What UAE employers pay on top of salary for gratuity and visas

The direct answer: what sits beyond salary

When you budget for a UAE employee, the monthly salary is only the visible part. Three items usually sit on top of it, and each one follows its own official rule. Gratuity is a lump sum owed when employment ends. Health insurance is a recurring premium that must be in place before a residence permit is issued or renewed. Work permit and visa fees are government charges that recur, usually every two years, and that the employer carries.

For gratuity, the core rule is Article 51 of Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relations. The law entered into force on 2 February 2022. Under it, a full-time private-sector employee who completes at least one year of continuous service is owed 21 days of basic pay for each of the first five years, and 30 days for each year after that. The total cannot exceed two years' wage. The Ministry of Human Resources and Emiratisation (MOHRE) has repeated these figures in public guidance, and it adds that the employer must settle the amount within 14 days of the contract ending.

Health insurance is a different kind of cost. Since 1 January 2025, private-sector employers across all seven emirates must insure their employees and domestic workers. The cover is tied to residence permits. A residence permit cannot be issued or renewed without it, so a lapse in cover can stop a renewal.

Visa and permit costs come from the work permit that MOHRE issues for each employee, plus other federal steps such as the entry permit, medical fitness test and Emirates ID. The MOHRE work permit fee depends on the company's classification as A, B or C. The official UAE government portal gives a range of AED 250 to AED 3,450 for issuing or renewing a work permit. Other guides quote much higher all-in totals, because they add service centre charges, medical tests and processing. Those extras vary, so the right approach is to use the official fee schedules from MOHRE and the Federal Authority for Identity, Citizenship, Customs and Port Security (ICP), not one number from a third-party site.

How the gratuity figure is worked out

The calculation has six steps. Each step uses the same basic pay figure, so it is worth fixing that figure before you start.

Start with the daily rate. Take the employee's last monthly basic salary and divide it by 30. The divisor is 30 under the rules as summarised by several legal commentators, and the basic salary is the base. Housing, transport and other allowances are left out of the 21-day and 30-day amounts. Basic salary is the base for those figures.

Next, count the continuous service. Count from the start date to the last working day. Days of unpaid absence are not counted as service, according to commentary on Article 51 by UAE law firms. If the employee has less than one full year, no gratuity is due under the standard calculation.

Then apply the 21-day rate to each of the first five full years. Multiply the daily rate by 21, then by the number of years, up to five years.

Apply the 30-day rate to each full year beyond five. Multiply the daily rate by 30, then by the number of those later years.

Add any part year in proportion. A part year is paid pro rata: days worked in that year divided by the days in that year, then multiplied by the rate that applies to that year. Part years count only once the employee has completed the first full year.

Last, check the cap. The total gratuity cannot exceed two years' wage. The official summaries describe the cap in terms of wage, and legal commentators do not agree on whether that means basic pay or total pay. Check this point with your lawyer or with MOHRE, because it decides the cap for employees with high allowances.

One worked example

Take an employee with a basic monthly salary of AED 6,000 and total monthly pay of AED 9,000, including allowances. The employee has completed seven full years of service when employment ends. The employer is paying out gratuity, not the employee resigning early.

The daily rate is AED 6,000 divided by 30, which gives AED 200. The first five years earn 21 days each, and the last two years earn 30 days each.

The gratuity is AED 33,000. Neither cap applies at this length of service, so the cap question does not change the answer here. It would matter only for very long service or very high allowances.

The employer's annual cost for gratuity is not the same as the lump sum. A practical approach is to accrue a provision each month. The monthly accrual for this employee is roughly the gratuity owed so far divided by the months worked, and the figure rises as service grows. The exact accrual method is a question for your accountant and auditor.

Health insurance in this example is a separate line. The employer pays the premium for the employee's basic policy, and the premium depends on the plan and insurer chosen under the federal scheme. Check the current plan options with an approved insurer. Visa costs add to this. If the company is classified as Category A, the two-year work permit fee is AED 250. If it is classified as Category C, the same permit fee is AED 3,450. That gap of AED 3,200 is one reason the company's classification matters to the budget.

