How to hire your first employee in the UAE: employment contract, WPS, insurance — the complete 2026 checklist

Opening a company in the UAE has become relatively uncomplicated. The procedure is digitized, the timeframes are predictable, and the number of solutions — from mainland to 47 free zones — covers any business model. But the first hire of an employee is already a different story. It is exactly here that most entrepreneurs encounter mistakes, fines, and delays that nobody warned them about.

This material is a complete operational guide for an employer who is hiring the first person in the UAE in 2026. Each point is built on the current regulatory framework, verified against official sources, and reflects current changes, including the amendments of Federal Decree-Law No. 9 of 2024 and the new medical insurance requirements from 1 January 2025.

1. Regulatory framework: what governs employment relationships in the UAE

Before moving to the checklist, it is necessary to understand the architecture of labour regulation. The UAE is a federal state, and labour law operates on two levels simultaneously.

The main federal law is Federal Decree-Law No. 33 of 2021 Regarding the Regulation of Employment Relationship(“Labour Code”). It entered into force on 2 February 2022 and completely replaced the previous Federal Law No. 8 of 1980. In 2022–2024, the law was supplemented three times by amendments: Federal Decree-Law No. 14 of 2022, Federal Decree-Law No. 20 of 2023, and the most significant block — Federal Decree-Law No. 9 of 2024, which entered into force on 31 August 2024. It was precisely this last package of amendments that introduced the status of MOHRE decisions as “writs of execution” and established a one-year limitation period for labour disputes.

The implementing regulation to the law — Cabinet Resolution No. 1 of 2022 — details the forms of contracts, the procedure for calculating benefits, and the classification of employers.

The regulator is the Ministry of Human Resources and Emiratisation (MOHRE or MoHRE). It is through it that the entire chain passes: registration of the company as an employer, quota for work permits, registration of contracts, WPS control, and labour inspections.

An important distinction.

The law applies to employees of the mainland and most free zones. Exceptions: DIFC and ADGM operate on the basis of their own labour regulations — DIFC Employment Law (DIFC Law No. 2 of 2019, as amended) and ADGM Employment Regulations. Companies in these jurisdictions hire personnel under separate rules, although the general logic (contract, insurance, tax position) remains similar.

2. Step 1. Registration of the company as an employer in MOHRE

Before hiring the first person, the company must obtain the status of an employer in the MOHRE system and establish a quota for work permits.

For the mainland.

Registration takes place through the MOHRE portal (mohre.gov.ae) or the Tas’heel system. Required: a valid Trade Licence, MOA (Memorandum of Association), and the company’s certificate of registration. After registration, the company is assigned an establishment number — this is the employer’s identifier in all subsequent operations.

For free zones.

Work permits and employee registration are processed through the corresponding free zone authority (DMCC, JAFZA, DAFZA, RAK ICC, and so on). Each free zone uses its own portal and sets its own ratio of “visa per unit of office area” or packages with a fixed number of visas. It is important: some free zones limit the number of visas depending on the type of licence and the leased space.

Quota for work permits.

A company cannot hire as many employees as it wishes — there is a visa quota, which is determined by MOHRE on the basis of the office size, type of activity, demographic composition of personnel, and compliance with Emiratisation requirements. For start-ups with a virtual office, the quota usually begins with 3–6 visas. Expansion of the quota requires either an increase in the leased area or a move to a higher employer category.

Employer categories.

MOHRE classifies companies into three categories (A, B, C) based on compliance with labour legislation, the level of Emiratisation, and other criteria. The category affects the cost of work permits: for Category A, it is significantly lower than for Category C. This creates a financial incentive to maintain a high level of compliance.

3. Step 2. Employment contract: structure, mandatory terms, and hidden risks

Federal Decree-Law No. 33 of 2021 introduced a fundamental change: all employment contracts in the private sector of the UAE are now fixed-term. Unlimited contracts have been abolished. The maximum term of the contract is 3 years, however it may be renewed or re-executed an unlimited number of times. If, upon expiry of the term, the parties continue to perform obligations without a new agreement, the contract is considered automatically extended on the same terms.

