The short answer: The UAE pairs zero personal income tax with a fully codified labour law. Private-sector contracts are fixed-term, salaries are quoted monthly in AED, and employees build an end-of-service gratuity worth 21 days’ basic pay per year for the first five years and 30 days thereafter, capped at two years’ pay. Notice runs 30 to 90 days, and foreign workers are entitled to a repatriation flight home at the end of their contract. The detail below matters whether you are hiring into the region or relocating for a role.
The UAE is one of the most active energy recruitment markets in the world and a core hub for WRS. Its tax-free salaries and high standard of living attract professionals globally, while its employment framework, governed by Federal Decree-Law No. 33 of 2021, is more codified than many newcomers expect. This guide sets out what employers and candidates need to know across hiring, pay, tax, termination, leave and benefits.
Figures reflect UAE law as of 2026 and apply to the private sector onshore (mainland). Free zones such as the DIFC and ADGM operate their own employment regulations. This guide is informational and does not constitute legal advice.
How do employment contracts work in the UAE?
All private-sector contracts in the UAE are now fixed-term. The previous distinction between limited and unlimited contracts was removed under the 2021 law, and every employee is on a fixed-term agreement, typically aligned to the residence visa and running two or three years. Salaries are quoted monthly and, while paid in AED by default, can be paid in other currencies by agreement.
Probation cannot exceed six months and must be agreed in writing, with three months the typical norm. It cannot be extended, even under a new contract. Non-compete clauses are enforceable but limited to a maximum of two years and must be reasonable in scope.
What are the standard working hours?
Under Article 17 of the labour law, standard private-sector hours are 8 per day or 48 per week, reduced by two hours per day during Ramadan. Some sectors such as hospitality, security and retail may run 9-hour days with MOHRE approval. The weekend varies by employer: the federal government works a four-and-a-half-day week with a Friday-to-Sunday weekend, while many private companies operate a Friday-Saturday or Saturday-Sunday weekend. Overtime is capped at two hours per day, paid at 125% of normal pay during daytime hours and 150% at night, on rest days or on public holidays.
How is pay and tax structured in the UAE?
This is the headline attraction: there is no personal income tax in the UAE, so salaries are received in full. The wider picture for 2026:
- Personal income tax: 0%. No income tax applies.
- Corporation tax: 9% on business profits above AED 375,000, rising to 15% for large multinationals with global revenues above AED 3.15 billion.
- VAT: 5% consumption tax.
- Social security: Applies to Emiratis and GCC nationals only. Employers contribute 12.5% (15% in Abu Dhabi) and employees 5%, based on a monthly salary between AED 1,000 and AED 50,000. Expatriate workers do not pay UAE social security, though other GCC nationals pay their home-country rates.
There is no statutory 13th-month salary, though some employers offer one and discretionary bonuses are common. For expatriates, the absence of income tax combined with common allowances is what makes UAE packages so competitive.
What benefits and allowances are typical?
A basic level of medical insurance is legally required for a foreigner to obtain a work visa, and most employers add private cover spanning inpatient and outpatient treatment, often with dental and optical options and family cover at a professional level. Group life insurance is common, too.
Beyond insurance, UAE packages frequently include allowances that significantly increase their real value: a housing allowance, an annual return flight to the country of origin for expatriates, a car or transport allowance, and an education allowance for school-age dependents. Candidates weighing an offer should assess the whole package, not just the headline salary.
How does termination and notice work?
Notice must be stated in the contract and fall between 30 and 90 calendar days, applying to both resignations and terminations. Payment in lieu of notice is allowed. No notice is required where an employee is dismissed for just cause.
During probation, the employer gives 14 days’ notice. An employee leaving the UAE during probation gives 14 days, while one moving to another UAE job gives 30 days, and in that case, the former employer can ask the new employer to cover recruitment costs. Grounds for summary dismissal include gross misconduct and abuse of position for personal benefit. To dismiss for poor performance, an employer must follow a documented process of investigation and warnings, and must notify MOHRE within seven working days of a misconduct incident. Under the current law, gratuity is not automatically forfeited on dismissal; an employer needs a court ruling to withhold it.
What is end-of-service gratuity, and how is it calculated?
Gratuity is the UAE’s form of severance, and it is one of the most important figures for any expatriate to understand. Under Article 51 of the labour law, a foreign worker with at least one year of continuous service is entitled to a gratuity on leaving, payable in almost all circumstances, including dismissal with cause. The calculation is based on basic salary only, excluding allowances:
- 21 calendar days’ basic pay for each of the first five years of service.
