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UPDATED JUL 6, 2026💡 Everything you need to know to hire and manage employees in the United Arab Emirates through Toku. Toku handles payroll processing, tax withholding, social contributions, and statutory compliance. This guide covers what you need to plan costs and manage your team.
At a Glance
| Item | Detail |
|---|---|
| Currency | UAE Dirham (AED) |
| Payroll cycle | Monthly. Toku runs one payroll per month in the UAE. |
| Estimated employer costs on top of salary | Approximately 5-10% of gross salary for expatriate hires (gratuity accrual plus health insurance and visa costs); UAE nationals add a 12.5-15% pension contribution |
| Onboarding lead time | 10-25 business days |
| Standard working week | 48 hours (8 hours per day), Monday to Friday with a Saturday-Sunday weekend |
| Probation period | 3 months (per Toku's employment agreement) |
| Annual leave | 30 calendar days after 1 year of service |
| 13th month salary | Not required |
| Minimum notice on termination | 30 calendar days |
Onboarding a New Hire
Plan for 10-25 business days between submitting a new hire and their start date. Before day one, your new hire completes a medical test and Emirates ID biometrics (plus visa stamping if applicable), while Toku arranges the work permit, health insurance, and payroll activation; all of these must be finished before the hire date, which is why UAE lead times are longer than most countries.
Submit your new hire through the Toku platform and we take it from there: local employment agreement, statutory registrations, and payroll setup. See Onboard Contributors as a Client Admin in Toku for the step-by-step process, and the Country Readiness Live Tracker for lead times across all countries.
Employer Costs
The UAE has no social security contributions for expatriate employees, so ongoing employer costs are lower than in most countries. The main items to budget are:
| Cost | Rate | Notes |
|---|---|---|
| End-of-service gratuity accrual | 21 calendar days' basic salary per year of service (30 days per year after 5 years) | Paid out when employment ends; capped at 2 years' total salary |
| Private health insurance | Plan-dependent | Mandatory for all employees; in Abu Dhabi dependents must also be covered |
| Work permit and visa costs | Per case | Borne by the employer by law |
| GPSSA pension (UAE nationals only) | 12.5-15% of pensionable salary | Rate depends on when the employee joined the workforce; salary caps apply |
As a rule of thumb, total cost of employment for an expatriate hire is roughly 105-110% of gross salary, mainly driven by gratuity accrual and insurance; for UAE nationals, add the pension contribution above. There is no 13th month salary requirement.
Employees pay no personal income tax in the UAE. The only payroll deductions are a small mandatory unemployment insurance (ILOE) subscription of AED 5-10 per month plus VAT, and, for UAE nationals, a pension contribution of 5-11% of pensionable salary. These come out of gross salary, not on top. Toku calculates and remits all of the above.
Compensation & Payroll
Toku runs one payroll per month in the UAE, paid in AED through the government's Wages Protection System, and employees receive an itemized payslip each cycle. From January 1, 2026 the minimum wage for UAE national employees in the private sector is AED 6,000 per month. There is no legislated minimum wage for expatriate employees, but immigration authorities apply salary benchmarks of roughly AED 12,000 per month for university graduates and AED 7,000 for skilled technicians.
Employment Contracts & Probation
- Toku issues a compliant local employment agreement for every hire, in bilingual Arabic-English form (the Arabic text prevails legally).
- All UAE employment contracts are fixed-term by law. Toku employs your team members on a 12-month fixed-term contract that renews automatically, so in practice employment continues seamlessly.
- Probation is 3 months per Toku's employment agreement (the statutory maximum is 6 months). During probation, termination by the employer requires 14 days' written notice; a resigning employee gives 1 month's notice if joining another UAE employer, or 14 days otherwise.
Working Hours
Standard hours are 8 per day and 48 per week, with a Saturday-Sunday weekend for most private-sector companies. During Ramadan, working hours are reduced by 2 hours per day for all employees. Overtime is limited to 2 hours per day and is paid at 125% of the hourly wage, rising to 150% for work on rest days, public holidays, or between 10pm and 4am. Employees in managerial or supervisory roles may be exempt from overtime provisions if their contract says so.
