UAE Payroll Legislation: The Statutory Reference for Mainland, Free Zones, DIFC and ADGM
UAE payroll legislation is not one rulebook. It is four employment regimes and three employee populations, and the combination decides every figure your payroll produces. This is the first article in our six-country legislation series, and it sets out what applies in each UAE regime: the end-of-service accrual rates and wage bases, how resignation is treated, the wage-protection obligation, the social-insurance position for nationals, and the reforms currently in flight. Figures are cited to the instrument that creates them.
This article reflects gulfHR’s current understanding of the requirements cited and does not constitute legal advice. Statutory rates, thresholds and deadlines change; verify any figure with the named authority before configuring payroll against it.
The six-country legislation series
Each GCC state gets its own article, one at a time, with the full legislation rather than a summary. This is part one: the United Arab Emirates. Saudi Arabia, Qatar, Kuwait, Bahrain and Oman follow. The complete HRMS evaluation checklist is the pillar this series expands.
Two questions decide every UAE payroll answer
Before any rate or rule applies, two things have to be settled. Getting either wrong invalidates the calculation, and most UAE payroll errors trace back to one of them.
Which regime is the entity in? Mainland companies and most free-zone companies apply Federal Decree-Law No. 33 of 2021, administered by the Ministry of Human Resources and Emiratisation for mainland employers and by the relevant authority in a free zone. The Dubai International Financial Centre and Abu Dhabi Global Market are different: each is a financial free zone with its own employment law, its own end-of-service regime and its own payment obligations. A group with a Dubai mainland company, a JAFZA entity and a DIFC entity is running three regimes, not one.
Which population is the employee in? Expatriate employees accrue end-of-service benefits. UAE nationals do not: they are registered for pension and social insurance instead. GCC nationals working in the UAE sit on a third track, contributing under their home state’s scheme through the unified GCC protection system. A payroll rule written for “UAE employees” as a single group will be wrong for at least one of them.
| Regime | Governing employment law | End of service, expatriates | Wage protection |
|---|---|---|---|
| Mainland | Federal Decree-Law No. 33 of 2021, administered by MOHRE | Gratuity under Art. 51, or the voluntary savings scheme per enrolled employee | MOHRE WPS under Ministerial Resolution No. 340 of 2026 |
| Free zones | Federal Decree-Law No. 33 of 2021, administered by the zone authority | Gratuity under Art. 51, or the voluntary savings scheme | Zone-specific mechanics. Confirm with your authority |
| DIFC | DIFC Employment Law No. 2 of 2019, as amended, including Amendment Law No. 1 of 2025 | DEWS or another qualifying scheme for service after 1 February 2020. Gratuity remains for earlier service | Outside MOHRE WPS. DIFC payment obligations apply |
| ADGM | ADGM Employment Regulations 2024, in force 1 April 2025 | Gratuity under Section 61, on Basic Wage, which must not be less than 50% of Annual Wages | Outside MOHRE WPS. ADGM requirements apply |
Table 1. The four UAE regimes. A single “UAE” payroll configuration is wrong for any group holding a DIFC or ADGM licence.
End of service for expatriate employees
Mainland and free zones: the statutory gratuity
Article 51 of Federal Decree-Law No. 33 of 2021 entitles a foreign worker who has completed one year or more of continuous service to “the wage of twenty-one (21) days for each year of the first five years of service” and “the wage of thirty (30) days for each year in excess of that”, subject to a cap so that “the total end-of-service gratuity for the foreign Worker does not exceed two years’ wage”. Partial years beyond the first accrue pro rata.
Four mechanics decide whether the figure is right, and none of them appear in the headline rates.
- The accrual base is basic salary. Housing, transport and similar allowances are excluded. The daily rate is monthly basic salary divided by 30, applied separately to each service band. Note that the law expresses the cap on “wage” while the accrual convention runs on basic, so confirm which base your own contracts and policies apply.
- Unpaid leave days are excluded from the service period.
- Resignation pays the full accrued entitlement. The reduced-gratuity-on-resignation rules of the previous regime were abolished by the 2021 law. Legacy systems and migrated calculation rules frequently still carry the old reduction logic.
