United Arab EmiratesThe UAE is where US startups hire when they want senior talent in a hub timezone (UTC+4) that bridges Europe and Asia, with no personal income tax on salaries. The surprise is on the other side of the ledger: employment here comes bundled with immigration. Hiring most people in the UAE means someone has to sponsor a work permit and residence visa, and salary has to flow through a government-monitored payment system.
Here's how it actually works.
Quick facts
| United Arab Emirates | |
|---|---|
| Currency | UAE Dirham (AED) |
| Standard work week | 48 hours, 6 days |
| Payroll frequency | Monthly |
| Employer statutory cost | GPSSA pension 12.5-15%, Emirati employees only; expat hires accrue gratuity instead |
| Income tax | None on salaries |
| Minimum wage | None for expats; AED 6,000/month for Emiratis from January 2026 |
| Probation | Up to 6 months |
| Notice period | 30 days |
| 13th month pay | Not mandatory |
| Employees paid in | AED, required by law (through the Wage Protection System) |
First decision: contractor or employee?
The usual logic applies: independent professionals with their own clients and their own schedule can work as contractors, and plenty of UAE-based consultants operate exactly that way, often through their own free-zone license.
The UAE twist is that residence usually depends on sponsorship. A contractor living in the UAE needs their own valid residence status (their own company license, a freelance permit, or a golden visa). If your "contractor" has no independent basis to live and work in the UAE, contractor status doesn't solve that, and the arrangement is fragile. When someone is core to the team, working your hours under your management, you hire them properly through an employer of record (EOR) that sponsors the visa, or through your own UAE entity.
Paying contractors in the UAE
For contractors who do have their own setup, the mechanics are standard:
- Collect a W-8BEN before the first payment. It certifies the contractor is a non-US person, so you generally don't issue a 1099. Confirm your setup with your accountant.
- Sign a real contract. Scope, rate, IP assignment, termination terms, governing law.
- Pay in USD or AED, their choice. Contractors can invoice in either. Bank wires cost $25-45 each plus a spread hidden in the exchange rate.
Shor pays UAE contractors over local rails at a flat disclosed 2% FX margin, for $19/month per contractor. Contracts, W-8BEN collection, and invoicing are built in.
Hiring full-time employees
The UAE's statutory cost structure is unusual, and mostly favorable:
| Contribution | Rate (employer side) | Notes |
|---|---|---|
| GPSSA pension (Emirati nationals) | 12.5-15% | 12.5% for pre-Nov 2023 joiners, 15% for new joiners since |
| End-of-service gratuity (expats) | Accrual, not a % | 21 days' salary per year for first 5 years, 30 days/year after |
| Health insurance | Varies | Mandatory employer-funded coverage in Dubai; emirate-specific |
There is no social security contribution for expatriate employees, which is most of the workforce. Instead, expats earn an end-of-service gratuity: a lump sum paid at separation, calculated on basic salary and capped at two years' total salary. A good EOR accrues this monthly so the final bill never surprises you.
Two 2026 changes to have on your radar. First, the Emirati private-sector minimum wage rose to AED 6,000/month effective January 2026 (this applies to UAE nationals only; there is no statutory minimum for expats). Second, the Wage Protection System (WPS) tightened: the long-standing grace period for salary payments is being eliminated in 2026, with real-time monitoring of pay dates. Late salary now carries real penalties, so payroll discipline matters more than ever. Statutory rules change; confirm current requirements with your advisor.
Employees must be paid in AED through WPS-approved channels. That's law, not preference, and it's why UAE payroll can't be improvised from a US bank account.
Leave and benefits
- Annual leave: 30 days
- Sick leave: up to 90 days per year, with pay tiered by duration
- Maternity leave: 60 days (45 at full pay, 15 at half pay), employer-funded
- Paternity leave: 5 days, paid
- Public holidays: ~14 days
Beyond statute, competitive UAE offers commonly add a private health insurance upgrade, housing allowance, transport allowance, education allowance, and annual flight tickets home.
Ending employment
The UAE is not at-will, but termination is more straightforward than in most of Asia:
- 30 days' notice (or pay in lieu)
- End-of-service gratuity paid at separation: 21 days' basic salary per year of service for the first 5 years, 30 days per year after that, prorated for partial years, capped at 2 years' total salary
- Final settlement covering accrued salary, leave payout, gratuity, and visa and work permit cancellation
That last item is the part US founders miss: offboarding includes an immigration process, and skipping it creates compliance exposure for the employee and the sponsor. This is handled for you under EOR.
Documents we'll collect from your employee at onboarding
Passport (for visa processing), Emirates ID (issued during the visa process), and a UAE bank account compatible with WPS salary payments. Expect onboarding to take roughly 7-10 business days without visa processing and 10-20 business days when a new work permit and residence visa are needed.
What it costs through Shor
- Contractors: $19/month each
- Full-time employees (EOR): $299/month each, including MOHRE contract registration, visa sponsorship coordination, WPS payroll, and gratuity accrual
- Your own UAE entity: we run payroll on top of it for less than EOR, in the same dashboard
No setup fees, and the FX margin is a flat disclosed 2%. The pricing calculator shows the full UAE math.
Next steps, depending on where you are: the EOR pricing comparison puts published provider prices side by side, and EOR vs. your own entity has the breakeven math for when a local entity starts to win. To see the UAE against the rest of our coverage, the reference tables compare employer costs, notice periods, and public holidays across every country here. Already with another provider? Switching EOR providers covers the traps worth planning around.
FAQ
Is there really no income tax on UAE salaries? For most employees, yes: no personal income tax is withheld from salary. Social contributions apply to UAE nationals through GPSSA. Tax rules evolve, so confirm your specific situation with your accountant.
Can I pay UAE employees in USD? No. Salary must be paid in AED through Wage Protection System approved channels. Contractors with their own setup can invoice in USD or AED.
How fast can someone start? Contractors: as soon as the contract is signed and the W-8BEN is in. EOR employees: typically 7-10 business days if they already hold valid work authorization, and 10-20 business days when visa sponsorship is required.
What does an employer of record in the UAE cost? With Shor, $299/month per employee, plus the statutory employer contributions (gratuity accrual for expats, GPSSA for Emirati hires, and mandatory health insurance). Deel and Remote charge $599-699/month for the same coverage.