One of the reasons why employers and employees are keen on working in the UAE is its legal and regulatory system. Regarded as one of the safest and secured places to work globally, the UAE boasts diverse businesses and a cosmopolitan workforce.
While the Ministry of Human Resources and Emiratisation (MOHRE) keeps a strict check on all policies, the UAE also makes use of real-time tracking and data and audit checks to ensure everyone gets their due in time. Consequently, even minor oversight or inaccuracy can result in:
- Fines and legal penalties
- Suspension of work permits
- Delays in visa processing
- Reputational damage with regulators and employees
So, how can you stay compliant? By understanding the different aspects of payroll, regulation, and recent changes made to them. Our 2026 edition of the UAE payroll compliance guide covers everything you need to know. So read till the end.
What’s Coming Up Next…
- Who regulates payroll compliance in the UAE
- The Wage Protection System: Recent changes
- WPS compliance rules for employers
- Key payroll requirements as per the UAE Labour Law
- End-of-service benefits [ESOBs] and saving schemes
- Social security for UAE and GCC nationals
- Health insurance
- Emiratisation and payroll compliance
At a Glance
| Area | What Employers Must Do | Risk if Missed |
| Wage Payments | Pay salaries monthly via WPS within 15 days | Fines and work permit bans |
| Contracts | MOHRE-registered
fixed-term contracts |
Legal disputes, penalties |
| WPS | Real-time salary reporting & verification | Up to AED 5,000 per violation |
| EOSB/DEWS | Accurate gratuity or savings contributions | Underfunding liabilities |
| Emiratisation | Meet national hiring quotas | AED 6,000–9,000 monthly per shortfall (progressive, up to AED 108,000 annually) |
Who Regulates Payroll Compliance in the UAE?
Different authorities take care of different aspects of payroll in the UAE. Below is a quick overview of the same:
Ministry of Human Resources and Emiratisation (MOHRE)
MOHRE is the leading authority that looks after private-sector jobs in the UAE. It oversees important aspects such as contracts, wages, working hours, gratuity benefits, and the mandatory use of the Wage Protection System.
Think of it like an intermediary between the employer and the employee. It assures that the labor practices are fair and align with the country’s laws. Additionally, the MOHRE is responsible for the Emiratisation program. It works hand in hand with companies for integrating UAE nationals in the private sector. Another area that MOHRE looks into is dispute resolution. It mediates and arbitrates disputes between employers and employees for fair settlements.
Federal Tax Authority (FTA)
The FTA regulates two aspects of payroll-related processing:
- 5% VAT on employee benefits. For example, housing and transportation.
- Corporate tax (linked to payroll costs)
General Pension and Social Security Authority (GPSSA)
GPSSA manages pensions for UAE and GCC nationals, helping them build a strong retirement fund. You’ll have to register eligible employees with GPSSA and make monthly contributions.
As of 2025, the total contribution rate is 20% for private sector employees. It is determined by the employee’s salary and is calculated on the pensionable wage. Below is a breakdown of the contribution:
| Entity | Percentage [out of 20] |
| Employer | 12.5 |
| Employee | 5 |
| Government | 2.5 |
If the employee has joined after October 2023, the updated percentages are as follows:
| Entity | Percentage |
| Employer | 15 |
| Employee | 11 |
| Government | 2.5 (if salary is less than AED 20,000) |
The Wage Protection System
Introduced in 2009, the Wage Protection System is mandatory for all private companies. Under the WPS, employers have to pay salaries through approved banks or exchange houses. MOHRE monitors these payments electronically to ensure employees are paid fully and on time.
What Changed with the Enhanced WPS?
The WPS covers more than 99% of employees working in the private sector with wages exceeding AED 35 billion monthly. The MOHRE has developed a new fully digital system along with the Central Bank of the UAE, Al Etihad Payments, and a group of financial institutions. It is a result of the partnership between the Ministry and e& Group, Lulu Exchange, GCC Exchange, and others to secure rights and ensure transparency.
Key improvements include:
- Accelerated registration and verification process
- Ability to retrieve data directly from MOHRE
- Real-time salary verification
- Automated wage data processing
- High-accuracy monitoring of delays or violations
As a result, payroll errors are detected faster. Also, compliance expectations are higher.
