Situated in the Middle East, UAE is one of the world’s richest countries that has witnessed steady economic progress for the past few decades. Dubai, one of the 7 emirates in UAE and an important business hub in the region, has been gaining popularity as the global commercial capital. We can say it has rightly gained this reputation so, with aggressive legal reforms to boost foreign investment, including implementing long-term visas and introducing free trade zones for the benefit of business operations also run by foreign owners. The announcement of new long term visa laws will be yet another reason why Dubai will garner the attention of international investment. Ongoing and ambitious reforms in Dubai have made it easy for entrepreneurs and growing businesses and service providers to set up a business.
As always, payroll is an important element when one discusses business or employment opportunities in a country. In Dubai, payroll compliance can be complex owing to some regulations that are discussed below. Here are brief pointers that can help you:
1. General Information
There is no minimum wage stipulated in the UAE Labour Law, however, it broadly mentions that salaries must cover the basic needs of the employees. Generally, the salary is processed every month. Most of them work between Sunday and Thursday. Occasionally, some of them work from Saturday to Thursday. Someone with a UAE Employment Permit can live and work in UAE for up to 2 years, provided they have a job offer in hand. The permit can be renewed afterwards. Newly recruited employees must register with the Ministry of Labour at the time of employment.
2. Tax
The tax year in Dubai is between January 1 and December 31 of the particular year. The UAE has autonomous emirate and local governments, and there are currently no personal income taxes applicable in Dubai. All statutory reporting is done electronically.
3. Social Security Contribution
The General Pension and Social Security Authority (GPSSA) is responsible for administering Social Security in Dubai. An employer is required to register all the UAE national/GCC national employees with the GPSSA within a month of their joining through Form 1. Contributions should be made by both the employer and employee as under:
- For the UAE nationals, the employer’s contribution is 12.5% and the employee’s contribution is 5% towards the Pension Scheme
- For other Gulf Cooperation Council (GCC) nationals, the contribution is as per the social security law of the employee’s home country
- For the non-GCC nationals, no contribution is made to the Pension Scheme. Instead, gratuity is paid to them at the end of their employment, if they serve for one or more years of continuous service
Gratuity is also paid to other employees who are otherwise not covered by the National Pension Scheme. Gratuity payment varies depending upon the type of employment, namely; regular, unlimited term contract, and limited term contract.
4. Leave entitlement and payouts
Statutory leaves are governed by the UAE Labour Laws issued under Federal Law No. 8 of 1980. They include paid annual leave, sick leave, and maternity leave.
- Paid Annual Leave:
A worker is entitled to an annual leave of not less than:
- 2 days a month, where the worker’s period of service is more than six months but less than one year, or;
- 30 days a year, where the worker’s period of service is more than one year
When a worker's service is terminated, he is entitled to annual leave in respect of fractions of the last year.
When the employer requires the services of a worker on annual leave, and if such an annual leave is not carried forward, then the employer will pay such worker the normal wage and allowance in lieu of leave for actual days worked as under:
- If a worker is required to work on a holiday and is granted a substitute holiday, then s/he will be paid a wage that is 1.5 times his/her ordinary wage
- If a worker is required to work on a holiday and is not granted a substitute holiday, then the employer will pay an additional sum to the basic salary amounting to 150% with regards to the days of work
Choosing the Best Payroll Service Provider for Your Business in Dubai
For an intricate payroll environment such as Dubai, it becomes a critical need for a business to partner with a service provider that can provide them with accurate, compliant, and timely payroll solutions. In such an environment, it becomes quite pertinent for organizations to work on specialized payroll services, so they can cater to these nuances efficiently. A comprehensive payroll solution doesn't only ensure the computation of statutory leaves, overtime, and gratuity but also deals with compliance with the dynamic labour laws in Dubai.
Ramco's payroll solution has been designed to work according to the complexities involved in the payroll landscape in Dubai. It helps businesses avoid issues related to tax law, social security contributions, and leave entitlements. Their platform is designed such that it would provide errorless payroll processing, integrating automation and AI and machine learning, enabling no errors and delivery timely. Businesses can be sure through Ramco's payroll service to have smooth-running payrolls, in full accordance with local compliance, combined with valuable insights to enhance further the operational efficiency of one's business. This ability to scale and meet global payroll challenges makes Ramco the perfect partner for those businesses looking to expand in Dubai and across the Middle East.
Payroll in Dubai must be diligently processed with caution. One must factor in the nationality of the employees, and unlike other countries, there are 3 categories (UAE national, GCC national and expatriates) to be considered here. Statutory leaves and overtime calculations are yet other important factors influencing the calculation of salary slips. You can wisely choose a payroll partner that can manage this and always ensure on-time delivery of payroll.
Ramco's Global Payroll Services covering 45+ countries on a single platform using powerful automation, equipped with AI and Machine learning capabilities resolves such challenges. Backed by automation, Ramco's payroll solutions help facilitate effortless payroll processing for organizations that are keen on ensuring complete compliance with the relevant regulations.