- Article 53 requires all entitlements to be paid within fourteen days of the contract ending. That covers the whole settlement, not just the gratuity: final salary to the last working day, accrued leave encashment on the basic-salary basis, notice pay, pending overtime and expenses, and lawful deductions.
The voluntary alternative end-of-service benefits scheme
Cabinet Resolution No. 96 of 2023 established the voluntary alternative end-of-service benefits scheme. Where an employer enrols eligible employees in the scheme, future statutory gratuity accrual for those employees is replaced by monthly contributions to an approved investment fund.
For a full-time employee, the employer’s basic contribution is 5.83% of monthly basic wage where continuous service with the employer does not exceed five years, and 8.33% where service exceeds five years. Importantly, the service period is measured from the employee’s original commencement date with that employer, not from the date they enter the savings scheme.
Before participation begins, the employer must calculate the employee’s gratuity accrued up to that point. That accrued gratuity is not paid to the employee simply because they join the scheme. Under Article 5(3), it becomes payable when the employment relationship ends and is calculated using the employee’s basic wage at the time they joined the alternative scheme. This historical gratuity therefore needs to remain separately identifiable in the payroll and offboarding record.
Employers may enrol all employees, particular groups or selected professional categories in accordance with the scheme rules. The official UAE Government guidance also confirms the 5.83% and 8.33% contribution rates and permits voluntary employee contributions subject to the scheme limits.
DIFC: DEWS, preserved gratuity and pension top-ups
For eligible DIFC employees, service from 1 February 2020 is covered through DEWS or another qualifying scheme rather than continuing to accrue under the old gratuity model. Employer Core Benefits are calculated at 5.83% of Monthly Basic Wage for the first five years of service and 8.33% for each additional year, subject to the current DIFC Employment Law.
Service accrued before the Qualifying Scheme Commencement Date remains separately relevant. Where an employee is entitled to a gratuity payment for that period, the current DIFC Employment Law provides for 21 days of Basic Wage for each of the first five years and 30 days for each additional year, capped at twice Annual Wage. The applicable Basic Wage is the Basic Wage at termination, the daily rate is calculated using a 365-day divisor, and Basic Wage for this calculation must not be less than 50% of Annual Wage.
For UAE and GCC nationals registered with GPSSA, DIFC law also provides a pension top-up mechanism where the employer’s pension contribution is lower than the Core Benefits that otherwise would have applied. The top-up applies where the monthly amount is AED 1,000 or more. This AED 1,000 threshold is confirmed by DIFC itself.
Employers should also note DIFC Laws Amendment Law No. 1 of 2025, which clarifies that the comparison is against the employer’s GPSSA pension contribution for the employee in the relevant month. The amendment took effect in July 2025.
ADGM: Employment Regulations 2024
The ADGM Employment Regulations 2024 have applied since 1 April 2025 and replaced the Employment Regulations 2019. ADGM is a separate employment-law jurisdiction and is not governed by the UAE Federal Labour Law for these employment matters.
Under Section 61, a qualifying employee receives 21 days’ Basic Wage for each year of the first five years of service and 30 days’ Basic Wage for each additional year. The calculation uses the employee’s Basic Wage at termination, and the daily rate is calculated by dividing the annual Basic Wage by 365. Importantly, Basic Wage must not be less than 50% of the employee’s Annual Wages.
ADGM also expressly confirms that the UAE Wage Protection System does not apply within ADGM.
