How to Hire Employees in the UAE: Labor Law, End of Service Gratuity & EOR Guide

1. The UAE Employment & Expansion Environment

The United Arab Emirates (UAE) has established itself as the leading commercial and financial hub of the Middle East. With 0% personal income tax, world-class infrastructure, and a strategic location bridging Europe, Asia, and Africa, Dubai and Abu Dhabi attract top international executives and remote specialists. Employment relationships are governed by Federal Decree-Law No. 33 of 2021.

2. Compensation, WPS & End of Service Gratuity

• 0% Income Tax & Wages Protection System (WPS): Employees pay zero personal income tax. All private sector employers must disburse salaries in UAE Dirhams (AED) through the Central Bank's electronic Wages Protection System (WPS) to maintain corporate good standing.
• End of Service Gratuity (ESG): For foreign expatriate workers, employers must fund a statutory severance accrual upon contract termination:
  • 21 days of basic salary per year for the first 5 years of service.
  • 30 days of basic salary for each additional year thereafter (capped at 2 years' total gross salary).

See the UAE EOR Cost & Pricing Guide for employer contributions and total employment cost modeling.

3. Employment Visas & EOR Sponsorship

Foreign nationals cannot legally work in the UAE on a visit or tourist visa. An Employer of Record holding a registered UAE mainland or free-zone entity sponsors the employee's Residence Visa, Work Permit (Labour Card), and Emirates ID, handling mandatory medical health screenings and ministry approvals on behalf of the overseas client company.