The true annual cost of an employee in the UAE.
Total annual cost
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Annual salary
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Gratuity accrual / yr
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Employer pension / yr
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A salary is only part of what a hire costs
If you are budgeting headcount, the agreed salary understates the bill. In the UAE there is no employer payroll income tax, which keeps things simpler than in most countries, but two real obligations sit on top of pay. Every employer accrues end-of-service gratuity, the lump sum due when someone leaves, and for UAE and GCC nationals there is an employer pension contribution to GPSSA. This calculator stacks salary, gratuity accrual, and where relevant the pension into one annual cost so you can compare the true expense of a hire against the headline package.
Gratuity is a running liability, not a leaving-day surprise
End-of-service gratuity, governed by UAE labour law and administered through MOHRE, builds up as the employee works. For the first five years of service it accrues at 21 days of basic pay a year, the figure this calculator applies, rising to 30 days a year after that. Crucially it is based on basic salary, not the full package, and the daily rate uses the standard 30-day month. A prudent employer treats this as a cost that accrues every month rather than a bill that lands on the resignation date, which is exactly how this tool models the first-year accrual. Confirm the current day counts with MOHRE, though the 21-then-30 structure is long-standing.
The pension line that only applies to nationals
Expatriate employees are not in a state pension scheme; their gratuity is the substitute. UAE and GCC nationals are different. Employers contribute to GPSSA on the contribution salary, and the employer share this calculator applies is around 15 percent, within a contribution-salary floor and cap. That single line can add tens of thousands of dirhams a year to the cost of a national hire compared with an expat on the same pay. Verify the current rate and the contribution-salary band with GPSSA, since the scheme has been reformed in recent years.
Costing a UAE national on a 20,000 package
Take a national employee with AED 12,000 basic inside a AED 20,000 total monthly package. The rates this calculator applies give an annual cost of AED 284,400: salary plus a first-year gratuity accrual of AED 8,400 plus an employer pension of AED 36,000.
| Component | Annual figure |
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The stacked bar shows how the AED 284,400 divides, with the pension and gratuity sitting above base pay.
What is not in the number, and why it matters
The tool deliberately stops at salary, gratuity, and pension. Real headcount costs more: a residence visa and Emirates ID, mandatory medical insurance, possibly an annual flight allowance, recruitment fees, and workspace. For an expat hire, medical cover and visa renewal are the items most often forgotten, and they recur. A common budgeting mistake is to compare two candidates purely on salary when one is a national, whose pension contribution alone can outweigh a modest salary difference. Switch the nationality toggle in the tool to see that gap. This estimator suits founders modelling a first hire, finance teams building a headcount plan, and anyone converting a salary offer into a fully loaded cost.
Does the gratuity accrual change after five years?
Yes. The accrual rate steps up from 21 days of basic pay per year to 30 days per year for service beyond the fifth year, so a long-tenured employee builds the benefit faster. This first-year tool shows the lower rate; for a multi-year projection of the full lump sum, a dedicated gratuity calculator handles the two-tier accrual and the overall cap.
Why is an expat cheaper than a national on identical pay?
Because expats attract no employer pension contribution. Both accrue gratuity on the same basic salary, but only the national hire carries the GPSSA employer cost, which here is about 15 percent of the contribution salary. On equal packages that single line is the entire difference in employer cost between the two.