| Regime | Mechanism | Rate | Wage base | Resignation |
|---|---|---|---|---|
| Mainland and free zones | Accrued gratuity, FDL 33/2021 Art. 51 | 21 days per year for the first five years, 30 days thereafter, capped at two years’ wage | Basic salary, 30-day divisor | Full entitlement. No reduction |
| Mainland and free zones, enrolled employees | Savings scheme, Cabinet Resolution 96/2023 | 5.83% up to five years’ service, 8.33% beyond | Monthly basic wage | Not applicable to the contribution stream. Gratuity accrued before enrolment is payable on termination |
| DIFC | DEWS or another qualifying scheme, from 1 Feb 2020 | 5.83% for the first five years, 8.33% for each additional year | Monthly Basic Wage. Preserved pre-2020 gratuity on Basic Wage at termination, 365-day divisor, Basic Wage not less than 50% of Annual Wage | Not applicable to the contribution stream. Pre-2020 gratuity preserved |
| ADGM | Accrued gratuity, Employment Regulations 2024 s.61 | 21 days per year for the first five years, 30 days for each additional year | Basic Wage at termination, 365-day divisor, Basic Wage not less than 50% of Annual Wages | Entitlement regardless of termination reason, subject to the Regulations |
Table 2. End-of-service mechanisms for expatriate employees across the four UAE regimes.
Social insurance for UAE and GCC nationals
UAE nationals should first be routed to the correct pension authority and applicable law rather than treated as one payroll population.
For employees covered by GPSSA under Federal Law No. 7 of 1999, the private-sector contribution is 20% in total: 5% employee, with the employer statutory share supported by a 2.5% government contribution so that the private-sector employer effectively bears 12.5%. The private-sector contribution salary is subject to the applicable GPSSA limits. Current GPSSA guidance confirms a minimum of AED 1,000 and maximum of AED 50,000 for this regime.
For Emiratis falling under Federal Law No. 57 of 2023, including qualifying people employed for the first time from 31 October 2023, the total contribution is 26%: 11% employee and 15% employer. The Government supports private-sector employers by bearing 2.5 percentage points of the employer share where the contribution account salary is below AED 20,000. The private-sector contribution account salary is subject to a minimum of AED 3,000 and maximum of AED 70,000.
Do not describe 31 October 2023 as a simple hire-date switch for every Emirati. GPSSA expressly confirms that people already covered by the 1999 law generally remain under it even if they later change employer.
| Element | Federal Law No. 7 of 1999 | Federal Law No. 57 of 2023 |
|---|---|---|
| Applies to | Emiratis insured before 31 October 2023 | Emiratis employed for the first time from 31 October 2023 |
| Employee share | 5% | 11% |
| Employer share | 15% statutory, of which the government bears 2.5% for private-sector insureds, so the employer pays 12.5% | 15% statutory, of which the government bears 2.5% where the contribution account salary is below AED 20,000, so the employer pays 12.5% below that level and 15% at or above it |
| Total | 20% | 26% |
| Private-sector salary limits | Minimum AED 1,000, maximum AED 50,000 | Minimum AED 3,000, maximum AED 70,000 |
Table 3. GPSSA contributions for UAE nationals in the private sector, per GPSSA. Where the government’s 2.5% sits structurally differs between the two regimes; confirm the position with GPSSA before modelling what happens if that support changes.
A trap worth knowing about
Several of GPSSA’s own FAQ pages still describe only the 1999 regime, including the 5% employee share and the AED 1,000 to AED 50,000 salary limits. A payroll team reading those pages to configure a post-31-October-2023 Emirati hire will deduct 5% where 11% is due. Check the law that applies to the individual, not the general FAQ.
Abu Dhabi. Emirati employees in Abu Dhabi, including the private sector, fall under the Abu Dhabi Pension Fund rather than GPSSA. For new active members joining on or after 1 December 2023 who had not previously registered with ADPF, the official contribution rates are 11% employee and 15% employer.
Sharjah. The Sharjah Social Security Fund Law states 5% employee and 15% employer of Subscription Calculation Salary. The Fund’s published scope covers Sharjah citizens working for Sharjah government entities and private-sector entities in which the Sharjah Government holds a stake. GPSSA separately confirms that private-sector Emiratis in Sharjah generally fall within the federal pension framework.
GCC nationals working in the UAE. They are covered through the GCC Insurance Protection Extension Program under the social-security law of their home country. However, the UAE employer’s required subscription cannot exceed the employer contribution share applicable to UAE nationals working for that employer; the GCC employee bears any contribution difference where applicable. GPSSA currently states that contributions are due no later than the 15th day of the following month.
