Employer of Record in United Arab Emirates

Taxes and social security in UAE

There is no personal income tax in the UAE. In January 2022, the Ministry of Finance announced a federal corporate tax on business profits applicable across all emirates for domestic businesses. Foreign businesses in Free Zones are exempt from all taxes.

Tax thresholds in UAE

The UAE corporate tax will become applicable either on July 1, 2023, or January 1, 2024, depending upon the financial year followed by the business. The tax brackets for domestic businesses are as follows:

• Up to AED375,000: 0%
• Above AED 375,000: 9%
• A different rate, not yet specified, for large multinational companies that meet specific criteria set by the OECD Base Erosion and Profit Shifting Project.

Health insurance in UAE

The UAE healthcare system is comprehensive, government-funded, and regulated at the federal and emirate levels. Healthcare varies in the UAE from emirate to emirate, but overall, medical service quality is high.

The UAE has free public healthcare for Emirati residents. Non-residents pay higher fees for medical treatment. However, the government subsidizes costs, and the standard of care is high at both public and private medical facilities.

Regardless of employment status, all residents of Dubai and Abu Dhabi are required to have health insurance. In the remaining emirates of Ajman, Ras Al-Khaimah, Sharjah, Fujairah, and Umm Al-Quwain, employers do not need to provide health insurance to employees.

Pensions in UAE

The General Pension and Social Security Authority (GPSSA) provides UAE residents with pension-related services. The UAE pension scheme by GPSSA covers old-age retirement, disability, death, and occupational illnesses. According to Article 16 of the UAE Labor Law, employees are entitled to an old-age retirement pension in the UAE if they complete the following requirements:

• 50 years of age
• 20 years of service

The old-age retirement pension amount increases by two percent for every year the employee works after 20 years of service until completing 35 years of service. Employees who complete 35 years of service qualify to receive an old-age retirement pension equal to their salary. Employees who exceed 35 years of service qualify to receive an old-age retirement pension equal to a salary of three months for each year.

Employment benefits in the United Arab Emirates

The UAE’s government benefits programs are administered by a couple of its government agency authorities. The Ministry of Human Resources and Emiratisation provides general supervision and administration of labor relations and employment benefits to UAE residents. The Ministry of Health and Prevention provides and administers general healthcare benefits and procedures to UAE residents.

The General Pension and Social Security Authority (GPSSA) provides pension-related services to UAE residents. Government authorities collect contributions from employers and employees to maintain the UAE Social Security scheme, which maintains pensions, survivor benefits, short-term disability, long-term disability, healthcare, and paid leave entitlements.

Termination and notice periods in the United Arab Emirates

According to Article 43 of the UAE Labor Law, the notice period to terminate the employment relationship by both employer and employee is a minimum of 30 days and a maximum of 90 days.

During the probation period in the UAE, employers can terminate the employment relationship with at least 14 days of written notice. If employees terminate the employment relationship during probation, they are required to provide:

• One month of written notice, when they are joining another UAE business
• 14 days of written notice, when they are leaving the country

The notice period for employees who work in the Dubai International Financial Center (DIFC) and the Abu Dhabi Global Market (ADGM) is determined by length of employment.

The minimum notice period legally required to be given from both employer and employee in the DIFC is:

• Seven days of notice for less than three months of service
• 30 days of notice for at least three months but less than five years of service
• 90 days of notice for five years or more of service

The minimum notice period legally required to be given by both employer and employee in the ADGM is:

• Seven days of notice for less than three months of service
• 30 days of notice for at least three months or more of service

Throughout the UAE, the DIFC, and the ADGM, employers and employees can agree to payment instead of notice.

Employers are permitted to immediately dismiss employees without notice or payment instead of notice if employees commit an act of gross misconduct, as defined in the UAE Labor Law.

The UAE Labor law entitles employees to severance pay after completing one year of service. The severance pay is calculated as follows:

• 21 days of wages for each year of service for the first five years of service
• 30 days of wages for each following year of service, after the first five years