WPS Compliance Requirements for Employers
If you’re an employer, you need to be mindful of the following compliances:
- Registration with MOHRE or the relevant free zone authority
- A corporate bank account supported in the WPS
- Preparation and submission of Salary Information File (SIF)
- Electronic payment of salaries within 15 days of the due date. You must avoid cash or cheque payments.
- Immediately resolve all rejected or delayed transactions.
Other compliances:
- Register all new employees in WPS within 60 days of contract signing
- You cannot deduct more than 10% of your employee’s salary. It is only allowed if it is specified by law.
Penalties for WPS Non-Compliance
In case you fail to comply with the WPS, you may be fined or penalized with the following:
- WPS blocking and suspension: If you miss payment deadlines, your new work permits can be blocked after 17 days past the due date. Moreover, all companies under the same ownership can face the consequences.
- Fines: You’ll have to pay AED 1,000 for each employee for false wage data. Other penalties apply for manipulating working hours.
- Labour ban: If you’re a serious offender, you may be banned from onboarding staff and face legal action.
Key Payroll Requirements Under UAE Labour Law
Here are some important payroll requirements under the UAE labour law:
Employment Contracts
All employees must be issued renewable, fixed-term contracts for a maximum of 3 years. These must be registered with MOHRE within 14 days of joining. Contracts must clearly state the following aspects of employment:
- Basic salary
- Allowances
- Payment frequency
- Deductions
- Payment method
- Net pay
Payroll records, including contracts and proof of payment, must be kept for at least five years. Note that if the salary is not paid within 15 days after the due date, the employer is considered late.
Salary Deductions
Deductions are allowed only in limited cases, such as:
- Unpaid absences
- Approved salary advances
- Legal penalties under labour law
Working Hours, Overtime, and Pay
Standard working hours are 8 hours per day or 48 hours per week. But during Ramadan, Muslim employees work 6 hours per day or 36 hours per week. If your employee is working overtime beyond the legally allowed limits, you must pay them as per the labour law.
There is no fixed minimum salary in the UAE. But still, the salary should be enough for basic living needs. And it should be the same as mentioned in the job contract.
End-of-Service Benefits (EOSB) and Savings Schemes
Gratuity (Mainland & Non-DIFC/ADGM)
Employers must accrue gratuity as follows:
- 21 days’ basic salary per year for the first 5 years
- 30 days’ basic salary per year after that
- Maximum cap of 2 years’ total wage
DIFC – DEWS Scheme
For DIFC employees, employers must contribute:
- 5.83% of basic salary (service under 5 years)
- 8.33% (service over 5 years)
ADGM
ADGM employers must meet gratuity obligations. They must also prepare for the qualifying savings scheme starting from April 2025. Regular reconciliation helps avoid underfunding issues.
Mandatory Health Insurance
Health insurance is employer-funded and mandatory. Valid coverage is required for visa issuance and renewal. It is best to stay on top of insurance regulations as they update across the Emirates.
Emiratisation and Payroll Compliance
If a company has 50 or more employees, it has to follow Emiratisation rules. This means the company needs to hire Emirati people for skilled jobs. If not:
- Employers face AED 9,000 per month per missing role
- Penalties increase each year
Payroll systems must track nationality, job roles, and salaries accurately to support reporting.
Staying Compliant With the UAE Laws
The UAE is constantly updating its laws to benefit all stakeholders equally. In fact, its policies, rules, and regulations make it one of the most structured and safe places to work. However, a small misstep, ignorance, or non-compliance with the laws can result in hefty penalties.
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Frequently Asked Questions
How does payroll work in the UAE?
Payroll runs through WPS. Employers collect data, calculate salaries, apply deductions, submit the SIF, and issue payslips. All steps must follow the labour law.
How do you ensure payroll compliance?
Follow MOHRE rules and pay through WPS. It is best to keep accurate records and run regular checks to prevent fines, licence issues, and legal action.
What is the HR policy in the UAE?
HR policies must follow Federal Decree-Law No. 33 of 2021. They should talk about working hours, leaves, how termination works, safety at work and discipline. Overall, the rules should be fair and clear. They should also allow some flexibility where possible.
What are the basic salary rules?
Although there is no minimum wage, the pay should be enough for basic needs. It should also match what is written in the contract. Most importantly, it has to be paid on time.
