UAE payroll year-end: a checklist
Reviewed by Mellow Editorial Team, HR & payroll content team
UAE payroll year-end does not follow the same tax-filing calendar that employers in the UK or US deal with, but there are still real obligations to close out — gratuity reviews, WPS records, pension reconciliation for nationals, and leave liability updates. Here is a structured checklist to work through before you close your books.
Reconcile your WPS records
The Wage Protection System holds a transaction-level record of every salary transfer you have made. Before year-end, pull your WPS statement and match each payment against your payroll register line by line.
Look for:
- Any month where a transfer was flagged as late or rejected
- Employees whose bank details changed mid-year and caused a failed transfer
- Joiners or leavers whose first or final pay fell outside the normal cycle
Unresolved WPS failures can trigger Ministry of Human Resources and Emiratisation (MoHRE) penalties and block new work-permit applications. Fix discrepancies now rather than carrying them into the new year.
Review and provision end-of-service gratuity
Gratuity is one of the largest accruing liabilities on a UAE payroll. Under Federal Decree-Law No. 33/2021, expatriate employees earn 21 days' basic wage per year of service for the first five years, then 30 days' basic wage per year after that, capped at two years' total pay.
At year-end, recalculate the accrual for every active expatriate employee using their current basic wage — not their total package. Common errors include:
- Using gross salary instead of basic wage
- Forgetting to step up the rate for employees who passed the five-year mark during the year
- Not adjusting the provision when someone received a salary increase
If you run your gratuity provision through the balance sheet, make sure the figure is updated to reflect current basic wages, not the wages that were in place when you last ran the calculation.
Employees who resign before completing one year receive no gratuity. Between one and three years they receive one-third of the entitlement; between three and five years, two-thirds. These reductions apply on resignation but not on termination by the employer, so the accounting treatment depends on how you expect each employment to end.
Reconcile GPSSA contributions for UAE and GCC nationals
Expatriate employees are not enrolled in a pension scheme in the UAE, but UAE nationals and qualifying GCC nationals are members of the General Pension and Social Security Authority (GPSSA). Both the employee and the employer make contributions each month.
At year-end, reconcile the contributions you have actually remitted to GPSSA against the contributions your payroll system calculated. Check:
- That every eligible national was correctly enrolled from their start date
- That contribution calculations were updated whenever a national received a pay change
- That no contribution payments are outstanding or pending
Errors in GPSSA reporting can result in interest charges on late payments and create complications if an employee later claims their pension. Get a remittance statement from GPSSA and reconcile it to your records before closing the year.
Audit annual leave balances
Annual leave entitlement under UAE labour law is 30 calendar days per year after one year of service. At year-end, run a leave liability report and check every employee's balance.
Things to verify:
- Balances have been reduced correctly for leave taken during the year
- Employees who joined mid-year have a pro-rated entitlement, not a full 30 days
- Any carry-forward policy you operate is applied consistently and documented
- Employees who left during the year had unused leave either paid out or taken before their last day
Leave liability is a cash obligation. If employees are carrying over large balances, that represents real money owed. Quantify it, provision it, and consider whether a more active leave management policy is needed for the year ahead.
Update employee records and contracts
Year-end is the right moment to ensure your employee files are clean before anything else changes.
Work through:
- Salary changes effective during the year — confirm they are reflected in both payroll and the official employment contract or addendum
- Any employees on fixed-term contracts whose terms expire in the coming months — renewal, conversion or termination needs planning ahead of the deadline
- Visa and Emirates ID expiry dates — lapses here affect WPS eligibility and work-permit renewals
- Changes to job title or department that should be reflected in MoHRE records
Clean records at year-end mean fewer firefighting moments in the first quarter of the new year. A payroll that is well-reconciled now — WPS matched, gratuity provisioned accurately, GPSSA squared off, leave balances correct — is a payroll that is far easier to manage as headcount grows or changes.
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