Employers who moved to the new contracts later than the established deadline (31 December 2023) formally violated the requirement of the law and may face sanctions during MOHRE inspections.

Mandatory elements of the contract

The form of the contract is standardized by MOHRE and must include:

Parties and identifiers.

The full name of the employer, MOHRE establishment number, the employee’s full name according to the passport, nationality, and the job title, which must coincide with the position specified when the work permit is issued.

Place and nature of work.

The address of the main place of work. If the work предполагает a remote regime or several locations, this must be expressly prescribed. The employer has the right to change the place of work only with the employee’s written consent (if the change requires a change of place of residence — at the expense of the employer).

Start date and term.

The date the contract enters into force and the date of its end. The term may not exceed 3 years in the initial version.

Probation period.

Maximum — 6 months. Extension of the probation period is not provided for by law. During the probation period: the employer may terminate the contract by giving 14 days’ notice; an employee leaving the UAE — with 14 days’ notice; an employee moving to another employer in the UAE — with 1 month’s notice. The probation period counts toward the total length of service when calculating end-of-service benefits.

Remuneration.

The contract must distinguish between the basic salary and allowances — housing, transport, medical, and others. This distinction is critical: the calculation of gratuity and a number of other payments is made exclusively from the basic salary. Splitting salary into allowances for the purpose of reducing gratuity is a common practice, however MOHRE labour inspections increasingly challenge it.

Working time.

The standard for the private sector: 8 hours per day, 48 hours per week. During Ramadan, the working day is reduced by 2 hours for all employees. When working continuously for more than 5 hours, the employee has the right to a break (not included in working time). Travel time to work is not included in working time.

Annual leave.

For service from 6 months to 1 year — proportionally. From 1 to 5 years — 30 calendar days per year (minimum under the law). The employer is not entitled not to grant leave for more than two consecutive years, unless the employee himself requests to postpone it or compensate it with money.

Notice of termination.

The minimum notice period is 30 days, the maximum under the law is 90 days. The parties are entitled to agree on any period in the range of 30–90 days.

Non-compete clause.

Permissible, but limited: term — no more than 2 years; geographical and professional boundaries must be proportionate to the employer’s protected interest. The clause does not apply if the employer itself has breached obligations to the employee. The new employer or the employee himself may “buy out” the clause by paying a 3-month compensation equivalent to the previous employer with its consent.

Language of the contract.

If the contract is drafted only in English, in the event of a labour dispute in MOHRE or in court, the Arabic-language version will be considered the priority. A bilingual version (English + Arabic) is recommended, indicating which version has priority.

Flexible forms of employment

Federal Decree-Law No. 33 of 2021 established several new models of employment in addition to standard full-time employment: part-time, temporary, flexible, and remote formats. Benefits and allowances for them are calculated proportionally — based on the ratio of actual working hours to standard full-time hours.

4. Step 3. Employee work permit and visa: sequence and timing

A foreign citizen cannot legally work in the UAE without two documents: a work permit / labour card, issued by MOHRE, and a residence visa, issued by GDRFA / ICP. These documents are processed sequentially, and it is precisely the employer who initiates and pays for the entire process.

According to Federal Decree-Law No. 33 of 2021, the employer bears 100% of the expenses associated with obtaining the work permit and visa. Recovery of these amounts from the employee is a violation of labour law, which may be appealed to MOHRE.

Stages of processing

1. Initial Approval.

The employer submits an application through Tas’heel (mainland) or the free zone portal. Submitted: a copy of the candidate’s passport, the signed contract, and proof of qualifications. MOHRE checks the company’s quota and the compliance of the position with the declared qualification level. Term: 2–5 working days.

2. Entry Permit.

After approval, the employee located outside the UAE receives an Entry Permit — valid for 60 days. It allows entry into the country and the start of residence visa processing. If the employee is already in the UAE on another visa, instead of an Entry Permit an internal status change is processed.

