Key facts at a glance
Employer payroll tax
0%
No Employer NI/PRSI equivalent
Typical expat load
4-10%
Insurance + visa + gratuity accrual
GPSSA (nationals only)
12.5-15%
Of basic salary, employer share
Here is the answer before the mechanics: hiring in the UAE has no employer payroll tax at all, unlike the UK's Employer National Insurance or Ireland's Employer PRSI, but it is not free on top of salary either. Budget an extra 4% to 10% of the quoted package for an expatriate hire once you add mandatory health insurance, the employment visa and labour card, and an annual gratuity accrual. If the hire is a UAE or GCC national, add employer GPSSA pension contributions of 12.5% to 15% of basic salary on top, a much bigger number that a lot of first-time UAE employers don't budget for.
None of this is exotic, MOHRE (the Ministry of Human Resources and Emiratisation) and the DHA (Dubai Health Authority, or the equivalent authority in your Emirate) publish the rules, but the cost lines are scattered across different agencies and easy to miss when you're used to a single "Employer NI" style number. Here's the full stack, with worked examples.
Model the exact true cost for any UAE package.
Open the UAE True Cost to Hire CalculatorThe four cost lines, one by one
1. Mandatory health insurance. Every Emirate requires employers to insure their employees, and the premium must be fully employer-funded, deducting it from salary is a violation. Dubai's DHA sets the Essential Benefits Plan (EBP) as the legal floor, roughly AED 650-1,100/year for a basic adult expat plan; a more competitive group plan commonly runs AED 1,500-4,500/year depending on coverage tier and employee age. Abu Dhabi and other Emirates run comparable schemes at similar cost bands.
2. Employment visa and labour card. A bundled 2-year mainland employment visa, MOHRE work permit and labour card, entry permit, medical test, Emirates ID, and residence visa stamping, typically costs AED 3,000-7,500 per employee, depending on the employer's classification category (Category 1-3) and Emirate. Free zone employment (DIFC, ADGM, and similar) runs a parallel but broadly comparable process through the free zone authority instead of MOHRE directly.
3. Gratuity accrual. Gratuity is paid as a lump sum only on exit, 21 days' basic pay per year for the first 5 years, then 30 days' basic pay per year after that, capped at 2 years' basic salary, per Federal Decree-Law No. 33 of 2021. It shouldn't be treated as a surprise year-of-exit cost: a well-run finance team provisions the year's earned portion annually, so the eventual payout is already funded.
4. GPSSA (UAE/GCC nationals only). Under Federal Law No. 57 of 2023, the employer contributes 15% of contributable salary, reduced to 12.5% via a government subsidy for private-sector nationals earning under AED 20,000/month, capped at a AED 70,000/month contributable salary. This is the one line that genuinely resembles a UK/Ireland-style payroll tax, and it only applies to nationals, not the expatriate majority of most UAE workforces.
Worked examples: three UAE hires
Assuming an expatriate hire, a 70% basic-salary split, and the DHA Essential Benefits Plan floor for health insurance:
| Hire level | Quoted package | True cost (low-high) | Load |
|---|---|---|---|
| Junior hire | AED 120,000 | AED 126,983 – AED 129,683 | +5.8-8.1% |
| Mid-level hire | AED 240,000 | AED 251,816 – AED 254,516 | +4.9-6.0% |
| Senior hire | AED 420,000 | AED 439,065 – AED 441,765 | +4.5-5.2% |
On the mid-level AED 240,000 package, a UAE national hire instead of an expatriate adds a further AED 21,000/year in employer GPSSA contributions, on top of the same insurance, visa, and gratuity lines. Model your own package on the UAE True Cost to Hire Calculator.
The basic-salary trap works against employers too
Employers sometimes set a lower basic-salary percentage to reduce the gratuity accrual shown in payroll forecasts, which is legal, but it can make an offer look worse to a candidate comparing basic-salary percentages across employers, and it doesn't reduce your health insurance or visa cost lines at all, those are flat per-employee costs regardless of the basic/allowance split. Model both the cost and the offer-competitiveness angle before setting the split, not just the cost angle in isolation.
Provision gratuity annually, not on exit
A common mistake is treating gratuity as a cost that only shows up when someone leaves. It accrues every year an employee works, at 21 days' basic pay per year for years 1-5, then 30 days' basic pay per year after that. Setting aside roughly that year's earned portion annually keeps your finance forecasts accurate and avoids a nasty surprise the year a long-tenured employee finally exits.
See the full milestone-by-milestone lump-sum breakdown, and how the split between basic salary and total package affects it, in our UAE gratuity guide.
Model your own UAE hiring cost
Enter a package, adjust the basic-salary split and nationality, and see the exact true annual cost to hire.
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Frequently asked questions
What does the UAE really cost an employer on top of salary?
For an expatriate hire, typically an extra 4-10% of the quoted package per year: mandatory health insurance, the annualized cost of the employment visa and labour card, and a gratuity accrual. There is no employer payroll tax comparable to UK Employer NI or Ireland's Employer PRSI, which is why the UAE load looks small next to those markets, but it isn't zero.
Is health insurance really mandatory for every UAE employee?
Yes, in every Emirate, and it must be fully employer-funded. Dubai's DHA sets the Essential Benefits Plan (EBP) as the legal floor, with an annual premium of roughly AED 650-1,100 for a basic adult expat plan; deducting any part of the premium from the employee's salary is a violation. Better group plans commonly run AED 1,500-4,500/year.
What does the employment visa and labour card actually cost?
A bundled 2-year mainland employment visa, covering the MOHRE work permit and labour card, entry permit, medical test, Emirates ID, and residence visa stamping, typically costs AED 3,000-7,500 per employee, varying by the employer's classification category (Category 1-3) and Emirate. It is illegal to pass this cost to the employee.
How should an employer budget for gratuity if it's only paid on exit?
By provisioning annually rather than treating it as a surprise cost. Gratuity accrues at 21 days' basic pay per year for the first 5 years, then 30 days' basic pay per year after that, capped at 2 years' basic salary. A prudent employer sets aside roughly that year's earned amount each year, so the eventual lump sum on exit is already funded rather than a hit to a single year's budget.
Does GPSSA apply to every employee?
No, only UAE and GCC nationals. Under Federal Law No. 57 of 2023, the employer contributes 15% of the employee's contributable salary (reduced to 12.5% for private-sector nationals earning under AED 20,000/month via a government subsidy), the employee contributes 11%, and contributions cap at a AED 70,000/month contributable salary. Expatriate employees have no equivalent payroll pension contribution; gratuity is their end-of-service benefit instead.
Is hiring in the UAE still cheaper overall than the UK or Ireland?
For total employer cost, generally yes, since there's no employer payroll tax equivalent to Employer NI (roughly 13.8% in the UK) or Employer PRSI (11.15% in Ireland) stacked on top of salary. But the UAE isn't zero-cost either: visa, mandatory insurance, and gratuity accrual are real budget lines that a lot of first-time UAE employers underestimate.
Does the cost stack differ between Dubai and Abu Dhabi?
The visa, labour card, and gratuity mechanics are federal (MOHRE-governed) and identical across all seven Emirates. Health insurance requirements are broadly similar in cost but administered by different bodies: Dubai's DHA runs its own scheme, while Abu Dhabi's health insurance requirement runs through the Daman/Thiqa-linked system. Budget the same ballpark either way, but confirm the exact scheme with your PRO.
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