Leave Entitlements
| Leave | Entitlement | Who pays |
|---|---|---|
| Annual leave | 30 calendar days after 1 year of service; 2 days per month worked between 6 and 12 months | Employer |
| Sick leave | 90 days per year after probation: first 15 days at 100%, next 30 days at 50%, remaining 45 days unpaid | Employer |
| Maternity leave | 60 days: first 45 at 100%, next 15 at 50% (plus 30 days full pay and 30 unpaid if the child is sick or disabled) | Employer |
| Paternity leave | 5 working days at full pay, within 6 months of the birth | Employer |
| Bereavement leave | 5 days for a spouse; 3 days for a parent, child, sibling, grandchild, or grandparent | Employer |
| Study leave | 10 working days per year after 2 years of service | Employer |
| Hajj leave | 30 days, once during employment | Unpaid |
Annual leave may be accumulated or carried over by agreement between you and the employee. All paid leave in the UAE is employer-funded; there is no state benefit system covering it.
Public Holidays (2026)
The UAE observes approximately 12-14 paid public holidays per year. Islamic holiday dates follow the lunar calendar and are confirmed officially shortly before each occasion, so the dates below are approximate.
| Date | Holiday |
|---|---|
| January 1 | New Year's Day |
| March 19-22 | Eid Al Fitr (subject to moon sighting) |
| May 26-29 | Eid Al Adha and Arafat Day (subject to moon sighting) |
| June 16 | Islamic New Year (subject to moon sighting) |
| August 25 | Prophet Muhammad's Birthday (subject to moon sighting) |
| December 2-3 | UAE National Day (Eid Al Etihad) |
When a public holiday falls on a rest day, employees are entitled to a substitute day off or an additional day's pay.
Benefits: Required vs. Common Extras
Statutory (included in employer costs above): end-of-service gratuity for all employees who complete one year of service, mandatory private health insurance, paid annual, sick, maternity, and paternity leave, workplace injury compensation, unemployment insurance (ILOE, employee-funded), and pension contributions for UAE nationals.
Through Toku, health coverage is provided under the UAE WorkCo Employee Health Benefits plan (Sukoon/Bupa Global): the employee is fully covered, and dependents can be added with the cost deducted from payroll.
Other common extras include a housing allowance (often 25-40% of basic salary), transportation allowance, an annual flight ticket home, education allowance for children, and life and disability insurance. Toku can advise on the cost impact of any of these.
Ending Employment
Termination in the UAE requires a legitimate reason (such as documented poor performance, misconduct, or redundancy) and written notice, and all final entitlements must be paid within 14 days of termination, so involve Toku early if you are considering ending an employment relationship. For the process, see How to Terminate an Employee or Contractor.
| Scenario | Notice |
|---|---|
| Standard termination (either party) | 30 calendar days (contracts may specify up to 90) |
| During probation (employer) | 14 calendar days |
| During probation (employee resigning) | 1 month if joining another UAE employer; 14 days otherwise |
Instead of statutory severance, the UAE uses end-of-service gratuity: 21 calendar days' basic salary per year of service for the first 5 years, then 30 days per additional year, capped at 2 years' total salary and calculated on the last drawn basic salary. Employees who resign after one year receive their full accrued gratuity, while dismissal for gross misconduct forfeits it.
Hiring Someone from Overseas?
Every foreign national needs a work permit and residency visa to work in the UAE, sponsored and paid for by the employer, which Toku arranges as part of onboarding. Standard work permits take about 2-6 weeks to process, and long-term options such as the Golden Visa exist for higher earners and specialists. Talk to Toku before extending an offer to a candidate who needs sponsorship.
Last verified July 2026. This guide is for general information and doesn't constitute legal or tax advice. Your Toku account manager can confirm specifics for your situation.