3. Medical examination.

Within 14 days after entry, the employee is obliged to undergo a medical examination at an accredited centre (in Dubai — Smart Salem, DHA-approved). The test includes: blood test (HIV, hepatitis B and C, syphilis), and a chest X-ray (tuberculosis). Cost: 320–500 dirhams depending on the emirate. A positive result for a number of infectious diseases is grounds for refusal of a work visa.

4. Biometrics and Emirates ID.

Simultaneously with the medical examination, an application for Emirates ID is submitted through ICP. Cost: 370 dirhams (2 years) or 480 dirhams (3 years). Emirates ID is a mandatory document for opening a bank account, renting housing, and accessing government services.

5. Registration of the employment contract.

The contract is officially registered in the MOHRE system. From this moment, it becomes legally binding and traceable. A discrepancy between the salary in the registered contract and the actual payments through WPS is one of the most frequent triggers for inspections.

6. Residence Visa Stamping.

The final stage is the placement of the visa in the passport. The visa is valid for 2–3 years. Mainland visas, as a rule, are issued for 2 years; free zone packages often include 2–3-year visas.

Total cost

According to current sources, the full processing cycle costs the employer 3,000–7,000 dirhams on the mainland and 2,500–4,500 dirhams in the free zone. The difference is due to: the employer’s category under MOHRE (A, B, or C), the employee’s qualification level, and the specific emirate. Fast-track processing costs an additional 500–1,000 dirhams and reduces the period to 5–7 working days.

The standard period is 2–4 weeks from submission of documents to visa stamping. Delays are most often connected with incomplete apostille of education documents in the candidate’s home country, the employer’s filled quota, or identified violations during the medical examination.

Documents from the candidate

The standard package includes: a passport with a remaining validity period of at least 6 months; photographs on a white background; education documents (with apostille and translation, if required). For a number of professions (medicine, law, engineering), nostrification of the diploma is required in the relevant UAE authority.

5. Step 4. WPS system: salary only through approved channels

The Wage Protection System (WPS) is an electronic system for monitoring wages, developed jointly by MOHRE and the Central Bank of the UAE. It was introduced by Ministerial Decree No. 788 in July 2009. According to MOHRE, the system covers more than 99% of private sector employees; the monthly volume of transfers exceeds 35 billion dirhams.

In December 2025, MOHRE, jointly with the Central Bank and Al Etihad Payments, launched an updated version of WPS with real-time integration through the Aani instant payment platform — the payment now takes seconds, not days.

Who is covered by WPS

Mainland.

All companies registered with MOHRE are obliged to comply with WPS in accordance with Labor Resolution No. 43 of 2022. There are no exceptions — neither by company size nor by industry.

Free zones.

The situation is heterogeneous:

• JAFZA — the first free zone fully integrated with the federal WPS.

• DMCC — WPS became mandatory from 1 January 2024. In the case of non-compliance — sanctions through the free zone portal.

• DIFC and ADGM — are not integrated with the federal WPS, but have their own requirements for payment transparency. DIFC also applies the DEWS system (DIFC Employee Workplace Savings Plan) instead of traditional gratuity.

• Most other free zones follow federal legislation and standard WPS requirements.

Employers in free zones should clarify requirements directly with the regulator of their zone.

How WPS works in practice

The employer prepares a Salary Information File (SIF) — a structured file with data on each employee: labour card number, bank details, basic salary, allowances, deductions. The SIF is sent to an approved WPS agent (bank, exchange house, or fintech provider authorized by the Central Bank). The agent sends the file to the WPS system, where MOHREand the Central Bank verify the data — the amounts must correspond to the registered contract. After verification, the agent transfers salaries to employees’ accounts or WPS cards.

Payment deadline

Salary is considered overdue 15 days after the established payment date. Under a standard monthly cycle: salary for January is considered overdue if not paid by 15 February.

80% rule

A company is recognized as compliant if at least 80% of the total payroll fund has been timely transferred through WPS.

