash allowance or company accommodation | Housing is the largest living cost for most expatriates |
| Transport allowance | Monthly allowance, company transport or fuel card | Common for site-based roles and long commutes |
| Annual flight ticket | Return ticket home once a year, sometimes for the family | A long-standing expectation in expatriate offers |
| Family health cover | Employer-paid insurance for spouse and children | Removes a major cost for employees with dependants |
| Education allowance | Contribution towards children's school fees | High-value perk for mid-level and senior hires |
| Relocation support | Flights, temporary housing, shipping and settling-in help | Speeds up joining and reduces early attrition |
| Performance bonus | Annual or quarterly bonus tied to targets | Rewards results without raising fixed cost |
| Flexible and hybrid work | Flexible hours, remote days or compressed weeks | Costs little but is highly valued (see hybrid work in the UAE) |
| Wellness and EAP | Gym memberships, mental health support, Employee Assistance Programmes | Helps prevent burnout and supports retention |
| Learning and development | Course fees, certifications, study time | Builds skills and signals long-term investment |
Which Benefits Matter Most by Industry
Benefit priorities shift with the workforce. A quick guide by sector:
- Retail: shift flexibility, staff discounts, transport support and clear sales incentives for front-line teams.
- Hospitality: accommodation or housing allowance, meals on duty, transport, and uniforms and laundry.
- Construction: company accommodation, transport to site, enhanced medical cover and heat-safety measures beyond the mandatory summer midday break.
- Tech startups: equity or ESOPs, flexible and remote work, learning budgets and family health cover to compete with larger employers.
- Healthcare: licensing and CME support, shift allowances, family health cover and wellbeing support for clinical staff.
- Education: school-fee discounts for staff children, annual flights, housing and structured summer leave.
- Financial services: performance bonuses, education allowances and enhanced health and life cover.
How to Build a Competitive Benefits Package
- Start with compliance. Audit leave, gratuity, health insurance and pension obligations for every employee category and every emirate you operate in.
- Ask employees what they value. Short surveys or eNPS pulse checks show whether people would rather have, say, family health cover than a gym membership.
- Structure pay deliberately. Basic salary drives gratuity, overtime and leave encashment, so the split between basic and allowances has long-term cost effects.
- Prioritise low-cost, high-value benefits. Flexible hours, recognition and learning time cost little but rank highly with employees.
- Communicate the full package. Employees often underestimate benefits that don't appear on a payslip. A total rewards statement makes them visible.
- Measure and adjust. Track uptake, retention, absenteeism and offer-acceptance rates, and review the package every year.
Employee Benefits on a Limited Budget
SMEs can't match corporate packages, and they don't need to. A few practical moves go a long way:
- Buy group health insurance at the mandatory basic level, then offer upgrades employees can opt into.
- Offer flexible start times or a hybrid day each week instead of costly perks.
- Pair simple, regular recognition with a modest performance bonus pool.
- Fund specific professional certifications rather than broad allowances.
- Automate leave, gratuity and payroll to cut admin time and avoid compliance errors.
How HR Software Simplifies Benefits Management
Most benefit errors come from manual tracking: wrong leave balances, outdated gratuity calculations, missed insurance renewals. An HRMS ties every entitlement to one employee record, so payroll, leave and settlements stay in sync.
Zimyo, used by 2,500+ organisations across 40+ countries, helps UAE employers:
- Run WPS-compliant payroll with MOHRE-ready SIF file generation
- Calculate end-of-service gratuity and full and final settlements automatically
- Sync attendance, leave and overtime directly into payroll
- Run eNPS surveys and recognition programmes through Zimyo Engage
- Deliver courses and certifications through the Zimyo LMS
Conclusion
Getting employee benefits in the UAE right starts with the legal floor: correct leave, accurate gratuity, compliant health insurance and, for Emirati staff, pension contributions. The optional benefits you add on top, such as housing, flights, flexibility and family cover, are what make an offer competitive. Keep the mandatory side accurate and the optional side matched to what your people actually value, and benefits become a retention tool rather than an admin burden.
Frequently Asked Questions
Is housing allowance mandatory in the UAE?
No. The Labour Law doesn't require a housing allowance or accommodation for most employees, but it is standard practice in many sectors. Because gratuity is calculated on basic salary, a housing allowance doesn't increase end-of-service benefits.
Is gratuity paid if an employee resigns?
Yes. Under Federal Decree-Law No. 33 of 2021, an employee who resigns after at least one year of continuous service receives full gratuity. The reductions for resignation under the old 1980 law no longer apply.
Is an annual flight ticket mandatory in the UAE?
No. An annual ticket home is a common contractual benefit for expatriates, not a legal requirement. If the employment contract includes one, the employer must honour it.
Do part-time employees get benefits in the UAE?
Yes. Part-time employees under the federal Labour Law receive annual leave and gratuity in proportion to the hours they work, and are covered by the same health insurance rules as full-time staff.
What benefits are expats entitled to in the UAE?
Expatriate employees receive the same statutory leave, health insurance and overtime protections as UAE nationals. They earn end-of-service gratuity instead of a state pension, and they must subscribe to ILOE unemployment insurance.
Are employees on probation entitled to benefits?
Partly. Probation can last up to six months. Health insurance applies from the start, and probation counts towards service for gratuity. Annual leave starts accruing after six months, and sick leave during probation is unpaid and at the employer's discretion.