Wage protection
Ministerial Resolution No. 340 of 2026 governs the Wage Protection System for establishments registered with MOHRE, and took effect on 1 June 2026, repealing Ministerial Resolution No. 598 of 2022. Salaries for the preceding month are due on the first day of each Gregorian month. Where lawful deductions apply, employers must transfer at least 85% of the total wages due on time through WPS, an increase on the previous 80% standard. The Resolution provides graduated measures for late or non-payment, beginning with alerts and monitoring and escalating depending on the duration and circumstances of the violation.
Applicability follows the entity’s regulatory and employment regime. MOHRE-registered establishments fall within the federal framework. Free-zone mechanics vary by authority, so confirm the applicable process with your zone authority and with MOHRE where relevant. DIFC and ADGM entities sit outside MOHRE’s WPS and carry their own payment obligations, which means a group spanning mainland and a financial free zone has more than one obligation to satisfy in the same month. Our guide to UAE WPS compliance, deadlines and penalties covers the submission process in detail.
Unemployment insurance
The Involuntary Loss of Employment Scheme applies to covered employees in the UAE federal government and private-sector framework, subject to statutory exclusions, under Federal Decree-Law No. 13 of 2022 and Cabinet Resolution No. 97 of 2022. There are two categories, set by basic salary.
- Category A, basic salary of AED 16,000 or below: premium AED 5 per month plus VAT. Compensation is capped at AED 10,000 per month.
- Category B, basic salary above AED 16,000: premium AED 10 per month plus VAT. Compensation is capped at AED 20,000 per month.
The basic scheme provides compensation at 60% of the relevant subscription salary for up to three months per claim, capped at AED 10,000 per month for Category A and AED 20,000 for Category B, with an aggregate maximum benefit period of twelve months. Claims must generally be submitted within 30 days. Eligibility requires at least twelve consecutive months of subscription, and termination by resignation or disciplinary dismissal does not qualify.
Investors and owners working in their own establishment, domestic workers, temporary-contract workers, those under 18 and retirees receiving a pension who take up new employment are outside the scheme. MOHRE applies a fine of AED 400 for failure to subscribe and AED 200 where premiums go unpaid for more than three months, recoverable from salary or end-of-service benefits, with new work permits withheld until settled.
The scheme is ultimately the employee’s subscription responsibility, though payroll-facilitated deduction is common. If you deduct through payroll, the system has to hold the arrangement, the category and the exemptions without a side spreadsheet.
Do not treat ILOE as universally mandatory across every UAE regime. ADGM expressly states that ILOE is not mandatory for ADGM employers and employees, although ADGM encourages voluntary participation.
Emiratisation
For MOHRE-regulated private-sector establishments with 50 or more employees, the Emiratisation framework requires growth of 2% annually in skilled jobs, implemented through 1% semi-annual growth targets, with the programme designed to reach an overall 10% increase by 2026. Official UAE Government guidance states that the financial contribution began at AED 6,000 per month for each required Emirati position not filled and increases by AED 1,000 annually until 2026. To avoid publishing a derived assessment amount, payroll teams should verify the live liability through MOHRE when configuring or settling a compliance assessment.
For targeted establishments with 20 to 49 employees in specified economic activities, the requirement was to employ at least one Emirati during 2024 and one additional Emirati during 2025. Failure to meet the 2025 target results in an AED 108,000 financial contribution from January 2026, subject to the rules in Ministerial Resolution No. 455 of 2023.
A major 2026 payroll point also applies: MOHRE increased the minimum monthly wage for Emiratis employed in the private sector to AED 6,000 effective 1 January 2026. Employers with existing Emirati employees were given until 30 June 2026 to make the necessary salary adjustments, with compliance measures applying from 1 July 2026.
One jurisdiction caveat: the UAE federal Emiratisation laws do not apply in ADGM.
What is in flight
Three things are worth watching, because each one changes a payroll input rather than a policy.
