New: Dubai Design District opens 1 October 2026 — pre-book your office, limited places Pre-book →
Home › Business Consultancy › HR & Payroll

HR, payroll & labour compliance

Hiring in Dubai: payroll, contracts and the penalty timeline

Your first employee turns your business into an employer. Here is what that puts on you, and from which day it starts costing.

Talk to someoneThe whole section

Two colleagues working together at Oh My Desk

In short

Salaries must go through the Wage Protection System, due on the 1st of each month. From the 5th day late, no new work permits are issued; on the 16th, a labour dispute opens automatically. Contracts are fixed-term with a probation period of 6 months maximum. Health insurance and unemployment insurance are mandatory.

01WPS and its penalty timeline

The previous month's salary is due on the first day of the following Gregorian month, and the employer is late from the second day. The compliance threshold is set at 85% of the payroll transferred on time.

What makes WPS dangerous is not the fine, it is the automatic chain of consequences.

  1. 1Day 2Electronic alerts and notifications
  2. 2Day 5New work permits are no longer issued
  3. 3Day 11Administrative fines, downgrade to category 3 if repeated within 6 months
  4. 4Day 16A labour dispute opens automatically, permits suspended
  5. 5Day 21Enforcement orders, travel ban on directors, referral to the Public Prosecution if repeated

02Contracts: one single form, and a common trap

Since Federal Decree-Law No. 33 of 2021, only fixed-term contracts exist in the private sector. They renew for the same length or shorter. Probation cannot exceed six months and counts towards length of service.

The trap: many templates circulating online still mention a three-year cap on a fixed-term contract. That cap has disappeared from the current official text. A contract drafted on an outdated template is not necessarily invalid, but it creates ambiguity when the relationship ends.

Notice periods during probation are specific: fourteen days if the employer terminates, at least one month if the employee leaves for another employer, fourteen days if they leave the UAE.

03Mandatory insurance and Emiratisation

Health insurance is mandatory in Dubai and paid for by the employer. Since 1 January 2025 it is also mandatory in the other emirates, as a condition for issuing or renewing a residence permit. The federal package launched by MOHRE is priced at 320 AED per year.

Unemployment insurance is mandatory for every private sector employee: no more than 5 AED per month below a salary of 16,000 AED, no more than 10 AED above. Not subscribing costs 400 AED.

Emiratisation, finally, only concerns companies with at least twenty employees, and not free zone companies. If you are in a free zone or below twenty employees, this subject does not concern you — whatever some providers may imply.

Frequently asked questions

Is WPS mandatory for every company?
Private sector employers must pay salaries through the Wage Protection System, with at least 85% of the payroll transferred on time. The salary is due on the first day of the month and the employer is late from the second.
What happens if I pay my employees late?
The consequences follow automatically: alerts on day two, new work permits suspended on day five, fines on day eleven, a labour dispute opened on day sixteen, then enforcement orders and a travel ban on directors on day twenty-one.
Can you still sign an open-ended contract in the UAE?
No. Since Federal Decree-Law No. 33 of 2021, only fixed-term contracts exist in the private sector. They can be renewed for the same length or shorter, with no maximum duration in the current text.
Does Emiratisation apply to my company?
Only if it has at least twenty employees, and it does not apply to free zone companies. Below that threshold, no quota concerns you.
Is health insurance paid for by the employer?
Yes in Dubai, where it is mandatory and falls on the employer. Since January 2025 it is also mandatory in the other emirates, as a condition for issuing or renewing a residence permit.
How long can a probation period last?
Six months maximum, and it counts towards length of service. Notice during probation is fourteen days if the employer terminates, at least one month if the employee leaves for another employer, and fourteen days if they leave the UAE.
Is there still a three-year cap on a fixed-term contract?
No. That cap has disappeared from the current official text, but many templates circulating online still mention it. A contract drafted on an outdated template is not necessarily invalid — it creates ambiguity when the relationship ends.
Is unemployment insurance mandatory?
Yes, for every private sector employee. No more than 5 AED per month below a salary of 16,000 AED, no more than 10 AED above. Not subscribing costs 400 AED.
What does the MOHRE health insurance package cost?
The federal package launched by MOHRE is priced at 320 AED per year. Health insurance is mandatory in Dubai and paid for by the employer; since 1 January 2025 it is also mandatory in the other emirates, as a condition for issuing or renewing a residence permit.
What share of the payroll has to go through WPS?
At least 85% of the payroll, transferred on time. The previous month's salary is due on the first day of the following Gregorian month, and the employer is late from the second day.

The rest of this section

BusinessCompany setupFinanceLegal advice
The Oh My Desk building in Dubai

Let's talk

Tell us where you stand. We'll tell you what we handle, what a partner handles, and what it involves — before you commit.

Contact us

Tell us where you stand

Three fields. The team replies within two working hours, with what applies to your case — and the price, before you commit.

Where are you?

Our sources

Every figure on this page comes from one of these sources. Rules change: check the date before you rely on it.

WhatsApp
  • EnglishEN
  • FrançaisFR
  • العربيةع
  • DeutschDE
  • РусскийRU
  • 中文中
  • ItalianoIT
  • فارسیفا