UAE Employee Cost Calculator

Calculate the total monthly cost of hiring an employee in the UAE

Last updated: May 2026

Complete Guide to Employee Costs in the UAE (2026)

Hiring an employee in the UAE costs significantly more than just their monthly salary. Between mandatory health insurance, visa processing fees, gratuity accrual, and WPS compliance, the true cost of employment can be 15-30% higher than the base salary alone. This guide breaks down every component so employers can budget accurately.

1. How Total Employee Cost Is Calculated

The total monthly cost to employ someone in the UAE consists of four main components:

  • Base Salary + Allowances: The contractual monthly pay including housing, transport, and other allowances.
  • Visa & Emirates ID Costs: Approximately AED 7,000 every 2 years (AED ~292/month amortized), covering medical fitness, Emirates ID, entry permit, and status change fees.
  • Mandatory Health Insurance: AED 650-3,000+ per year depending on the plan and emirate. Dubai and Abu Dhabi mandate employer-provided coverage.
  • Gratuity Accrual: Monthly provision for end-of-service benefits: (Basic Salary ÷ 30 × 21) ÷ 12 for the first five years.

2. Worked Examples: AED Scenarios

Example 1: Mid-Level Employee (AED 8,000 Salary)

  • Basic Salary: AED 8,000/month
  • Allowances: AED 2,500 (housing + transport)
  • Visa Amortization: AED 7,000 ÷ 24 months = AED 292/month
  • Health Insurance: AED 1,200/year ÷ 12 = AED 100/month
  • Gratuity Accrual: (8,000 ÷ 30 × 21) ÷ 12 = AED 467/month
  • Total: 8,000 + 2,500 + 292 + 100 + 467 = AED 11,359/month

True Cost: AED 11,359 — that's 8.2% above the salary + allowances.

Example 2: Domestic Worker (AED 2,500 Salary)

  • Basic Salary: AED 2,500/month
  • Visa Amortization: AED 5,000 ÷ 24 = AED 208/month
  • Health Insurance: AED 650/year ÷ 12 = AED 54/month
  • Gratuity Accrual: (2,500 ÷ 30 × 21) ÷ 12 = AED 146/month
  • Total: 2,500 + 208 + 54 + 146 = AED 2,908/month

True Cost: AED 2,908 — 16.3% above the base salary.

3. Gratuity: Resignation vs. Termination

End-of-service gratuity is one of the largest hidden costs. The payout varies based on how the employment ends:

YearsResignationTerminationFormula
< 1 yearNo gratuityNo gratuityN/A
1–3 years1/3 of 21 days/yrFull 21 days/yrBasic ÷ 30
3–5 years2/3 of 21 days/yrFull 21 days/yrBasic ÷ 30
5+ yearsFull 30 days/yrFull 30 days/yrBasic ÷ 30

WPS Compliance Is Mandatory

All UAE employers must pay salaries through the Wage Protection System (WPS) — a MOHRE-monitored electronic system. Failure to pay through WPS within 15 days of the due date triggers automatic alerts and can result in fines, license suspension, or work permit bans. Calculate exact gratuity obligations using our Gratuity Calculator.

4. Employer Obligations (2026)

  • Health Insurance: Mandatory in Dubai and Abu Dhabi for all employees and dependents. Other emirates are implementing phased mandates.
  • Worker's Compensation Insurance: Required for certain sectors; protects against workplace injuries.
  • Annual Leave: 30 calendar days per year after 1 year of service. Employers must budget for paid leave accrual.
  • Flight Ticket Home: Employer must provide a return flight ticket to the employee's home country upon contract completion.

Official References

Disclaimer: This calculator provides estimates based on average 2026 visa, insurance, and gratuity figures. Actual costs may vary depending on the emirate, industry, and specific insurance plan. Consult with a qualified HR professional for precise calculations.

Frequently Asked Questions

Under UAE labour law, the employer is responsible for all costs related to recruitment and visa processing of the employee. Deducting these costs from the employee's salary is illegal and can result in fines from MOHRE.
Yes, as of 2025, all domestic workers (maids, drivers, etc.) must have a mandatory health insurance plan provided by their sponsor. The minimum coverage plan costs approximately AED 650 per year.
Divide your employee's basic monthly salary by 30 to get the daily rate. Multiply by 21 (days per year for the first 5 years) and then divide by 12 to get the monthly accrual amount. For employees with 5+ years, use 30 days instead of 21.
WPS is a MOHRE electronic salary transfer system that ensures workers receive their wages on time. All private sector employers must register and pay salaries through approved WPS agents (banks or exchange houses).
Yes. Under UAE Labour Law Article 13, the employer must bear the cost of repatriating the employee to their home country upon contract termination, unless the employee was dismissed for gross misconduct.
For UAE and GCC nationals only. Employers must contribute to the General Pension and Social Security Authority (GPSSA) at a rate of 12.5% of the employee's salary, while the employee contributes 5%. Expat employees have no social security contributions.