With the shift to remote working, companies across the globe are increasingly seeking top-tier, remote talent beyond the corporate HQ. If you’re looking to expand globally, the United Arab Emirates (UAE) makes a great choice, thanks to a talented pool of workers spanning information technology, financial services, engineering, and sales.
When it comes to hiring talent from the UAE, salaries aren’t the only monetary consideration to factor into your budget. It is important to consider the costs of setting up an employment package which can include things like taxes, social security contributions, overtime and vacation pay, stipends, and benefits.
Let’s analyze the costs of hiring an employee in the UAE. This includes mandatory and optional expenses, helping you expand your global reach without increasing hiring costs.
Costs to Consider When Hiring Around the World
The basic hiring costs in the UAE include:
- Employee’s gross salary
- Taxes and benefits
- Vacation pay and other leaves
- Overtime pay
- Severance pay
Plus, you may want to add certain optional costs like benefits, bonuses, and extras.
Mandatory Costs of Hiring in the United Arab Emirates
Mandatory hiring costs are non-negotiable expenses when hiring remote, UAE-based talent. Proper accounting of salaries, taxes, overtime pay, and vacation pay is essential. Otherwise, you may risk non-compliance with local labor laws and regulations.
Salary
The UAE is home to a diverse pool of trained workers in an economy that has embraced new technologies like AI and cryptocurrency and is a known hub for finance, trade, travel and tourism, and hospitality. For non-citizens, there is no set minimum wage.
For citizens, the minimum wage is determined based on their education level:
- No high school certificate: 3,000 AED ($816.79 USD)
- High school certificate: 4,000 AED ($1,089.06 USD)
- College degree or higher: 5,000 AED ($1,361.32 USD)
That said, salaries will vary greatly among industries and job types, so it is wise to offer a competitive salary to attract top-tier UAE talent to your company.
Taxes and Benefits
Employers in the UAE pay 12.5% in payroll taxes in addition to employees’ gross salary.
Paid Leave
There are several types of paid leave entitlements in the UAE.
- Public holidays: There are around 15 public holidays.
- Paid time off: Full-time employees are entitled to up to 30 days of annual leave.
- Sick leave: UAE-based employees can take up to 90 days after three months of employment.
- Parental leave: New mothers are entitled to 45 days of maternity leave.
Overtime Pay
There are two rates of overtime for specific time periods:
- 9pm-4am: Night overtime is paid at 125%
- Anytime following: 150%
Severance Pay
Severance is mandatory and varies depending on the length of service.
- 1-5 years: 21 days per year worked
- 5+ years: 21 days per year worked + 30 days per additional year worked
The maximum amount of severance paid out is two years' salary.
Supplemental Costs of Hiring in the United Arab Emirates
When the world is your competition, it pays to incentivize new and existing hires with attractive supplementary benefits like medical, dental, vision, life insurance, retirement savings plans, and other stipends and perks.
When you offer attractive supplementary benefits, you are boosting morale and increasing retention which in turn lowers onboarding costs and helps you establish a strong, remote team you can rely on.
Bonuses and Extras
According to global benefits company Asinta, the most common supplementary benefits offered by UAE employers include insurance for death, disability, and retirement plans.
Average Cost of Hiring
Below is an estimated cost of hiring one employee in the UAE based on a salary of $100,000. This salary is designed to make it easier to calculate average costs and doesn’t represent actual average salaries in the country. The actual salary will vary depending on your hiring goals.
Average Cost Of Hiring One Employee in the United Arab Emirates (Annual in USD)
Mandatory Costs
- Salary: $100,000
- Employer Taxes: $12,500
- Total: $112,500
Work with Borderless
Growing your remote, global team and hiring UAE talent can seem overwhelming, especially when you consider all the associated costs. Leave the headache to Borderless. An Employer of Record (EOR) like Borderless will handle all the administrative work, ensuring compliance and giving you cost savings, so you can focus on growing your business.
To get started, book a demo today.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
