In 2025, employee benefits in the United Arab Emirates (UAE) remain a critical part of compliance, talent retention, and workforce competitiveness. The UAE labour market is shaped by the UAE Labour Law (Federal Decree Law No. 33 of 2021), mandatory health insurance in most emirates, and statutory end-of-service gratuity payments.
For global companies, offering compliant benefits is more than an HR strategy—it is a legal requirement. While statutory benefits create a strong foundation, employers frequently enhance packages with voluntary perks to attract top global talent in finance, technology, and professional services.
However, compliance can be complex, especially for employers without a local entity. That’s where Employer of Record (EOR) services in the UAE streamline payroll processing, health insurance, and benefits delivery while ensuring adherence to labour laws.
This guide covers everything global employers need to know about employee benefits in the UAE in 2025, including statutory obligations, voluntary perks, compliance risks, and the role of an EOR partner.
Table of Contents
- What Are Employee Benefits in UAE?
- Types of Employee Benefits in UAE
- Global Contractor Management and Benefits
- Emerging Benefit Trends for 2025
- Steps to Launch Employee Benefits in UAE
- Estimated Timeline to Implement Benefits
- Legal Framework Governing Benefits in UAE
- Key Compliance Challenges for Employers in UAE
- How Asanify Supports Employers in UAE
- FAQs
What Are Employee Benefits in UAE?
Employee benefits in the UAE include all non-salary entitlements granted to employees under the Labour Law or provided voluntarily by employers. These benefits include paid leave, health coverage, and statutory gratuity payments.
For employers, benefits ensure compliance with labour laws in the UAE while improving employer branding. For employees, they represent job security, healthcare access, and work-life balance.
Payroll processing in the UAE plays a central role, as employers must handle wage transfers through the Wage Protection System (WPS) and manage end-of-service benefits accurately.
Examples of employee benefits in UAE include:
- Paid annual leave and public holidays
- Mandatory health insurance (depending on the emirate)
- End-of-service gratuity (statutory severance)
- Overtime pay as per Labour Law
Types of Employee Benefits in UAE
The UAE offers a well-defined system of employee benefits, balancing statutory entitlements mandated by the Labour Law with voluntary perks that employers use to attract and retain top talent in a globally competitive market. Below we break down the key categories.
Statutory Entitlements
By law, UAE employers must provide a range of benefits that ensure employee wellbeing, income protection, and compliance. These include:
Paid Annual Leave and Public Holidays
Employees are entitled to 30 calendar days of paid annual leave after completing one year of service, plus official public holidays such as Eid al-Fitr, Eid al-Adha, and National Day.
Sick Leave
Employees are entitled to 90 days of sick leave per year, applied as follows:
- First 15 days with full pay,
- Next 30 days with half pay,
- Remaining 45 days unpaid.
Maternity and Paternity Leave
- Maternity leave: 60 days (45 days on full pay, followed by 15 days on half pay).
- Paternity leave: 5 working days, which must be taken within six months of the child’s birth.
Health Insurance
Employers are required to provide mandatory health insurance in Abu Dhabi and Dubai, and it is a standard practice across all emirates. Coverage must include inpatient and outpatient services.
End-of-Service Gratuity
Employees who complete at least one year of service are entitled to end-of-service gratuity, calculated as:
- 21 days’ basic wage per year for the first five years,
- 30 days’ basic wage per year for each additional year.
Wage Protection System (WPS)
All salaries must be processed through the Wage Protection System (WPS) to ensure compliance, transparency, and timely payments.
Compliance Reminder: Employers must calculate gratuity accurately, provide mandatory health insurance, and pay wages via WPS to remain compliant with the Ministry of Human Resources and Emiratisation (MOHRE).
Suggested Read: Employer of Record UAE: A Comprehensive Guide 2025
Common Voluntary Perks
Beyond the statutory framework, UAE employers often go further to create attractive packages for employees, especially given the high proportion of expatriate workers. Many of these perks are designed to support lifestyle, relocation, and retention.
Some of the most common voluntary benefits include:
- Housing allowances or company accommodation to cover rent expenses.
- Transportation allowances or car leasing options.
- Annual flight tickets for expatriates and their families to return home.
- Education allowances for employees’ children at international schools.
- Performance-related bonuses and incentive schemes.
- Private life and disability insurance to complement statutory health insurance.
- Wellness and lifestyle programs such as gym memberships, nutrition support, or mental health counselling.
