Quick Answer
The total employer cost of hiring one employee in UAE exceeds the basic salary by 15 to 20% in mandatory on-costs — work permit fees, health insurance, end-of-service gratuity accrual under Article 51, and annual leave payout risk under Article 29. For a role at AED 30,000 monthly basic, the total Year 1 employer cost is approximately AED 418,500.
Federal Decree-Law No. 33 of 2021 · Articles 29, 51 · MoHRE · DHA · DOH
Five Mandatory Cost Components
Component 1 — Work Permit and Visa Fees
| Fee Item | Approximate Cost | Authority | Frequency |
|---|---|---|---|
| MoHRE work permit | AED 1,000–2,000 (varies by skill category) | MoHRE | Per hire + renewal every 2–3 years |
| ICP entry permit and residency visa | AED 1,500–2,500 | ICP | Per hire + renewal |
| Emirates ID (2-year) | AED 370 | ICP | Per hire + renewal |
| Medical fitness test | AED 320–400 | DHA / DOH | Per hire + renewal |
| Total government fees (approx.) | AED 3,500–5,500 | Multiple | Year 1 + every 2–3 years |
Component 2 — Mandatory Health Insurance
| Emirate | Authority | Approximate Annual Premium |
|---|---|---|
| Dubai | DHA (Dubai Health Authority) | AED 1,500–3,500 per employee per year |
| Abu Dhabi | DOH (Department of Health — NOT HAAD, abolished 2017) | Higher minimum benefit level than Dubai |
| Northern Emirates | MOH (Ministry of Health) | Per MOH approved plan |
Component 3 — End-of-Service Gratuity Accrual (Article 51)
Article 51 of Federal Decree-Law No. 33 of 2021 requires 21 calendar days of basic salary per year for the first 5 years. Monthly provision formula:
Full Cost Model — Three Salary Levels
Salary Level 1 — AED 15,000 Monthly Basic, Year 1 (Dubai employer)
Salary Level 2 — AED 30,000 Monthly Basic, Year 1 (Dubai employer)
Salary Level 3 — AED 60,000 Monthly Basic, Year 1 (Dubai employer)
Quick Reference — On-Cost as % of Annual Basic
| Monthly Basic | Annual Basic | Total On-Costs Year 1 | On-Cost % |
|---|---|---|---|
| AED 15,000 | AED 180,000 | ≈ AED 32,500 | ≈ 18% |
| AED 30,000 | AED 360,000 | ≈ AED 58,500 | ≈ 16% |
| AED 60,000 | AED 720,000 | ≈ AED 113,500 | ≈ 16% |
Emiratisation — The Largest Avoidable Cost
The AED 108,000 penalty per unfilled Emirati position per year (2025) exceeds the first-year visa cost for a non-Emirati hire by a factor of 10 to 15. For a company with 100 employees that is 2 positions short of the Cabinet Resolution No. 18 of 2022 quota, the 2025 penalty is AED 216,000. From 2026 the penalty rises to AED 120,000 per position. NAFIS incentives of up to AED 8,000 per month per Emirati hired partially offset this cost.
Frequently Asked Questions
What is the total employer cost of hiring an employee in UAE beyond base salary?
Beyond base salary, UAE mainland employers must budget for work permit and visa fees (approximately AED 5,000 in Year 1), annual health insurance (AED 1,500–3,500), gratuity accrual at 21 calendar days per year of basic salary (Article 51), and annual leave payout risk of 30 days of basic salary (Article 29). Total on-costs add approximately 16 to 18% to annual basic salary.
How much does the annual gratuity accrual add for an employee on AED 30,000 basic?
AED 21,000 per year — AED 1,000 daily rate × 21 days under Article 51. Monthly provision: AED 1,750. Over 5 years, total gratuity liability = AED 105,000.
What is the Emiratisation penalty for UAE companies in 2025?
AED 108,000 per unfilled Emirati position per year in 2025, rising to AED 120,000 from 2026. Cabinet Resolution No. 18 of 2022 sets the quota. NAFIS offers up to AED 8,000 per month per Emirati hired to qualifying employers.