Exceptions from WPS

The law exempts from mandatory passage through WPS: employees who have filed a claim for salary arrears; those listed as “absconding”; new employees in the first 30 days from the date the payment becomes due; employees on unpaid leave; foreign employees of foreign companies receiving salary from abroad.

Penalties for WPS violation

The consequences of violations arise according to an escalation scheme:

Day 17 from the date of delay — MOHRE automatically blocks the issuance of new work permits for the company. It becomes impossible to hire, transfer, or renew an employee’s visa.

Day 30 — for companies with 50 employees or more, the matter is referred to the prosecution.

4 months — in the case of a systematic violation, restrictions are imposed on all companies connected with the same partners/shareholders.

Repeated violations

A company that commits an analogous violation within 6 months is transferred to Category C, which increases the cost of work permits and complicates further operational activity.

Financial penalties for submitting knowingly false WPS data: 5,000 dirhams for one employee, up to 50,000 dirhamsfor several violations.

Practical WPS checklist

— Open a corporate bank account in the UAE in a bank authorized by the Central Bank.

— Connect to WPS through a bank or approved agent and sign an agreement.

— Make sure that each employee has an account in an approved bank or a WPS card.

— Set up monthly preparation of the SIF file with correct data.

— Establish an internal payment deadline at least 5 days before the official date.

— Bonuses, commissions, and one-off payments may be transferred outside WPS — provided they are properly documented and correspond to the contract.

6. Step 5. Medical insurance: employer obligation from 2025

From 1 January 2025, medical insurance for employees became mandatory in all seven emirates of the UAE. Before that moment, mandatory insurance applied only in Abu Dhabi (since 2006, on the basis of Abu Dhabi Law No. 23 of 2005) and in Dubai (since 2014–2016, on the basis of Dubai Law No. 11 of 2013).

The new requirement extends to all five remaining emirates: Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah. Administration of the scheme in the northern emirates is with MOHRE jointly with the Ministry of Healthand ICP.

Mechanics of the obligation

The presence of a medical insurance policy is a mandatory condition for the issuance or renewal of an employee’s residence visa. Without valid insurance, MOHRE will not issue a visa and will not renew a work permit. Employees with work permits issued before 1 January 2025 are exempt from the requirement until the moment of the next visa renewal.

Basic package (Basic Health Insurance)

MOHRE launched a unified basic insurance package, aimed at employers with a small budget. The cost starts from 300–400 dirhams per year per employee. Available through the DubaiCare Network or other accredited insurers.

What the basic package covers:

consultations with a general practitioner and specialists, emergency care, basic diagnostic procedures. Inpatient treatment and specialized operations, as a rule, require broader coverage.

Features by emirate

Abu Dhabi.

The regulator is the Department of Health (DOH). The employer is obliged to insure not only the employee, but also members of his family: spouse and up to three children under 18. The cost of the insurance cannot be passed on to the insured — this is a direct violation of DOH regulations. Minimum coverage includes: outpatient visits, inpatient treatment, and maternity services.

Dubai.

The regulator is the Dubai Health Authority (DHA). The employer insures only the employee; dependent family members are the employee’s own responsibility. In 2025, DHA introduced Directive PD-05-2025, obliging insurance claims to be processed electronically through the eClaimLink platform with strict processing deadlines and penalties for non-compliance.

From September 2025, Federal Decree-Law No. 6 of 2025 entered into force, transferring supervision over the entire insurance market (insurers, brokers, third-party administrators) to the Central Bank of the UAE. This means centralization of regulation and an increase in sanction pressure.

Penalties for absence of insurance

The amount of penalties varies by emirate:

• In Dubai: DHA has the right to impose monthly fines and block visa processing.

• In Abu Dhabi: DOH blocks renewal of labour cards.

• Range of fines: from 300 to 150,000 dirhams per month depending on the emirate and the scale of the violation.

Practical medical insurance checklist

— Do not start the visa issuance process without a valid policy.

— Choose an accredited insurer through the DubaiCare Network or the DHA/DOH registry.

— Clarify which additional categories of persons must be insured (especially relevant for Abu Dhabi).

— Do not pass the cost of the policy to the employee — this is a violation.