- Flexible working hours and hybrid work models, increasingly adopted in tech and services sectors.
- Equity or long-term incentive plans for senior executives and multinational company staff.
These voluntary perks help companies position themselves as attractive employers in the UAE’s diverse and competitive labour market, improving both employee satisfaction and long-term retention.
Global Contractor Management and Benefits
Independent contractors in the UAE are not entitled to statutory employee benefits such as gratuity, leave entitlements, or employer-provided health insurance. They are responsible for their own taxes and coverage.
For global employers, this creates two main challenges:
- Misclassification Risks – Contractors wrongly treated as employees can trigger compliance issues, backdated gratuity payments, and fines.
- Limited Benefits Access – Contractors cannot typically access company health insurance or allowances without being formally employed.
Solution: Working with an Employer of Record (EOR) in the UAE enables companies to compliantly engage contractors as employees where necessary. This ensures fair access to benefits while protecting employers from legal and compliance risks.
Emerging Benefit Trends for 2025
The UAE benefits landscape is evolving quickly, with employers moving beyond traditional allowances to adopt more flexible, family-focused, and wellbeing-oriented perks. These trends reflect the UAE’s diverse expatriate workforce, government reforms, and global HR practices.
- Wellness and mental health support
Employers are increasingly offering counselling services, mindfulness programs, and fitness memberships to combat stress and promote overall wellbeing. Mental health, once a taboo subject, is now a mainstream focus in HR policies. - Remote and hybrid work allowances
As hybrid work models gain popularity, companies are formalising remote work support by reimbursing home internet, utilities, and ergonomic furniture for employees working part-time from home. - Enhanced family and education benefits
Given the large expatriate population, many companies now provide childcare allowances and tuition reimbursements for employees’ children in international schools—an attractive perk for retaining long-term expat staff. - Financial wellbeing and retirement planning
With the introduction of workplace savings schemes and discussions around supplementary retirement plans, employers are increasingly providing financial literacy workshops and long-term savings programs for employees. - Sustainability-linked mobility perks
Although car allowances remain common, sustainability goals are driving employers to explore mobility budgets and eco-friendly commuting incentives such as shared transport and electric vehicle leasing. - Digital HR and AI-driven benefits platforms
Technology adoption is accelerating in the UAE. Employers are using AI-powered platforms to personalise benefits packages, streamline administration, and improve employee engagement.
For global employers, adapting to these trends can be complex without local insights. Partnering with an Employer of Record (EOR) in UAE allows businesses to roll out modern perks swiftly while staying compliant with UAE Labour Law and WPS requirements.
Steps to Launch Employee Benefits in UAE
Rolling out employee benefits in the UAE requires careful strategic planning and strict compliance with the Labour Law, Wage Protection System (WPS), and emirate-level health insurance regulations. Employers must first define a clear benefits strategy, ensure accurate payroll processing, and work with local experts to avoid compliance risks.
Define Your Benefits Strategy
- Benchmark against industry norms in Dubai, Abu Dhabi, and other emirates.
- Balance expatriate expectations with statutory entitlements.
- Plan budgets to cover gratuity, health insurance, and allowances.
Understand Compliance Rules
- Follow the UAE Labour Law and emirate-specific health insurance regulations.
- Ensure accurate WPS registration and wage transfers.
- Calculate end-of-service gratuity correctly.
Partner with Local Experts
- Use an EOR in UAE for payroll, benefits, and compliance.
- Avoid risks of contractor misclassification.
- Ensure smooth onboarding for expatriates and locals.
Estimated Timeline to Implement Benefits
| Implementation Step | In-House (Local Entity) | With EOR in UAE |
| Entity setup & registrations | 1–3 months | Not required |
| Payroll & WPS setup | 4–6 weeks | Immediate |
| Health insurance enrollments | 3–5 weeks | 1–2 weeks |
| Full benefits rollout | 2–4 months | 2–3 weeks |
Partnering with an Employer of Record provider in UAE shortens timelines while ensuring compliance.
Legal Framework Governing Benefits in UAE
The UAE has a well-regulated employment system where benefits are defined by the Federal Labour Law and reinforced by emirate-specific regulations such as mandatory health insurance in Abu Dhabi and Dubai. Understanding this framework is essential for global employers to ensure compliance.
