UAE Payroll: Key Compliance Requirements

Payroll compliance in the UAE is anchored in timely wage payment and statutory end‑of‑service/pension obligations. The UAE does not levy personal income tax on individuals, so employers generally do not withhold income tax from salaries. Instead, payroll compliance for MoHRE‑registered private‑sector employers centres on the Wage Protection System (WPS), an electronic wage transfer framework that enables MoHRE to monitor whether wages are paid in full and on time. (Official sources: The Official Portal of the UAE Government (u.ae) and the Central Bank of the UAE (CBUAE).)

Payroll obligations in the UAE also vary depending on whether employees are UAE nationals (Emiratis) or expatriates, as each group is subject to distinct end-of-service and pension arrangements.

What Employers Must Manage

Wage Protection System (WPS) Compliance

All private sector employers registered with MoHRE must pay employee salaries through the WPS. Salaries must be processed via banks, exchange houses, or financial institutions authorised by the CBUAE, using a Salary Information File (SIF) submitted each pay cycle.

Key WPS rules include:

• Payment deadline: Under MoHRE’s WPS rules, an employer is considered late if wages are not paid within 15 days from the wage due date. If wages remain unpaid beyond 17 days from the due date, MoHRE may stop issuing new work permits for the establishment (subject to exceptions). Continued non‑payment can trigger inspection measures and administrative actions under the relevant MoHRE/Cabinet decisions. (Source: MoHRE Ministerial Resolution No. 598 of 2022).
• SIF accuracy: The Salary Information File (SIF) must match the agreed wage details and employee identifiers required under WPS file‑format rules. Rejected or inconsistent SIF submissions can delay salary processing and may create compliance exposure.
• New hires: Ministerial Resolution No. 598 of 2022 provides that employees who are newly employed are exempt from WPS compliance requirements for up to 30 days from the wage due date. Employers should ensure new hires are included in WPS wage files once their first wage becomes due.
• Employee exits/updates: Employers should keep MoHRE records and wage files aligned (e.g., when employees leave, change bank details, or move between work permits) to avoid mismatches in WPS reporting.

Free zones: WPS requirements apply to establishments registered with MoHRE. Some free zones follow MoHRE employment frameworks, while others (such as DIFC and ADGM) have separate employment systems and wage‑payment rules. Employers should confirm which regulator applies to their entity.

No Personal Income Tax Withholding

The UAE does not levy income tax on individuals. Employers are therefore generally not required to withhold or remit personal income tax from employee salaries. 

Note: The UAE Corporate Tax regime applies to businesses (not employee salary income). The standard corporate tax rate is 9% on taxable income above AED 375,000, subject to the rules and exemptions set out in the corporate tax legislation and guidance. 

End-of-Service Gratuity (Expatriate Employees)

Under Article (51) of Federal Decree‑Law No. (33) of 2021, a full‑time foreign worker who completes one year or more of continuous service is entitled to end‑of‑service benefits at the end of service. The benefit is calculated based on the worker’s basic wage, at: (a) 21 days’ wage for each year of the first five years; and (b) 30 days’ wage for each year beyond five years, with pro‑rating for parts of a year after completing one year of service. The total end‑of‑service benefit for a foreign worker must not exceed two years’ wage. 

Payment timing: The employer must pay the worker, within 14 days from the end date of the contract term, the wages and all other entitlements stipulated in the labour law (including end‑of‑service benefits where applicable). Unpaid days of absence are not included in the service‑term calculation for gratuity. 

Optional Alternative (Savings Scheme): Cabinet Resolution No. (96) of 2023 introduced a voluntary alternative end‑of‑service benefits scheme. For full‑time beneficiaries, the basic monthly subscription is 5.83% of the beneficiary’s monthly basic wage where the period of service does not exceed 5 years, and 8.33% where it exceeds 5 years. The basic subscription is paid by the employer and is not deducted from the employee’s wage. 

Pension Contributions for UAE National Employees

UAE national employees are not entitled to the standard expatriate gratuity. Instead, employers must register Emirati employees with the applicable national pension authority and make mandatory monthly contributions. The applicable authority depends on the Emirate:

• Dubai and other Emirates (excluding Abu Dhabi and private sector in Sharjah): General Pension and Social Security Authority (GPSSA)
• Abu Dhabi: Abu Dhabi Pension Fund (ADPF)
  GPSSA contribution rates (Federal Decree-Law No. 57 of 2023 – applicable to employees joining from 31 October 2023):

Contribution account salary (private sector) ranges between AED 3,000 and AED 70,000. Contributions must be paid to GPSSA by the 15th of each month. Employers must register insured Emirati employees with GPSSA within 30 days from the date of joining service; and notify GPSSA of insured persons whose services end within 15 days from the end date. If the employer violates these deadlines, it must pay an additional amount of AED 200 for each day of delay. 

Note: Emiratis employed before 31 October 2023 may remain subject to earlier pension rules depending on their registration status and applicable emirate/fund. Employers should confirm the applicable pension authority requirements for each Emirati employee.

Payroll Data Accuracy and Record-Keeping

Employers must ensure payroll data submitted via WPS is accurate and complete. MOHRE monitors payroll submissions in real time. Inaccurate or incomplete SIFs — such as misclassified salary components or missing employee records — can result in rejected filings, work permit restrictions, and reputational damage with the labour authority.

Why UAE Payroll Carries Compliance Risk

UAE payroll carries meaningful compliance risk because MoHRE monitors wage payments for MoHRE‑registered establishments through WPS. Delays or file inconsistencies can lead to immediate administrative actions (e.g., work permit issuance restrictions) rather than end‑of‑year reconciliation issues.

The dual-track system — gratuity for expatriates and pension contributions for UAE nationals — adds complexity, particularly for employers with mixed workforces. Employers must accurately track and account for end-of-service obligations on an ongoing basis, even though gratuity is only paid upon termination.

Separate from WPS, some employers may also have Emiratisation-related obligations and reporting requirements under MoHRE programmes, depending on their sector and headcount. These requirements sit alongside payroll compliance and should be tracked separately.

How Link Compliance Can Support

Link Compliance helps organisations navigate local regulatory requirements when operating in the UAE, with a focus on employment, payroll, and compliance obligations. Our team supports businesses in aligning internal processes with WPS requirements, managing end-of-service and pension obligations for both expatriate and national employees, and monitoring regulatory changes across the emirates. This enables organisations to operate with greater clarity and reduced compliance risk in the UAE market.

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Disclaimer:

This content is provided for general informational purposes only and does not constitute legal, tax, or professional advice. Regulatory requirements may change and their application may vary based on specific circumstances. Organisations should seek appropriate professional advice before taking action based on this information.

Key official references used in this article include: The Official Portal of the UAE Government (u.ae), MoHRE publications of Federal Decree‑Law No. (33) of 2021, UAE Legislation (uaelegislation.gov.ae) for Cabinet Resolution No. (96) of 2023 and Federal Decree‑Law No. (57) of 2023, the Central Bank of the UAE (centralbank.ae), and GPSSA (gpssa.gov.ae).

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Stay compliant and strengthen your UAE payroll compliance framework with Link Compliance.
Email: info@linkcompliance.com

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