April 29, 2022

Minimum Benefit Requirements Offered To UAE Employers When Looking to Offer a Flexible Benefits Package

Minimum benefit requirements by UAE employers when looking to offer a flexible benefits package

Sarah Malik, Saher Khan, Swetha Sivaram

The new UAE Labour Law (Federal Decree-Law No. 33/2021), which should be considered in conjunction with that Law’s Implementing Regulations (Cabinet Decision No. 1/2022) brought in new provisions on the various benefits which must be provided to any private sector employee on 2 February 2022 In addition to their salary, employees are entitled to 30 days annual leave per calendar year, and sick leave of up to 90 days (for which the first 15 days is fully paid). Female employees are also entitled to maternity leave of up to 60 days (of which the first 45 days are fully paid). Employees are also entitled to bereavement leave of up to five days when a family member dies, and parental leave of up to five days. Study leave of up to 10 days may be granted to employees who have worked with their employer for at least two years and are a student at an accredited educational institution in the UAE. Employees who have worked for more than a year with their employer are also entitled to receive an end-of-service gratuity payment, when they leave.

All UAE employers must mandatorily provide health insurance coverage for their employees. In Abu Dhabi, employers and sponsors are also responsible for providing health insurance coverage for their employees and their families (which are defined as one spouse and up to three children under the age of 18), where the employee is a resident expatriate. In Dubai, it is the employer’s responsibility to arrange and pay for the costs of private health insurance plans for their employees. Although employers in Dubai are not required to pay for health coverage for their employee’s spouses and dependants. That said, as a matter of good HR practice and to ensure security of their workforce, the Dubai Health Authority (DHA) does encourage employers to provide this coverage. Federal Decree-Law No. 33/2021 also states that employers must provide suitable accommodation to their employees, pay them a cash allowance or include such an allowance within their salary. Transportation allowances are not mandated in the UAE but are generally provided to employees.

Employers are usually free to determine the relationship between an employee’s basic salary and their allowances. However, they are advised to maintain an equal balance as a minimum between benefits and basic salary, so this does not put the employee in an unreasonably disadvantaged position. This is in part because a UAE employee’s last drawn basic salary and not their entire wage including benefits is used to calculate the various end-of-service benefits such as gratuity and accrued leave the employee will receive. Unfortunately, many UAE employees are unaware of this and can be disappointed as a result when they are handed their final settlement.

Common Benefits

As well as these statutory benefits the Hays GCC Salary Guide 2022 sets out details of what were the three most common benefits provided by employers in the UAE as part of a standard employment package: It was found that life insurance was offered to employees by 53% of employers. In addition, either a car or a car allowance was offered by 43% of employers. While education allowances for employees’ children were offered by 37% of UAE employers. Typically, child education allowances are offered based on an employee’s level of seniority, so in most companies, only the senior or C-Suite level employees were given this benefit.

Flexible Benefits

There are a number of UAE organisations who partner with incentive companies such as Merit and Flexxpay to provide unique benefits to their employees, for example, reward schemes issuing points for best behaviour which can be redeemed by employees for gift cards or non-monetary rewards and experiences. These schemes increase staff motivation, productivity, and aid employee retention.

As published by LexisNexis Middle East in the LexisNexis Middle East HR Alert April 2022

This publication is not intended to offer legal advice and is solely for informational purposes.