The employee lifecycle in the United Arab Emirates, end to end
Reviewed by Mellow Editorial Team, HR & payroll content team
The employee lifecycle in the UAE runs from visa sponsorship and contract signing through to end-of-service gratuity settlement — and each stage carries specific legal obligations under Federal Decree-Law No. 33/2021 and supporting regulations.
Hiring and onboarding
Before an expatriate employee can start work, the employer must obtain a work permit from the Ministry of Human Resources and Emiratisation (MOHRE) and sponsor the employee's residency visa. The process typically involves a medical fitness test, Emirates ID registration and visa stamping. Until all of this is complete, the employee cannot legally work.
The employment contract must be on a MOHRE-approved template and registered with the ministry. Contracts are fixed-term under current law — open-ended contracts are no longer issued for new hires. The probation period cannot exceed six months.
For UAE and GCC nationals, onboarding also means enrolment in the GPSSA pension scheme, with both employee and employer contributions deducted from the first payroll run.
Running payroll and the Wage Protection System
Every employer in the UAE must pay salaries through the Wage Protection System (WPS), a Central Bank-regulated electronic transfer mechanism that routes wages through approved financial institutions and logs each payment. MOHRE monitors compliance; late or missed payments trigger fines and can result in a labour ban.
Payroll in the UAE is straightforward in one respect: there is no personal income tax on salaries. You do not deduct income tax, and employees receive their full gross pay minus any pension contributions (nationals only) and any agreed deductions.
Salary is typically paid monthly. If you employ staff across multiple entities or countries, consolidating payroll data into one system before the WPS transfer deadline saves time and reduces the risk of errors — how Mellow runs payroll across six countries on one platform covers the practicalities.
Leave entitlements and absences
After completing one year of continuous service, an employee is entitled to 30 calendar days of annual leave. During the probation period, leave can be granted at the employer's discretion but is not a statutory right until that first year is complete.
Other statutory leave types under Federal Decree-Law No. 33/2021 include:
- Sick leave: up to 90 days per year (30 days full pay, 30 days half pay, 30 days unpaid), after completing the probation period.
- Maternity leave: 60 calendar days (45 days full pay, 15 days half pay).
- Parental leave: five working days for the father, within six months of the child's birth.
- Bereavement leave: five days for a spouse, three days for a parent, child, sibling or grandparent.
Tracking leave accurately matters beyond HR administration. Unused annual leave at termination must be paid out as part of the final settlement, so errors compound over time.
Managing performance, changes and terminations
Fixed-term contracts end on their expiry date; both parties can also terminate early with notice. The statutory minimum notice period is 30 days, though contracts often specify longer periods. Notice must be worked or paid in lieu — there is no option to simply walk away without one or the other.
MOHRE has a clear process for filing labour complaints, and employees can raise disputes online. Maintaining accurate records of performance management, warnings and any changes to terms of employment is the most practical protection an employer has if a dispute arises.
If you need to amend contract terms — a salary change, a role change, a move to part-time hours — the amendment must be documented and, where required, filed with MOHRE. Verbal agreements do not hold up.
End-of-service gratuity
Gratuity is the most financially significant obligation at the end of the lifecycle. Under Federal Decree-Law No. 33/2021, expatriate employees who complete at least one year of service are entitled to:
- 21 days' basic wage per year of service for the first five years
- 30 days' basic wage per year of service for each year beyond five
The total is capped at two years' total basic wage. Gratuity is calculated on basic wage only — it excludes housing allowances, transport allowances and other benefits unless the contract defines basic wage to include them.
Gratuity must be paid within 14 days of the employment end date. Late payment can result in a MOHRE complaint and a legal claim. The most common errors are using total package instead of basic wage in the calculation, and failing to pro-rate correctly for partial years.
For employees enrolled in the voluntary DEWS (Distinction End of Service Benefits) scheme or similar savings plans, monthly contributions may offset the gratuity liability — but only if the scheme is structured to do so and the employee has been enrolled throughout.
Accurate gratuity provisioning from day one of employment is not just good practice; it prevents a cash-flow problem at the point an employee leaves.
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