Cases that change the answer

Resignation is the case most people ask about. Under the current federal law, an employee who resigns after at least one year of service receives the full gratuity rate, not a reduced one. Some older guides describe reduced payouts on resignation. Those describe the rules before the 2022 law, so do not use them for a current calculation.

Minimum service is the next threshold. An employee with less than one full year of continuous service does not qualify for the standard gratuity. Once the first full year is completed, part years are paid pro rata, so a person who leaves at 14 months is owed a proportionate amount, not nothing.

Contract type and employment status also matter. The summaries of Article 51 describe the entitlement for full-time private-sector employees. Part-time staff, staff covered by other schemes, and staff in free zones may be treated differently. Check the text of the law and your contract before assuming the same rule applies to every role.

Unpaid leave and unpaid absence reduce the service period. Days without pay are left out of the count, so a long unpaid leave can push the end date later than the start date plus the years worked.

The cap changes the answer only at the top end. Two years' wage is the ceiling. For a typical employee who stays a few years, the cap is far above the amount owed. For a long-serving employee with high allowances, the cap decides the figure, which is why the basic-versus-total question matters.

Health insurance has fewer exceptions, but the dependant question is open. The federal scheme extends to dependants with the same benefits and pricing, according to published summaries of the MOHRE scheme. Check with HR who pays the premium for family members added to a policy.

Visa costs change with the company classification, the worker's category and the type of permit. A company with a record of violations is placed in Category C and pays higher work permit fees, according to the official government portal. Keeping payroll and wage records compliant is part of keeping the classification low.

Common mistakes

The most common mistake is using total salary instead of basic salary. Allowances are left out of the 21-day and 30-day amounts, so a budget built on total pay overstates the gratuity. The reverse mistake is also common: a budget that ignores allowances may understate the cap.

The second mistake is dividing by 365 instead of 30. The usual method in the official summaries is a daily rate of basic pay divided by 30, then multiplied by the gratuity days. Using another divisor produces a different answer.

The third mistake is treating the gratuity as a cost that arises only at exit. For budgeting, the cost builds from the first day of service. Waiting until the end to find the number is how companies end up with a surprise liability.

The fourth mistake is quoting one visa fee for every employee. The work permit fee depends on the company classification and sometimes on the worker's category. A single figure from a blog cannot replace the official schedule.

The fifth mistake is letting cover or permits lapse. Health insurance must be in place when a residence permit is issued or renewed. A lapse can delay a renewal and create a compliance problem, so track renewal dates in advance.

What to check with HR or a lawyer

Before you set a budget or a provision, check the following with your HR team, your payroll provider or a UAE lawyer:

• Whether the employee's contract is full-time and private-sector, and whether any part-time or free zone rules apply.
• Which figure is used for the gratuity base and for the cap, basic pay or total pay, and how the company's payroll records show each.
• The MOHRE classification (A, B or C) of the company, and the current work permit fee for each permit due in the next two years.
• The insurance plan in use, who pays the premium for dependants, and the renewal date tied to the residence permit.
• The date the employment ends, the days of unpaid absence, and the 14-day deadline for paying the final entitlements.

If you ever plan to reduce pay, hours or roles, the country's notice, consultation and severance rules apply. Any such change should be agreed with the employee or checked with a lawyer before it takes effect.

This explains the rule in general terms; it is not legal or tax advice for your case.

Taking routine HR and payroll work off staff with AI workers

Most of the work described here is repeated arithmetic and tracking. Someone has to pull basic pay from payroll, count service days, calculate the daily rate, update the monthly gratuity provision, watch permit and insurance expiry dates, and chase the paperwork before each renewal. AiStaffo builds AI workers that take this routine work from HR and payroll staff. They can be connected to the payroll export and HR records, so the gratuity accrual, the renewal calendar and the insurance check run on a schedule without retyping data. A person still reviews the figures, signs off the provisions and handles any case where the rules are unclear. The free calculator on this page is a starting point for those same inputs.