Core Labour Framework and Institutions
Several key laws and institutions define the rights and obligations of employers and employees in the UAE:
- UAE Labour Law (Federal Decree Law No. 33 of 2021) – Governs employment contracts, working hours, leave entitlements, and gratuity calculations.
- Wage Protection System (WPS) – Mandates that all salaries be paid electronically through banks to protect workers and ensure timely payments.
- Health Insurance Regulations (Abu Dhabi & Dubai) – Require employers to provide medical coverage for employees (and in some cases dependents).
- Ministry of Human Resources and Emiratisation (MOHRE) – Regulates and enforces labour compliance across mainland UAE.
- Free Zone Authorities (e.g., DIFC, ADGM, JAFZA) – Oversee employment rules within their respective jurisdictions, sometimes offering additional provisions.
Together, these frameworks create the foundation for statutory benefits such as paid leave, health insurance, gratuity, and transparent payroll practices.
Sectoral and Free Zone Practices
Beyond national laws, the UAE’s diverse business ecosystem means that benefits may differ between industries and jurisdictions:
- Multinational companies often provide enhanced allowances (housing, transport, and education) to attract expatriate talent.
- Free zones may establish their own employment standards, requiring employers to adapt to both federal and zone-specific rules.
- SMEs and startups tend to provide flexible perks such as hybrid work, wellness programs, and performance incentives to compete with larger firms.
This layered framework means that benefits in the UAE are shaped not only by federal legislation but also by emirate regulations and free zone authorities—making compliance complex for global employers.
Key Compliance Challenges for Employers in UAE
Employers face several compliance risks when administering benefits in the UAE:
- Incorrect gratuity calculations – Missteps in service duration or basic salary calculation cause disputes.
- WPS non-compliance – Delayed or incorrect payments result in heavy penalties.
- Misclassification of contractors – Can lead to fines and backdated benefits.
- Incomplete health insurance coverage – Especially for dependents in Abu Dhabi and Dubai.
- Leave management errors – Miscalculating annual or sick leave pay creates legal exposure.
- Free Zone variations – Different rules may apply in free zones vs mainland UAE.
Partnering with an EOR in UAE helps avoid these pitfalls by managing payroll, benefits, and compliance centrally.
Suggested Read: Top Employer of Record (EOR) Service Providers in UAE (2025)
How Asanify Supports Employers in UAE
Managing employee benefits and compliance in the UAE can be complex, but Asanify makes it simple. Through its Employer of Record in the UAE, global companies can expand quickly while ensuring full compliance with labour law, WPS, and emirate-level health insurance regulations.
With Asanify, employers are able to:
- Onboard employees compliantly under mainland or free zone authorities, depending on business needs.
- Streamline payroll processing and ensure all wages are paid through the Wage Protection System (WPS).
- Guarantee statutory benefits including annual leave, sick leave, maternity/paternity leave, health insurance, and end-of-service gratuity.
- Offer voluntary perks such as housing allowances, annual flight tickets, and education support for dependents.
- Administer modern benefits like wellness programs, remote work allowances, and flexible work arrangements.
- Provide bilingual payslips in Arabic and English to suit a multicultural workforce.
- Maintain compliance with Labour Law, emirate health insurance rules, and free zone-specific requirements.
- Manage contractors compliantly by converting them into employees through global contractor management solutions.
By partnering with Asanify, global employers reduce compliance risks, speed up hiring in UAE, and deliver a seamless benefits experience to their teams in the UAE.
FAQs
Annual leave, public holidays, sick leave, maternity/paternity leave, health insurance, end-of-service gratuity, and WPS-compliant payroll.
30 days of paid annual leave after one year of service, plus official public holidays.
Yes, in Abu Dhabi and Dubai it is legally required, and in practice, most employers provide it across all emirates.
21 days’ basic wage per year for the first five years, and 30 days per year thereafter, provided the employee has completed at least one year of service.
90 days per year: 15 days full pay, 30 days half pay, 45 days unpaid.
Maternity leave: 60 days (45 full pay + 15 half pay). Paternity leave: 5 days.
The Wage Protection System ensures all salaries are paid through banks, protecting workers and ensuring compliance.
Most apply UAE Labour Law, but free zones may set additional regulations on contracts, benefits, and dispute resolution.
No, but an EOR can employ them directly to extend benefits.
An EOR ensures compliance with UAE Labour Law, WPS, gratuity, and health insurance while simplifying payroll and benefits delivery.
Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant or Labour Law expert for specific guidance.