- 30 calendar days’ basic pay for each year beyond five years.
The total is capped at two years’ pay, and all outstanding wages and gratuity must be paid within 14 days of contract termination. Because the gratuity is based on basic pay rather than total package, the split between basic salary and allowances in a contract materially affects the eventual payout, which is something both employers structuring offers and candidates accepting them should look at closely. Separately, when an expatriate’s contract ends, the employer must provide a repatriation flight to their country of origin.
What leave are employees entitled to?
Annual leave and public holidays
Employees accrue 30 calendar days of annual leave after one year of service, though most employers allow accrued leave to be taken during the first year. There is no statutory requirement to permit carry-over, and payment in lieu is allowed by agreement. On termination, leave is paid at basic rate only. The UAE observes around 13 days of national public holidays a year, most tied to the Islamic calendar and therefore moving roughly 11 days earlier each year, with exact dates subject to moon sighting.
Sick leave
After three months’ employment, employees are entitled to up to 90 calendar days of sick leave per year for serious illness, with a doctor’s note required within three days. The first 15 days are paid in full, days 16 to 45 at half pay, and the remainder unpaid.
Maternity, paternity and family leave
Mothers receive 45 calendar days of fully paid maternity leave after one year of service (half benefits below a year), plus 15 days at half pay and, where there are medical complications, a further 45 unpaid days. Leave can begin 30 days before the due date, and there is security of tenure throughout. Fathers receive five working days of paid paternity leave within the first six months. There is no separate parental leave.
Other leave
Bereavement leave is five working days for the death of a spouse and three days for a relative within the second degree. Muslim employees may take up to 30 calendar days once during their employment to perform the Hajj pilgrimage, and employees studying at an approved UAE institution can take 10 days’ study leave after two years’ service.
What should employers and candidates know before hiring or relocating?
For employers, the practical points are that all contracts are fixed-term and visa-linked, gratuity accrues as a real and growing liability, and onshore rules differ from the free zones. Structuring an offer well, particularly the basic-to-allowance ratio, affects both competitiveness and long-term cost.
For candidates, the tax-free salary is only part of the picture. Assess the full package including housing, flights, schooling and medical cover, understand that your gratuity builds on basic pay, and factor in that your contract is tied to your residence visa. Relocating to the UAE is straightforward with the right support, but the detail rewards attention.
How WRS supports hiring and working in the UAE
The Middle East is one of WRS’s core regions, and the UAE one of its most active markets. We have spent over 24 years placing energy professionals across the region, with candidates mobilised in more than 90 countries. For employers, our recruitment solutions and contractor services cover compliant hiring, mobilisation and payroll, so the practicalities of UAE employment law are handled correctly from the start. For candidates, our consultants and candidate information hub guide you through visas, documentation and what to expect from a UAE package.
Explore our latest oil and gas and contract roles in the region, submit your CV or get in touch to discuss hiring into or relocating to the UAE.
FAQs
Do you pay income tax in the UAE?
No. The UAE levies no personal income tax, so salaries are received in full. There is a 5% VAT on goods and services and a 9% corporation tax on business profits above AED 375,000, but individuals pay no tax on earnings.
How is end-of-service gratuity calculated in the UAE?
For private-sector expatriates with at least one year of service, gratuity is 21 days’ basic salary per year for the first five years and 30 days per year thereafter, capped at two years’ pay and based on basic pay excluding allowances. See the UAE government guidance for the full rules.
What is the notice period in the UAE?
Between 30 and 90 calendar days, as stated in the contract, for both resignations and terminations. During probation it is 14 days from the employer. No notice is required for dismissal with just cause.
How much annual leave do you get in the UAE?
30 calendar days per year after one year of service, plus around 13 national public holidays. Most employers allow accrued leave to be taken in the first year.
Are UAE contracts fixed-term or permanent?
All private-sector contracts are fixed-term following the 2021 labour law reform, usually aligned to the residence visa for two or three years. The old unlimited contract no longer exists.
How can WRS help me work in or hire in the UAE?
WRS is a global energy recruiter with deep Middle East experience, offering compliant hiring, mobilisation and payroll for employers and full relocation support for candidates. Visit worldwide-rs.com or contact us to start.
