An employer of record in the United Arab Emirates employs your hire through a locally licensed entity, sponsors the work permit and visa, and administers employment under Federal Decree-Law No. 33 of 2021, the law that rewrote UAE labour relations for the private sector. The UAE is an unusual EOR market: there is no personal income tax to withhold, expatriate employees, who make up most of the workforce, pay no social security, and the significant employer costs are the end-of-service benefit, mandatory insurances and the visa stack. That shifts what you are buying from tax administration toward immigration, contract compliance and end-of-service liability management.
The legal frame: Decree-Law 33 of 2021
The 2021 law standardised private-sector employment around fixed-term contracts and set guardrails an EOR's contract template must respect. Probation is capped at six months, and notice obligations during probation are asymmetric: an employer must give 14 days' notice, while an employee moving to another employer inside the UAE gives 30 days, or 14 days if leaving the country. After probation, termination notice must be not less than 30 days and not more than 90 days, whichever way the termination runs, and a party that skips notice owes compensation in lieu equal to the employee's wage for the period. During notice an employer must also allow one unpaid working day a week for job seeking. These are floors and ceilings in the statute, so a contract that promises otherwise loses.
What employment costs when there is no income tax
For expatriate employees there is no wage tax and no social security: PwC's summary is blunt that non-GCC nationals are not subject to social security in the UAE. The employer cost stack is instead built from specific items. UAE and GCC nationals do attract pension contributions, a combined 20% of remuneration split 12.5% employer, 5% employee and 2.5% government, with higher employer and government shares in Abu Dhabi. A federal unemployment insurance scheme, mandatory since January 2023, costs the employee AED 5 a month at salaries up to AED 16,000 and AED 10 above that. In the DIFC free zone, the DEWS workplace savings scheme replaces gratuity with monthly employer contributions of 5.83% or 8.33% of basic salary depending on service length. An EOR quote should show which regime applies to your hire and price each line.
End of service, and why the EOR's balance sheet matters
Outside schemes like DEWS, a departing employee with at least a year of service is owed an end-of-service gratuity, calculated on basic wage and scaled to length of service under the labour law. Because the EOR is the legal employer, that liability accrues on the EOR's books throughout the employment, and the buyer should ask how it is funded: accrued and invoiced monthly, or left to be found at termination. An EOR that invoices gratuity accrual as it builds is pricing honestly; one that omits it is deferring a real cost into the exit, when your leverage is lowest. The same logic applies to visa costs, mandatory health insurance and flight entitlements where they apply; every deferred line is a dispute waiting for the offboarding.
Choosing an EOR for the UAE
Mainland and free-zone employment differ in regulator, permits and sometimes end-of-service treatment, so the first question for any provider is where its entity sits and whether that matches where your hire will actually work; DIFC and mainland Dubai are different regimes a few hundred metres apart. Ask to see the contract template against the 2021 law's probation and notice rules, the full visa and insurance cost schedule, and the gratuity or DEWS handling in the invoice. The UAE also runs Emiratisation quotas for larger private employers, which an EOR should be able to explain for your situation. Employment documents and the law control; nothing on this page is legal advice.
Questions people ask about employer of record united arab emirates
Do employees hired through a UAE EOR pay income tax?
The UAE levies no personal income tax on employment income, and non-GCC nationals pay no UAE social security either. The employer-side costs are the end-of-service benefit, insurances, visa costs, and pension contributions where the hire is a UAE or GCC national.
What notice period applies in the UAE?
After probation, not less than 30 and not more than 90 days, as set in the contract, for either party. During probation the employer gives 14 days while an employee gives 30 days to move employers within the UAE, or 14 days when leaving the country.
How long can probation last?
Up to six months under Federal Decree-Law 33 of 2021. It cannot be extended beyond that or restarted with the same employer, though the parties can agree a shorter period.
What is DEWS and does it apply to my hire?
DEWS is the DIFC's workplace savings scheme, which replaces the traditional gratuity for DIFC employees with monthly employer contributions of 5.83% or 8.33% of basic salary. It applies only to employment in the DIFC; mainland hires remain under the gratuity system.