- The savings-scheme transition. Cabinet Resolution No. 96 of 2023 is voluntary, and uptake is a commercial decision rather than a deadline. But every enrolment triggers an Article 5(3) calculation of accrued gratuity, which must then remain separately identifiable until it becomes payable on termination.
- The DIFC top-up obligation for nationals. DIFC Laws Amendment Law No. 1 of 2025, effective July 2025, clarifies that the comparison is against the employer’s GPSSA pension contribution for the employee in the relevant month.
- ADGM’s 2024 Regulations bedding in. They have only applied since 1 April 2025, and any ADGM calculation inherited from a pre-2025 configuration was built against the repealed 2019 Regulations.
The gulfHR expert view
The UAE errors we see in practice are rarely about the headline rates. Everyone knows 21 and 30 days. They are about the inputs and the boundaries around them.
The recurring four: accrual run on gross rather than basic, so every expatriate leaver is overstated; unpaid leave left inside the service period; reduced-on-resignation logic surviving a migration from a pre-2021 system; and one nationality flag doing too much work, so a post-October-2023 Emirati hire is deducted at the 1999 rate.
The structural one is the boundary itself. A group adds a DIFC or ADGM entity, the payroll team extends the existing UAE configuration to cover it, and the difference only surfaces when someone with ten years’ service leaves. Treat each regime as a separate calculation engine from the day the licence is issued, not from the day the first long-serving employee resigns.
Where gulfHR fits
gulfHR is an enterprise HR and payroll platform built for the Middle East rather than adapted from a global template, and it sits within Gulf Solutions Group alongside OPS. It is designed for organisations running payroll across multiple entities, with configurable approval chains, role-based access, audit trail, employee self-service and HR and payroll reporting. It is hosted on Microsoft Azure with enterprise-grade security and is ISO 27001 certified.
Which of the calculations above run natively and which are handled by configuration should be confirmed during scoping rather than assumed from a feature list. If you are assessing systems, the practical test is the one in our HRMS evaluation checklist: bring a real leaver from each regime you operate in, including one whose DIFC service spans February 2020, and ask which rule fired for each. The ten questions to ask before buying an HRMS sets out the evidence to demand from the answers, and UAE offboarding and final settlements covers the fourteen-day workflow in more detail.
Frequently asked questions
Is UAE gratuity calculated on basic salary or total salary?
On basic salary. Housing, transport and similar allowances are excluded from the accrual, and the daily rate is monthly basic salary divided by 30. The law expresses the two-year cap on “wage” while the accrual convention runs on basic, so confirm which base your own contracts and policies apply. In ADGM the base is also Basic Wage, the daily rate uses a 365-day divisor, and Basic Wage must not be less than 50% of Annual Wages.
Does an employee who resigns still get full gratuity in the UAE?
Yes, under Federal Decree-Law No. 33 of 2021 the full accrued entitlement is payable on resignation. The reduced-gratuity-on-resignation rules of the previous regime were abolished. This is worth testing in any system migrated from a pre-2021 configuration, because the old reduction logic often survives.
Does gratuity apply in the DIFC?
Not for service after 1 February 2020, which is funded through DEWS or another qualifying scheme at 5.83% and 8.33% of Monthly Basic Wage. Where an employee is entitled to a gratuity payment for earlier service, the current DIFC Employment Law provides 21 days of Basic Wage for each of the first five years and 30 days for each additional year, capped at twice Annual Wage, using the Basic Wage at termination and a 365-day divisor, with Basic Wage not less than 50% of Annual Wage. So a long-serving DIFC employee can have both components.
How much do employers contribute to GPSSA for UAE nationals?
It depends which law applies to the individual. For Emiratis insured before 31 October 2023 the total is 20%, with a 5% employee share and a 15% statutory employer share of which the government bears 2.5%. For those first employed from that date the total is 26%, with an 11% employee share and the same 15% employer share, the government bearing 2.5% where the contribution account salary is below AED 20,000. Salary limits differ between the two. Abu Dhabi nationals in the private sector are administered by the Abu Dhabi Pension Fund instead.
When must final settlement be paid in the UAE?
