Mandatory Employee Benefits in the UAE: 2025 Guide

Mandatory Employee Benefits Beyond Salary in the UAE (2025 Guide)

Employment in the United Arab Emirates (UAE) is closely regulated. The main source of rules is Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationships (the "UAE Labour Law"), together with its subsequent amendments and executive regulations. Salary is the core of any employment package, but the mandatory employee benefits beyond salary matter just as much. Employers need to understand them to stay compliant, and employees need to understand them to assert their rights. With key updates in 2025, a clear grasp of these requirements is more important than ever.

Related: Explore our real estate law advisory services in the UAE.

This guide explains the legally mandated employee benefits in the UAE private sector. It focuses on the current 2025 requirements and on the entitlements that go beyond the basic monthly wage.

Related: Explore our labour and employment law advisory services in the UAE.

Mandatory Employee Benefits Under UAE Labour Law

This article sets out what employers must provide beyond salary, so that business owners can review their contracts and practices and address gaps before they turn into disputes.

The UAE Labour Law sets a baseline of protection for all private sector employees. It guarantees a minimum standard of welfare on top of the agreed salary. These mandatory benefits are non-negotiable and form the foundation of every employment contract.

Related: Explore our master service agreement drafting and negotiation services in the UAE.

1. End-of-Service Gratuity (EOSG)

The End-of-Service Gratuity is arguably the most significant non-salary financial benefit. It is a lump-sum payment to an expatriate employee when their employment ends, provided they have completed at least one year of continuous service.

Key legal provisions (Article 51):

• Calculation basis: EOSG is calculated solely on the employee's basic salary. Allowances, bonuses and any other form of remuneration are excluded.
• Service period:
  • First five years: 21 days' basic salary for each year of service.
  • Years beyond five: 30 days' basic salary for each subsequent year of service.
• Maximum gratuity: The total gratuity must not exceed two years' total remuneration.
• Payment: The employer is legally obliged to pay the full gratuity and all other entitlements within 14 days of the termination date.

Calculating EOSG can be complex, especially where the reason for termination or the contract type is in question. Employers and employees who need detailed advice on compliance and accurate calculation can consult specialists in Employment Contracts and End-of-Service Benefits.

2. Annual Leave Entitlement

Paid annual leave is a fundamental right under the UAE Labour Law, designed to protect employee well-being and rest.

Key legal provisions (Article 29):

• After 6 months but less than 1 year of service: 2 days per month, fully paid.
• After 1 year of service: 30 calendar days per year, fully paid.
• Timing: The employer has the right to set the start date of the annual leave, but must notify the employee at least one month in advance.
• Carry-over and encashment: Employees must take their annual leave in the year it is due. However, the law permits an agreement to carry over a portion of the leave to the next year, or to receive a cash equivalent for untaken leave based on basic salary.

3. Sick Leave Provisions

The law sets a clear structure for paid and unpaid sick leave, protecting employees from financial hardship during illness.

Key legal provisions (Article 31):

After completing the probationary period, an employee is entitled to up to 90 continuous or intermittent days of sick leave per year, paid as follows:

• First 15 days: full pay (100% of basic salary).
• Next 30 days: half pay (50% of basic salary).
• Remaining 45 days: unpaid.

• Probationary period: No paid sick leave is granted during the probationary period.
• Medical proof: Entitlement to sick leave depends on the employee providing a medical report from a government-approved medical entity.

4. Maternity and Parental Leave

The UAE has significantly improved its support for parents, recognising the importance of family life and gender equality in the workplace.

Maternity leave (Article 30):

A female employee is entitled to 60 calendar days of maternity leave, structured as follows:

• First 45 days: fully paid.
• Next 15 days: half paid.

The law also provides an additional 45 days of unpaid leave in case of pregnancy-related illness or complications, provided a medical certificate is presented. In addition, for 18 months after returning from maternity leave, the mother is entitled to two additional breaks per day, not exceeding one hour in total, to nurse her child.

Parental leave (Article 32):

Both male and female employees are entitled to five working days of paid parental leave to care for their child. This leave must be taken within the first six months of the child's birth.

The 2025 Mandate: Health Insurance for All UAE Employees

One of the most significant recent changes to mandatory employee benefits is the extension of compulsory health insurance to every Emirate, a critical development for 2025.

Mandatory Health Insurance (Effective January 1, 2025)

Health insurance has long been mandatory in Dubai and Abu Dhabi. A Cabinet decision has extended this requirement to all Emirates for private sector employees and domestic workers, effective from January 1, 2025.

• Employer obligation: Employers are now required to purchase the new health insurance policy as a prerequisite for issuing or renewing their employees' residency permits.
• Groups covered: The mandate specifically targets private sector employees and domestic workers in Sharjah, Ajman, Fujairah, Ras Al Khaimah and Umm Al Quwain, bringing the legal requirement into line across the entire UAE.
• Compliance: Failing to provide the mandated health insurance can result in penalties and the inability to process visa renewals, which makes compliance a top priority for all employers in 2025.

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Other Mandatory Non-Salary Benefits

Beyond the main financial and leave entitlements, the UAE Labour Law requires several other non-salary benefits that support the employee's overall welfare and legal protection.

5. Official Holidays

Employees are entitled to fully paid leave on officially declared public holidays, which the UAE Cabinet announces each year. These holidays are in addition to the employee's annual leave entitlement.

6. Overtime Compensation

The law strictly regulates working hours and requires compensation for any work performed beyond the standard hours.

• Standard hours: The maximum ordinary working hours are 8 hours per day or 48 hours per week.
• Overtime rate: An employee required to work overtime is entitled to their ordinary hourly wage plus a minimum of 25% of that wage.
• Night work: If the overtime is performed between 10:00 PM and 4:00 AM, the compensation rises to the ordinary hourly wage plus a minimum of 50%.

7. Employment Visa and Work Permit Costs

The cost of securing an employee's legal right to work in the UAE rests entirely with the employer.

• Employer responsibility: The employer is responsible for all costs of the employee's recruitment, employment and residency, including the issuance and renewal of the employment visa and work permit.
• No transfer of costs: It is illegal for an employer to require an employee to pay any of these costs, whether directly or indirectly by deducting them from the employee's salary.

Compliance and Legal Counsel

The UAE Labour Law is complex and continues to change, with new requirements such as the nationwide health insurance scheme. Compliance therefore calls for a proactive, informed approach. Misreading the law, especially on the calculation of End-of-Service Gratuity or the proper provision of leave, can lead to costly disputes and legal action.

Businesses operating in the UAE should make sure their employment contracts are robust, comply with the latest 2025 regulations and clearly define all mandatory and discretionary benefits. Experienced legal counsel can provide valuable support with these requirements.

Nour Attorneys provides legal services to both employers and employees in the UAE, with a focus on full compliance with Federal Decree-Law No. 33 of 2021. Whether you need support with Drafting & Reviewing Contracts & Agreements to protect your business interests or expert advice on complex labour disputes, professional legal support is the most prudent step. Understanding the mandatory benefits beyond salary is not just good HR practice. It is a fundamental legal obligation that defines the integrity of the employment relationship in the UAE.

Related Services: Explore our salary and employment dispute lawyers and offshore company formation services for practical legal support in this area.

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Readers should seek professional legal advice tailored to their specific circumstances before making any decisions or taking any action based on the content of this article.

Nour Attorneys Team

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