The Real Cost of a New Hire in Dubai: Housing, Gratuity, Leave, Visas and Insurance

• 07 November, 2026
• By the Exiloz tax team
• Accounting

Last reviewed 7 November 2026 by the Exiloz tax team against the UAE legislation in force on that date. Tax law moves — confirm any figure against tax.gov.ae before you act on it.

The salary is only the first line

The salary on an offer letter is only part of what a new hire really costs. The labour law adds housing, medical care, leave and an end-of-service gratuity that builds every month. Visas, permits and insurance add more in the first year. Reliable payroll and WPS services put every one of those costs into the monthly budget from day one.

This guide adds those costs up in the order a Dubai employer usually meets them. It starts with the employer's legal obligations under the UAE labour law, which set the baseline. It then works through gratuity, leave, and the first-year visa and insurance costs. It ends with how to budget and record them, using one illustrative salary throughout the guide.

What does a new hire cost beyond salary?

Article 13 of Federal Decree-Law No. 33 of 2021 lists the employer's core obligations. The employer must provide licensed accommodation, pay a housing allowance, or include housing in the wage. It must also bear the worker's medical care costs and any insurances the legislation requires.

Recruitment costs also stay with the employer, because Article 6 bars charging them to the worker. That covers visa, permit and agency recruitment fees, whether charged directly or indirectly. A common and costly mistake is a hiring budget that stops at the gross monthly salary.

Quick Answer

A UAE hire costs far more than salary. The employer also carries housing, medical care, statutory insurance and recruitment costs, and none of them can be passed to the worker.

How much gratuity should you set aside each month?

Article 51 gives a foreign full-time worker gratuity after one year of continuous service. It is 21 days of basic wage for each of the first five years, then 30 days a year. The total gratuity is capped at two years' wage.

Take an illustrative employee on a basic wage of AED 6,000 within a larger package. Twenty-one days of basic wage comes to roughly AED 4,100 to 4,200 a year, depending on the daily-rate method. That is about AED 350 a month to accrue, even before the first anniversary.

Quick Answer

In the UAE, gratuity starts at 21 days' basic wage yearly. It rises to 30 days after year five, and AED 6,000 basic pay means accruing about AED 350 monthly.

What does annual leave add to the cost?

Article 29 gives at least thirty days of paid annual leave for each year of service. Between six months and one year of service, the entitlement is two days for each month. A worker leaving with unused leave is entitled to leave for the part year worked.

Leave costs money twice: the paid absence itself, and any cover needed while the person is away. Unused leave can be carried forward only with the employer's approval. Track the balance every month, because it becomes a cash payment when the employee leaves.

Quick Answer

After year one, UAE workers get at least thirty paid leave days. Track the balance every month, because any unused leave is paid out in cash when employment finally ends.

What do visas and insurance add in year one?

The first year carries one-off costs: the work permit, the residence visa, the medical test and the Emirates ID. Government fees vary with the visa type and circumstances, so get a written quote. These costs fall on the employer under Articles 6 and 13.

Health insurance has been a condition of issuing or renewing residence across the UAE since January 2025. Outside Dubai and Abu Dhabi, MOHRE's basic package costs AED 320 a year on a two-year policy. Dubai and Abu Dhabi run their own schemes with their own pricing.

Quick Answer

The first year adds work permit, residence visa, medical test, Emirates ID and health insurance costs. Get written quotes first, because government fees vary by visa type and individual circumstances.

How should the budget and the books treat these costs?

Build a cost-per-hire sheet with three layers: the monthly package, monthly accruals and one-off first-year costs. Accrue gratuity and leave every month as liabilities, rather than waiting for the employee to leave. The profit and loss then reflects the real cost of each hire.

For Corporate Tax, staff costs incurred wholly and exclusively for the business are normally deductible under Article 28. Pay salaries through the Wage Protection System, so payroll records match the bank and the ledger. A clean payroll file also supports visa renewals and bank reviews later.

Quick Answer

Budget the monthly package, the monthly accruals and the first-year costs as three separate layers. Accrue gratuity and leave monthly, and pay all salaries through the UAE Wage Protection System.

Frequently Asked Questions

Main Takeaways

A new hire costs far more than the gross salary on the offer letter. Employers carry housing, medical care, insurance and recruitment costs under the labour law. Gratuity of 21 days' basic wage a year should be accrued every month from the start. Annual leave, work permits, residence visas and health insurance complete the first-year cost of each new hire.

Budget the Whole Hire, Not the Salary

Most hiring budgets in Dubai stop at the gross monthly salary, and the real cost arrives later. Gratuity, leave, visas and insurance then turn up as unwelcome surprises about a year in. Yet the labour law makes every one of them predictable well in advance. A simple cost-per-hire sheet built before the offer letter avoids most of the later shock.

Accruing every month keeps the accounts honest and the cash ready for when it is actually needed. Our guide to setting up payroll for your first employee walks through the registration steps in order. Review the sheet whenever salaries, allowances or visa rules change. Exiloz can build the budget, run WPS payroll and keep every gratuity and leave accrual current.

Sources & References