How salary is paid: WPS and the unified date
The Wage Protection System (WPS) of the Ministry of Human Resources and Emiratisation (MOHRE) is the mandatory channel for paying salaries in the private sector. Payment is processed via WPS files through banks registered in the country or other approved platforms, and the worker receives it in their local account.
Ministerial Resolution 0340/2026, in force since 1 June 2026, unified the payment date: the previous month's salary must be paid no later than the 1st of each Gregorian month, and at least 85% of the wage bill must be paid on time to meet the compliance threshold.
Non-compliance has a fixed escalation: notices to the employer from day 2, suspension of new work permits on day 5, administrative fines and downgrading on day 11 if there is recurrence within six months, automatic labour disputes on day 16 when they affect 25 or more workers, and from day 21, asset seizure, travel ban and referral to the public prosecutor's office.
Package structure: basic salary and allowances
In Dubai, the contract usually breaks down the salary package into a basic salary plus allowances (housing, transport, other allowances). The basic salary is usually the smaller part of the package, and that decision is not cosmetic: overtime is calculated on the basic salary, as is the end-of-service gratuity.
Salary is paid in 12 monthly instalments and there are no extra payments such as a Christmas bonus or 14th month. In exchange, gross salary is net: in the Emirates there is no personal income tax, so what is agreed is what is received, with no personal income tax withholdings on the payroll.
When budgeting, also take into account the ILOE unemployment insurance, mandatory for employees since 2023 with a small monthly contribution, and that the package does not include health insurance: that is paid separately by the company and is mandatory.
End of service gratuity
The end-of-service gratuity is the statutory settlement in the Emirates and the main benefit for expatriate workers, who have no state pension. It accrues at 21 days of basic salary per year during the first five years of service and 30 days per year from the sixth year onwards, always based on the last monthly basic salary divided by 30.
Partial years are paid pro rata once the year of service is exceeded and the total is capped at two years' salary (24 months). Since Federal Law 33/2021, resigning no longer reduces the gratuity: anyone who resigns with at least one year of service receives the same rate as if they had been dismissed, and all private contracts are formalised for a fixed term.
Example: with a basic salary of AED 10,000 per month and six years of service, the gratuity is 21 days x 5 years plus 30 days x 1 year, about 135 days at about AED 333 per day, around AED 45,000. The remaining outstanding salary and the gratuity must be paid within 14 days from the end of the contract.
DIFC: the financial centre has its own scheme
In the DIFC (Dubai International Financial Centre) the classic gratuity does not apply. Since February 2020 the DEWS (DIFC Employee Workplace Savings) scheme has been in operation: the employer contributes 5.83% of basic salary each month for the first five years and 8.33% thereafter to a managed fund, instead of paying a settlement calculated at termination. ADGM, the Abu Dhabi financial centre, has a comparable regime.
If your subsidiary is going to operate within a financial free zone, check which labour law applies to your employees before modelling the exit cost: the difference between the classic gratuity and a monthly contribution scheme changes the annual cost, not just the final one.
What to check before paying your first payroll in Dubai
Define the basic salary and allowances breakdown in writing from the first contract: overtime (minimum 25% supplement, see working hours in Dubai) and gratuity are calculated from it. A low basic salary reduces those costs, but an absurdly low basic salary may be challenged in an employment claim.
Register the employee in the WPS before the first payment, set the 1st as an internal deadline and prepare the WPS file in advance to avoid the escalating penalties.
And a tax reminder: the 0% personal income tax rate applies to residents in the Emirates. If the worker remains a tax resident in Spain, their worldwide income is still taxed there, so review their situation before assuming the saving is automatic.
