Employee Benefits in UAE Explained for HR Teams (2025 Guide)

 For HR teams in the UAE, understanding employee benefits is essential for compliance, retention, and attracting top talent. With new labour law updates under Federal Decree-Law No. 33 of 2021 and increasing competition for skilled workers, companies are enhancing their benefits packages to remain competitive. This guide breaks down mandatory benefits required by law and optional perks commonly offered by employers.

Mandatory Employee Benefits in UAE

1. Health Insurance
   Health insurance is mandatory in Dubai and Abu Dhabi, and many employers across other emirates also provide it. Typical coverage includes outpatient and inpatient care, emergency treatment, and essential medicines. Ensuring all employees are covered protects both the workforce and the company from legal penalties.

2. Annual Leave
   Employees are entitled to paid annual leave based on their tenure:

• Less than 6 months: No mandatory leave (discretionary days may apply)

• 6–12 months: 2 days per month

• 1 year and above: 30 days per year

3. Sick Leave
   Employees completing probation can take up to 90 days of sick leave per year:

• First 15 days: 100% pay

• Next 30 days: 50% pay

• Remaining 45 days: unpaid

4. Maternity & Paternity Leave
   Maternity leave totals 60 days—45 fully paid, 15 at 50% pay—with additional unpaid leave if needed. Paternity leave provides 5 paid days within six months of childbirth.

5. Public Holidays
   UAE grants 13–15 public holidays annually, including Eid Al Fitr, Eid Al Adha, National Day, and other Islamic observances.

6. Gratuity (End-of-Service Benefits)
   Gratuity rewards long-term service:

• 1–5 years: 21 days’ basic salary per year

• 5+ years: 30 days’ basic salary per year
  Maximum gratuity is capped at two years of wages.

Optional Employee Benefits for Competitive Edge

Beyond mandatory provisions, modern employers offer perks to attract and retain talent. Popular options include flexible working hours, hybrid work models, supplementary health insurance, housing and transportation allowances, annual flight tickets, education support, wellness programs, and bonus structures. HR technology platforms like MaxHR also streamline benefits administration, payroll, and leave tracking.

Why Benefits Matter for HR Teams

Offering structured benefits improves retention, compliance, employer branding, and productivity. Competitive packages can reduce turnover by 20–40% and attract international talent in a tight labour market. Integrating digital HR tools ensures accurate tracking, reporting, and employee satisfaction.

Employee Benefits Cost Benchmarks (2025)

Benefit Type	Avg. Annual Cost per Employee (AED)	Notes
Health Insurance	1,500–6,000	Depends on plan, age, role
Housing Allowance	24,000–84,000	Varies by city & level
Transportation Allowance	3,000–12,000	Optional
Annual Flight Tickets	1,500–3,000	Common for expats
Wellness Programs	600–2,400	Gym, mental health, apps
Bonus Pay	8–20% of salary	Industry dependent

Conclusion

For HR teams in the UAE, balancing mandatory benefits with modern perks is crucial. Structured packages not only ensure compliance but also enhance employee satisfaction, retention, and productivity. Leveraging HR platforms like MaxHR simplifies benefits management, leaving HR teams free to focus on strategy and employee engagement.