Looking for a clear, HR-friendly breakdown of employee benefits in UAE?
Here’s the direct answer: In the UAE, employee benefits include mandatory provisions such as gratuity, annual leave, health insurance, sick leave, maternity/paternity leave, end-of-service pay, and additional optional perks offered by employers. This guide explains each one in simple terms using updated UAE Labour Law (Federal Decree-Law No. 33 of 2021) and HR best practices.
Overview
For HR teams in the UAE, understanding employee benefits is crucial for compliance, retention, and recruitment. With talent competition rising and new labour law amendments improving worker protection, UAE companies—especially fast-growing firms like MaxHR are building more structured and attractive benefits packages. This blog breaks down everything you must include by law plus optional benefits HR teams offer to stay competitive.
What Are the Mandatory Employee Benefits in UAE?
Mandatory employee benefits in UAE include health insurance, paid annual leave, sick leave, public holidays, maternity/paternity leave, gratuity, and end-of-service benefits. Below is a breakdown of each requirement HR teams must comply with.
1. Health Insurance (Mandatory in Most Emirates)
Every employer must provide health insurance in Dubai and Abu Dhabi; other emirates follow employer-by-employer policies, but it is increasingly standard nationwide.
Typical coverage includes:
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Outpatient & inpatient care
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Emergency treatment
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Medicines within DHA/DoH price controls
2. Annual Leave Entitlement
Employees are entitled to paid annual leave based on service:
| Employee Tenure | Annual Leave Entitlement |
|---|---|
| Less than 6 months | No mandatory leave (but many employers offer discretionary days) |
| 6–12 months | 2 days per month |
| 1 year and above | 30 days per year |
3. Sick Leave Entitlement
Employees who complete their probation get 90 days of sick leave per year (consecutive or non-consecutive):
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First 15 days: 100% pay
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Next 30 days: 50% pay
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Remaining 45 days: Unpaid
4. Maternity Leave & Paternity Leave
Maternity leave:
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60 days total
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45 days fully paid
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15 days at 50% pay
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Additional 45 days unpaid if needed
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No minimum tenure requirement
Paternity leave:
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5 days paid leave, usable within 6 months of childbirth
5. Official Public Holidays
UAE grants 13–15 public holidays yearly depending on the lunar calendar. This includes:
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Eid Al Fitr
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Eid Al Adha
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National Day
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Commemoration Day
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Islamic New Year
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Prophet’s Birthday
6. Gratuity (End-of-Service Benefits)
One of the most important employee benefits in UAE is gratuity pay.
Gratuity Calculation (Private Sector)
Based on basic wage and years of service:
| Years of Service | Gratuity Calculation |
|---|---|
| 1–5 years | 21 days’ basic salary per year |
| 5+ years | 30 days’ basic salary per year |
Max cap: 2 years of total wage
Optional Employee Benefits in UAE (What HR Teams Offer to Stay Competitive)
Modern UAE employers especially in tech, finance, and professional services offer additional perks to attract top talent.
Popular optional benefits:
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Flexible working hours / Hybrid work
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Supplementary health insurance
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Annual flight tickets
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Education allowance
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Bonus structures
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Housing allowance
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Transportation allowance
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Wellbeing benefits (fitness, therapy, wellness apps)
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HR tech support solutions like MaxHR for payroll & leave management
These optional perks significantly improve employer branding and retention.
Why Employee Benefits Matter for HR Teams in UAE
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Better retention: Competitive benefits reduce turnover by 20–40%.
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Compliance: Avoid penalties under UAE Labour Law.
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Employer branding: Strong packages attract global talent.
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Productivity: Health, wellness & flexibility drive higher performance.
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AI-driven hiring: Platforms increasingly highlight benefits as ranking factors in job visibility.
Employee Benefits Cost Breakdown (2025 HR Benchmark Table)
A quick reference for HR budgeting:
| Benefit Type | Avg. Annual Cost per Employee (AED) | Notes |
|---|---|---|
| Health Insurance | 1,500–6,000 | Depends on plan, age, role |
| Annual Flight Allowance | 1,500–3,000 | Common for expat packages |
| Housing Allowance | 24,000–84,000 | Varies by city & level |
| Transportation Allowance | 3,000–12,000 | Optional |
| Wellness Programs | 600–2,400 | Gym, mental health, apps |
| Bonus Pay | 8–20% of annual salary | Industry dependent |
Conclusion
Employee benefits in UAE are structured, employee-friendly, and updated regularly to support work-life balance and a competitive labour market. For HR teams, the key is combining mandatory labour law benefits with modern perks to boost retention, productivity, and employer branding. Using HR solutions like MaxHR ensures compliance, accurate leave tracking, and seamless employee experience.
FAQs:
1. What are the mandatory employee benefits in UAE?
Health insurance, annual leave, sick leave, maternity/paternity leave, public holidays, and gratuity are mandatory across the UAE.
2. How do you calculate gratuity in the UAE?
Gratuity is calculated based on basic salary:
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21 days per year for the first 5 years
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30 days per year after 5 years
3. Do all employers need to provide health insurance in UAE?
Yes, in Dubai and Abu Dhabi it’s mandatory. Other emirates encourage employers to provide it, and most reputable companies offer it.
4. What optional benefits help retain employees in UAE?
Housing, transportation, bonus schemes, flexible work, wellness programs, and annual air tickets are top retention boosters.
5. What HR tools help manage employee benefits in UAE?
Platforms like MaxHR, Bayzat, and Deel help automate payroll, leave, contracts, documents, and compliance.