Article 53 of Federal Decree-Law No. 33 of 2021 requires all entitlements to be paid within fourteen days of the contract ending. That is the whole settlement, not only the gratuity, which makes offboarding a workflow with a statutory clock rather than a report produced after the fact.
The rates are the easy part
UAE end of service turns on the base, the divisor and the regime, not the headline rate. Bring your entity structure and one departing employee from each regime you operate in, including a DIFC employee whose service spans February 2020, and we will work through the calculations with you and show which rule applied to each.
Next in the series: Saudi Arabia. The end-of-service award on the last wage including due increases, the resignation reductions, GOSI, Mudad and Saudization.
Sources
- Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationships, Articles 51 and 53 — UAE Legislation portal
- Cabinet Resolution No. 96 of 2023 on the Alternative End-of-Service Benefits System, Articles 5, 6, 7 and 8 — UAE Legislation portal
- Alternative End-of-Service Benefits System, guidance and approved fund managers — Ministry of Human Resources and Emiratisation
- Payment of salaries and wages, and the Wage Protection System — The Official Platform of the UAE Government
- Employee Workplace Savings scheme, contribution rates, exemptions and voluntary contributions — Dubai International Financial Centre
- DIFC Law Amendment Law No. 1 of 2024, amending Article 66 of the DIFC Employment Law — Dubai International Financial Centre
- Employment Law, consolidated: gratuity on Basic Wage at termination, the 365-day divisor and the 50% of Annual Wage floor — Dubai International Financial Centre
- DIFC Laws Amendment Law No. 1 of 2025, clarifying the GPSSA pension top-up comparison, effective July 2025 — Dubai International Financial Centre
- Enactment of amendments through DIFC Law Amendment Law No. 1 of 2024, including the AED 1,000 monthly threshold — Dubai International Financial Centre
- ADGM publishes new Employment Regulations, announcing commencement on 1 April 2025 — Abu Dhabi Global Market, 9 January 2025
- Employment Affairs Office guidance and FAQs on the ADGM Employment Regulations 2024, Section 61 — Abu Dhabi Global Market
- Employment Affairs Office FAQs: the 50% of Annual Wages floor, and confirmation that the Wage Protection System, ILOE and federal Emiratisation requirements do not apply in ADGM — Abu Dhabi Global Market
- Contribution distribution for insured individuals, and contribution calculation salary limits — General Pension and Social Security Authority
- Federal Law No. 57 of 2023: principal features and applicability from 31 October 2023 — General Pension and Social Security Authority
- Pensions and social security for UAE citizens, including the Abu Dhabi exception — The Official Platform of the UAE Government
- GCC Overview: the Insurance Protection Extension Program, the cap on the UAE employer’s subscription and the contribution deadline — General Pension and Social Security Authority
- Federal Law No. 57 of 2023 now available, on continuity for those already covered by the 1999 law — General Pension and Social Security Authority
- Guide for Entities, on pensionable salary and contribution rates — Abu Dhabi Pension Fund
- Law: contribution rates of 5% employee and 15% employer of Subscription Calculation Salary, and scope of coverage — Sharjah Social Security Fund
- Unemployment insurance scheme: categories, premiums, compensation and eligibility — Involuntary Loss of Employment scheme
- Cabinet Resolution No. 97 of 2022 on the Unemployment Insurance Scheme — UAE Legislation portal
- Fines imposed on workers who fail to comply with the unemployment insurance scheme — Ministry of Human Resources and Emiratisation
- Emiratisation Targets, guidance and awareness portal — Ministry of Human Resources and Emiratisation
- Employing Emiratis in the private sector: the 20 to 49 employee requirements and the AED 108,000 contribution from January 2026 under Ministerial Resolution No. 455 of 2023 — The Official Platform of the UAE Government
- MoHRE raises the minimum wage for Emiratis in the private sector to AED 6,000 per month effective 1 January 2026 — Ministry of Human Resources and Emiratisation
- Financial contributions applied to companies failing to raise Emiratisation rates, including the AED 6,000 monthly base and the AED 1,000 annual escalation to 2026 — Ministry of Human Resources and Emiratisation