Employer social-insurance costs in the United Arab Emirates
Reviewed by Mellow Editorial Team, HR & payroll content team
Employer social-insurance obligations in the UAE depend entirely on the nationality of each employee. For expatriate staff — the majority of most workforces here — there is no social-insurance contribution at all. For UAE and GCC nationals, employers must enrol them in the General Pension and Social Security Authority (GPSSA) scheme and pay ongoing contributions.
Who is covered by social insurance
The GPSSA covers UAE nationals and, under bilateral GCC agreements, nationals of other Gulf Cooperation Council states working in the UAE. Expatriate employees — regardless of how long they have worked here — are excluded from the pension scheme entirely.
This distinction shapes your payroll costs significantly. A team of 50 people that is 90% expatriate has a very different social-insurance bill from one that is majority Emirati.
How GPSSA contributions work for nationals
Both the employer and the employee contribute to the GPSSA. The contribution rates are set by federal law and are calculated on the employee's pensionable salary. The employer's share is larger than the employee's share, and the combined contributions go to the GPSSA each month.
Because the verified statutory figures available here are limited to the scheme's existence and structure rather than the precise current percentage rates, the safest step is to confirm the exact rates directly with the GPSSA or with a licensed payroll provider, as rates can be amended by ministerial resolution. What you can rely on as a process: the employer deducts the employee's portion from salary, adds the employer's own portion, and remits the total to GPSSA on a monthly basis.
Enrolment is mandatory from the employee's first working day. Late registration or missed payments attract penalties, so building the GPSSA filing into your monthly payroll cycle from day one is essential.
End-of-service gratuity for expatriates
Because expatriates are outside the pension system, their long-term benefit takes a different form: end-of-service gratuity, governed by Federal Decree-Law No. 33/2021.
The calculation is:
- First five years of service: 21 days' basic wage per completed year
- Beyond five years: 30 days' basic wage per completed year thereafter
- Overall cap: two years' total basic wage
Only the basic salary is used — not allowances, commissions or other components unless your employment contract says otherwise. An employee who leaves before completing one year receives no gratuity. Between one and three years, a proportion is payable; between three and five years, a larger proportion; after five years, the full entitlement applies.
Gratuity is a liability that accrues continuously. Many employers in the UAE make the mistake of treating it as a one-off cost at the point of departure. In practice, you should be provisioning for it monthly in your accounts so that the obligation is never a surprise. Some employers use approved savings or investment schemes to fund gratuity proactively rather than holding it as a balance-sheet liability.
The Wage Protection System
All salary payments must flow through the Wage Protection System (WPS), a Central Bank of UAE mechanism that records and timestamps wage transfers. This applies to both nationals and expatriates.
WPS compliance is monitored by the Ministry of Human Resources and Emiratisation (MOHRE). Persistent late or missed payments lead to fines, a freeze on new work-permit approvals, and ultimately a downgrade in your company's classification — which affects your ability to hire at all.
Salaries must be paid in full and on time each month. Partial payments trigger a flag. If you operate across multiple entities or pay workers through a third-party arrangement, each entity needs its own WPS setup, and the payments must be correctly mapped to the right Labour IDs.
Putting it together: your actual monthly obligations
For a typical UAE employer with a mixed national and expatriate workforce, the monthly payroll checklist looks like this:
1. Calculate basic and total salaries for all staff.
2. For UAE/GCC nationals, calculate GPSSA contributions (employer and employee portions) and prepare the GPSSA transfer.
3. For expatriates, update the running gratuity provision in your accounts.
4. Run all salary payments through WPS before the contractual pay date.
5. Keep records aligned across your HR system, WPS records and GPSSA filings — audits do happen.
There is no personal income tax to withhold or remit for any employee, national or expatriate. That removes one layer of complexity common in other jurisdictions, but it does not make UAE payroll administration simple — the combination of WPS compliance, GPSSA enrolment for nationals, and gratuity provisioning for expatriates still requires careful monthly discipline. Understanding how Mellow runs payroll across six countries on one platform can give useful context if you are managing UAE obligations alongside headcount in other markets.
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