UAE payroll is governed by a dense web of MOHRE regulations, WPS requirements, gratuity rules, GPSSA obligations, and Emiratisation targets. Non-compliance is expensive — penalties range from salary attachment orders to trading licence suspension. This guide walks through every obligation your UAE business needs to meet.
1. The Wage Protection System (WPS)
The Wage Protection System is a mandatory electronic salary transfer system operated by the Ministry of Human Resources and Emiratisation (MOHRE). All private sector employers in the UAE must pay salaries through WPS-approved channels.
WPS Key Requirements
- Registration: Employers must register with MOHRE and link their payroll to an approved WPS agent (a UAE bank or exchange house)
- Deadline: Salaries must be transferred within 10 calendar days of the due date stated in the employment contract
- Monthly SIF file: A Salary Information File (SIF) must be submitted to your WPS agent each month detailing employee details, salary amounts, and transfer references
- Currency: Salaries must be paid in UAE Dirhams (AED)
- Minimum wage: There is currently no statutory minimum wage in the UAE for expatriate workers, though MOHRE monitors adequacy
Who Is Exempt from WPS?
The following categories are currently exempt from WPS obligations:
- Employers with fewer than 5 employees (though voluntary compliance is encouraged)
- Free zone companies operating under their own authority's payroll system
- Domestic workers (governed by a separate domestic worker regime)
2. End-of-Service Gratuity
End-of-service gratuity is a statutory payment owed to all employees upon termination of employment (resignation or dismissal), provided they have completed at least one year of continuous service. It is calculated based on the employee's basic salary — not total package.
Gratuity Calculation Formula
| Service Period | Gratuity Entitlement |
|---|---|
| Less than 1 year | No gratuity entitlement |
| 1–5 years | 21 calendar days' basic salary per year of service |
| More than 5 years | 30 calendar days' basic salary per year of service (for years beyond 5) |
| Maximum cap | Total gratuity cannot exceed 2 years' total wages |
Gratuity Calculation Example
An employee has a basic salary of AED 10,000/month and has worked for 7 years:
- Daily basic salary: AED 10,000 ÷ 30 = AED 333.33/day
- First 5 years: 5 × 21 days × AED 333.33 = AED 35,000
- Years 6 and 7 (2 years beyond 5): 2 × 30 days × AED 333.33 = AED 20,000
- Total gratuity: AED 55,000
Gratuity Under the New Labour Law
Federal Decree-Law No. 33 of 2021 (the new Labour Law, effective February 2022) introduced several changes. Notably, the resignation penalty that previously reduced gratuity for employees who resigned before 5 years has been removed. All employees completing at least one year are now entitled to full gratuity regardless of the reason for termination.
3. GPSSA — UAE Nationals' Social Security
The General Pension and Social Security Authority (GPSSA) manages pension contributions for UAE national employees in the private sector. Private sector employers with UAE national employees must register with GPSSA and make monthly contributions.
GPSSA Contribution Rates
| Contributor | Rate | Basis |
|---|---|---|
| Employer contribution | 12.5% | Of the UAE national employee's gross salary |
| Employee contribution | 5% | Deducted from the UAE national employee's salary |
| Government top-up (Abu Dhabi) | 2.5% | Abu Dhabi government contributes for Abu Dhabi nationals |
GPSSA contributions are due by the 15th of the following month. Late contributions attract a penalty of 0.1% per day on the outstanding amount. UAE nationals are not entitled to end-of-service gratuity — GPSSA replaces this benefit.
4. Emiratisation Requirements
Emiratisation refers to the UAE government's policy of increasing UAE national employment in the private sector. Significant enforcement has been introduced since 2022, making compliance a priority for all private sector employers.
Who Must Comply?
Private sector companies with 50 or more employees must meet specific Emiratisation quotas. The target is to increase UAE national employees by 2% of skilled positions per year, reaching 10% by 2026.
Emiratisation Penalties
Companies that fail to meet their Emiratisation targets face a monthly financial contribution of AED 8,000 per unfilled UAE national position (AED 96,000 per year per position). This contribution is paid to the Nafis fund and is non-refundable.
5. Leave Entitlements Under the New Labour Law
Federal Decree-Law No. 33 of 2021 standardised leave entitlements across the private sector:
- Annual leave: 30 calendar days per year (2 days per month for employees with less than 1 year service)
- Sick leave: 90 days per year (first 15 days full pay, next 30 days half pay, remaining 45 days unpaid)
- Maternity leave: 60 calendar days (first 45 days full pay, next 15 days half pay)
- Paternity leave: 5 working days within 6 months of birth
- Bereavement leave: 3–5 days depending on the relationship
- Study leave: 10 days per year for employees who have completed 2 years of service
6. Payroll Compliance Checklist
Use this checklist to verify your UAE payroll compliance:
Is Your UAE Payroll Fully Compliant?
Profitrack manages payroll for UAE businesses of all sizes — MOHRE registration, WPS processing, gratuity provisioning, GPSSA submissions, and Emiratisation tracking. Get compliance done right from the start.
Get Payroll Support →Key Takeaways
- WPS requires salary payment within 10 days via an approved agent — late payment triggers permit bans
- Gratuity accrues at 21 days/year for the first 5 years and 30 days/year thereafter — provision monthly
- GPSSA contributions are 12.5% employer + 5% employee for UAE national staff, due by the 15th
- Emiratisation penalties are AED 8,000/month per unfilled position for companies with 50+ employees
- The 2022 Labour Law removed the resignation penalty — all employees completing 1+ year get full gratuity