— Build a tracking system for policy expiry dates (synchronize with the visa renewal date).

7. Step 6. Gratuity / End-of-Service Benefits: how to calculate correctly

End-of-service benefits (EOSB), commonly referred to as gratuity, are a one-time payment to an employee upon termination of employment relations. It is regulated by Article 51 of Federal Decree-Law No. 33 of 2021 and clarified by Cabinet Resolution No. 1 of 2022.

The rule applies to all private sector employees (foreign citizens). UAE nationals receive pension payments through the General Pension and Social Security Authority (GPSSA) — the gratuity scheme does not apply to them.

Conditions for the right to arise

The employee acquires the right to gratuity after 1 year of continuous service. Periods of unpaid leave are excluded from service. A proportional payment for an incomplete year is accrued if the minimum one-year threshold has been passed.

Federal Decree-Law No. 33 of 2021 eliminated the previous distinction between “limited” and “unlimited” contracts in the calculation of gratuity: now a single formula applies to all standard employment contracts.

Calculation formula

The basis for calculation is exclusively the basic salary — without housing, transport, and other allowances.

For each completed year in the first 5 years: 21 days of basic salary per year.

For each completed year after 5 years: 30 days of basic salary per year.

The maximum payment may not exceed a 2-year basic salary, regardless of total length of service.

Example

An employee with a basic salary of 10,000 dirhams per month worked 6 years and 2 months.

• First 5 years: (10,000 / 30) × 21 × 5 = 35,000 dirhams

• Year from the 6th to the 7th: (10,000 / 30) × 30 × 1.167 = 11,670 dirhams

• Total: 46,670 dirhams

• Ceiling (2 years): 10,000 × 24 = 240,000 dirhams — not exceeded.

The employer is obliged to pay gratuity and all other sums due within 14 days from the moment of termination of the employment contract. Violation of this period is grounds for a labour claim.

Alternative scheme: Savings Scheme

Since 2023, a voluntary Savings Scheme (Cabinet Resolution No. 96 of 2023) has been in force — the employer, instead of accumulating gratuity, pays monthly contributions into an approved investment fund:

• 5.83% of basic salary — if length of service is less than 5 years

• 8.33% — if length of service is more than 5 years

The scheme transfers risk from the employer to the market, protects the employee from losing end-of-service benefits in the event of company bankruptcy, and reduces the one-time burden when terminating the contract. Upon transition to the scheme, the employer calculates and pays the accumulated gratuity for the entire preceding period.

DIFC and ADGM

In DIFC, traditional gratuity has been fully replaced by DEWS (DIFC Employee Workplace Savings Plan): monthly employer contributions (5.83% or 8.33%), invested through accredited providers. In ADGM, a similar structure applies with separate regulatory requirements.

8. Step 7. Emiratisation: when it concerns your company

Emiratisation is the state policy of quota-based employment of UAE citizens in the private sector. It is regulated by the Nafis system (a federal initiative) and a number of cabinet resolutions.

From 1 January 2023, expanded quotas are in force for companies with 50 employees or more in “target sectors” (banking, insurance, financial services, manufacturing, ICT, education, healthcare, retail, hospitality, construction). For such companies, a norm of 2% Emiratisation of the total headcount has been established, with an annual increase of 2 percentage points until the target level is reached.

For companies with 20 to 49 employees, their own target indicators have been in force since 2024.

For start-ups and companies with fewer than 20 employees, there are no rigid quotas, however compliance with other requirements (WPS, insurance, contracts) directly affects the employer’s category, and that, in turn, affects the cost of work permits.

The penalty for failure to meet Emiratisation quotas: 6,000 dirhams per month for each unfilled position for a UAE citizen.

