UAE Employee Cost Calculator
What a hire really costs you per year — salary, gratuity accruing quietly in the background, mandatory insurance and the visa cycle, all in one number.
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General guidance based on Federal Decree-Law No. 33 of 2021 and current mandatory insurance rules — not legal, payroll or tax advice. Visa, Emirates ID and insurance figures are your own inputs, not quoted rates, and they vary by emirate, free zone, activity and category. It does not model DIFC or ADGM employment regimes, which run their own end-of-service schemes. Confirm with MoHRE, GPSSA or a licensed payroll provider.
The cost nobody budgets for
Salary, insurance and visa costs all leave the bank account on a schedule, so they get budgeted. Gratuity does not. It accrues silently every month an employee stays, and then arrives as a single cash demand within fourteen days of them resigning. For a company with twenty staff and average tenure, that liability sitting off the books is usually six figures.
| Service period | Entitlement | Annual cost, in basic salary |
|---|---|---|
| Under 1 year | None | Nothing accrues |
| Years 1 to 5 | 21 days' basic per year | About 0.70 months per year |
| Year 6 onward | 30 days' basic per year | A full month per year |
| Overall ceiling | Capped at 2 years' total basic salary | |
Basic wage only — and why the split matters
Gratuity is calculated on basic wage, excluding housing, transport and every other allowance. Two employees on an identical total package can therefore carry very different liabilities depending on how the package is structured. A package that is sixty per cent basic accrues forty per cent less gratuity than the same money paid entirely as basic.
This cuts both ways and it is worth being straight about it. Structuring a low basic reduces the employer's liability, but it also reduces what the employee eventually receives, and MoHRE expects the basic wage to be a genuine reflection of the role rather than a token figure. Artificially suppressing basic to dodge gratuity invites disputes and does not tend to survive scrutiny.
What else is mandatory
- Health insurance in all seven emirates since 1 January 2025, minimum AED 150,000 annual benefit. The employer pays and cannot deduct it from salary or gratuity.
- Abu Dhabi extends that obligation to the employee's spouse and up to three children under eighteen — a materially larger bill than a single-employee policy.
- WPS for salary payment, which is also the mechanism that determines whether an Emirati employee counts toward your Emiratisation quota.
- Final settlement within 14 calendar days of the contract ending, covering everything owed, not just the gratuity.
Frequently Asked Questions
What does an employee actually cost above their salary?
Typically fifteen to twenty-five per cent more than the headline package. The additions are end-of-service gratuity accruing at 21 days of basic wage per year, mandatory health insurance which the employer must pay, the residence visa, Emirates ID and labour card spread across the two-year permit cycle, and any recruitment fee. Gratuity is the one most often left out of budgets, because nothing leaves the bank account until the employee resigns.
Is gratuity calculated on the full salary or just basic?
Basic wage only. Housing, transport, phone and every other allowance is excluded under Federal Decree-Law No. 33 of 2021. This matters enormously because a package structured as sixty per cent basic carries a substantially smaller gratuity liability than the same total structured as one hundred per cent basic. Including allowances in the calculation is the most common payroll error in the UAE and it overstates the liability by a wide margin.
How much gratuity accrues each year?
Twenty-one days of basic wage per year for the first five years of service, which works out at roughly seven tenths of one month of basic salary a year, then thirty days per year after that, which is a full month of basic annually. The total is capped at two years of basic salary however long the service runs. Nothing is payable at all until the employee completes one continuous year.
Do I have to provide health insurance?
Yes, in every emirate. Cover became mandatory for private-sector employees across all seven emirates on 1 January 2025, having previously applied only in Dubai and Abu Dhabi, with a minimum annual benefit limit of AED 150,000. The employer pays the premium and it cannot be deducted from salary, withheld from gratuity or offset against any other entitlement. In Abu Dhabi the obligation extends to the employee spouse and up to three children under eighteen.
When do I have to pay a departing employee?
Within fourteen calendar days of the contract ending, under Article 53. That is calendar days including weekends and public holidays, counted from the last working day, and it covers everything owed rather than just the gratuity: unpaid salary, untaken annual leave, notice pay and any other entitlement. Employers who plan around a monthly payroll cycle regularly miss this window.
Does hiring an Emirati cost more or less?
The direct payroll cost is usually higher because of the AED 6,000 monthly minimum wage for citizen work permits and the employer pension contribution to GPSSA, but no residence visa is required and Nafis wage support can offset a meaningful part of the salary during the initial period. For a mainland company with twenty or more employees there is also the Emiratisation quota to weigh, where an unfilled position carries its own monthly cost.
Why spread the visa cost over two years?
Because a residence visa and labour card run on a two-year cycle rather than being an annual expense. Charging the whole amount against year one overstates the first year and understates the second, which distorts any comparison between candidates or between hiring and outsourcing. Spreading it gives you the steady-state annual figure, which is the number you actually want when budgeting a role.
Visas, labour cards and WPS handled for you
The admin behind each hire — entry permit, medical, Emirates ID, labour card and WPS registration — is where most of the delay sits. Browse UAE PRO and documents clearing services who process it end to end.