9. Full checklist: hiring the first employee in the UAE

Before signing the contract

• The company is registered in MOHRE as an employer, and an establishment number has been received

• The quota for work permits has been confirmed and is current

• The candidate’s position corresponds to the type of company licence

• The company is connected to WPS through an authorized agent

Contract

• The contract is executed as fixed-term, term — no more than 3 years

• The basic salary and allowances are prescribed separately

• The probation period is no more than 6 months

• The following are specified: working hours, annual leave (minimum 30 days), notice period (30–90 days)

• The contract is drawn up in two languages (Arabic + English) or with indication of the priority version

• The contract is registered in MOHRE (or in the free zone portal)

Visa and work permit

• An application for Initial Approval has been submitted to MOHRE / free zone portal

• The Entry Permit has been issued and transferred to the candidate

• The candidate has undergone a medical examination at an accredited centre

• Emirates ID has been issued or is in process

• The residence visa has been stamped into the passport before the expiration of the 60-day Entry Permit period

Salary and WPS

• A corporate bank account has been opened in an authorized bank

• The employee has a personal account or WPS card

• The SIF file has been configured and tested

• The salary in the SIF matches the amount in the registered contract

• An internal payment deadline has been established (at least 5 days before the official one)

Medical insurance

• The policy has been issued before the start of the visa issuance procedure

• The insurer is accredited (DubaiCare, DHA, or DOH — by emirate)

• The coverage complies with the minimum requirements of the jurisdiction

• For Abu Dhabi: coverage includes family members (spouse + up to 3 children under 18)

• The policy expiry date has been entered into the reminder system

Operational support

• The employee is included in the gratuity tracker from the start date of work

• A reminder for visa renewal has been set up (30 days before expiry)

• HR documentation is stored in accordance with requirements (MOHRE has the right to request labour files during an inspection)

• The company understands its status under Emiratisation and the planned burden as headcount grows

10. Frequent mistakes when making the first hire in the UAE

Splitting salary for the sake of reducing gratuity.

Transfer of a significant part of compensation into allowances (housing, transport) reduces the base for calculation of end-of-service benefits. This is a lawful practice, but MOHRE inspections and courts are increasingly evaluating the remuneration structure from the point of view of its real economic substance.

Processing visas without a valid insurance policy.

From 1 January 2025, this is technically impossible — insurance is a preliminary condition. Attempts to bypass the requirement through temporary policies with limited coverage create regulatory risks.

Mismatch between the amount in the contract and in WPS.

If one salary is indicated in the registered contract, but another is paid through WPS — this is automatically recorded by the system and is grounds for a fine and a labour claim.

WPS delay.

Most first-time employers underestimate the automatic nature of sanctions: blocking of work permits occurs on the 17th day without any warning whatsoever — the mere fact of delay in the system is sufficient.

Failure to track visa terms.

The employer bears responsibility for the timely renewal of employee visas. Delay costs 50 dirhams per day, and in the absence of renewal leads to cancellation of the work permit.

Failure to cancel the work permit upon dismissal.

Upon termination of the contract, the employer is obliged to cancel the work permit and visa through MOHRE within 30 days after the last working day. The fine for delay: from 5,000 to 10,000 dirhams, as well as the risk of being placed on a stop-list for subsequent sponsorship.

11. Summary

Hiring the first employee in the UAE is not simply an administrative procedure. It is the point at which the business structure begins to operate as a real employer: with labour obligations, a payment system, insurance requirements, and regulatory supervision. To do this correctly the first time means to lay a foundation that will not require costly restructuring when scaling.

The regulatory framework has stabilized: Federal Decree-Law No. 33 of 2021 in its current version, the updated WPSwith real-time integration, nationwide medical insurance from 2025 — all this creates a system that is understandable, although requiring attention. For those who comply with it from the very beginning, it ensures predictability. For those who neglect it — an escalation of fines, which in the UAE works quickly and automatically.

The material has been prepared on the basis of Federal Decree-Law No. 33 of 2021 (as amended by No. 14/2022, No. 20/2023, No. 9/2024), Cabinet Resolution No. 1 of 2022, Ministerial Decree No. 788/2009 (WPS), Cabinet Decision (2024) on universal medical insurance, and Federal Decree-Law No. 6 of 2025 (insurance supervision). The article is informational in nature and does not constitute legal advice.