Unlocking Success: The Importance of Employee Benefits in the United Arab Emirates

employee benefits package document

By Ashutosh Agarwal, Manager, Global Benefits, GoGlobal

The United Arab Emirates (UAE) continues to rise in global talent competitiveness, emerging as the only Arab nation to break into the top 25 of both the Global Talent Competitiveness Index and the IMD World Talent Ranking.

With the Race for Talent picking up momentum in the UAE, a powerful tool stands out for talent acquisition and retention: employee benefits.

Why employee benefits matter in the UAE

As international companies flock to the UAE for investment and hiring, the workforce enjoys a myriad of options for work. Employers may find the traditional incentives for talent, such as salary offerings and job titles, no longer suffice.

Statutory benefits

The provision of statutory benefits is a cornerstone of the UAE’s employment framework. For employers in the UAE, statutory benefits represent more than legal requirements. They embody a commitment to the well-being and economic security of the UAE’s workforce.

The following statutory benefits are mandatory in the UAE:

Statutory Benefit Explanation
Healthcare Insurance Healthcare insurance is a mandatory provision for all employees in the UAE, granting access to essential medical services and safeguarding against unforeseen health expenses.

Providing healthcare coverage demonstrates a genuine concern for your employees’ welfare and reinforces a culture of care within your organization.

End-of-Service Benefits (Gratuity) The concept of gratuity holds significant importance in the UAE employment landscape. Employers must provide end-of-service benefits to employees upon termination, calculated based on their years of dedicated service.

This benefit not only acknowledges employees’ contributions but also fosters a sense of financial security and stability for them as they transition into new phases of their lives.

Leave Allowances Employees are entitled to a certain number of days off per year, as per UAE labor law, for various holidays as well as sick leave, pilgrimage leave, maternity leave, parental leave, compassionate leave and study leave.

These entitlements reflect the UAE’s commitment to supporting employee well-being and work-life balance.

Supplemental benefits

Supplemental benefits serve as a powerful tool for employers in the UAE, enhancing talent acquisition, engagement and retention. Beyond legal requirements, these benefits demonstrate a commitment to fostering employee satisfaction, well-being and long-term loyalty.

The following are various types of supplemental benefits employers in the UAE may consider extending to their workforce:

Supplemental Benefit Explanation
Housing Allowance Expatriate employees often receive a housing allowance, assisting them with covering accommodation costs.
Transportation Allowance Commuting reimbursement is a typical benefit offered to employees by many companies in the UAE.
Education Assistance Some companies in the UAE support employees by assisting with expenses related to schooling for employees and their children.
Wellness Programs Employers can prioritize employee well-being through initiatives like gym memberships, wellness workshops or mental health support.
Employee Assistance Programs (EAP) Counseling services or financial planning assistance can support employees in various life situations.
Professional Development Opportunities for skill development, training and certifications can be made available to foster employee satisfaction and loyalty.

Who is entitled to benefits in the UAE?

Employee benefits in the UAE generally apply to both expatriate and local workers, although specific entitlements may vary based on factors such as employment status, industry and contract terms. It’s essential for employers to understand these nuances and align practices with relevant laws and regulations.

Stay compliant: benefits can be risky

Managing the criteria for statutory and supplemental benefits in various countries can be overwhelming and confusing. Additionally, staying up to date with the latest developments is challenging as regulators may amend employer obligations.

However, staying compliant with the benefits requirements of a new market is critical to expanding a workforce. Neglecting to provide statutory benefits for employees can result in fines, penalties, imprisonment and potential legal action from the affected employees. Failing to offer supplemental benefits, or administering them incorrectly, can hinder talent acquisition and employee engagement.

Solutions for streamlining global benefits

Benefits account for approximately 20% of total expenditures for international companies, according to data from Mercer. This percentage is expected to increase significantly due to rising medical trend rates, according to the World Economic Forum.

However, companies pay an even greater price for a fragmented approach to offering benefits to a cross-border workforce. According to Mercer, 81% of multinational benefits leaders maintain that ‘global consistency’ is their top priority.

Companies are increasingly focused on achieving efficiencies through the harmonization and centralized management of benefits. This involves establishing a global benefits management (GBM) structure capable of customizing benefits for streamlined local implementation and enhanced employee engagement.

Within a GBM framework, innovative solutions like Employer of Record (EOR) hiring are often implemented. This enables companies to hire in countries where they lack a legal entity. EOR services extend beyond benefits, and they include ensuring that employees are paid salaries on time and other HR processes from onboarding to termination.

Investing in employee benefits is not just an added perk. It’s a strategic business decision that can drive success in competitive global markets like the UAE.

Contact us today to discover how the GoGlobal Global Benefits Team can support your organization’s growth and talent management objectives through comprehensive employee benefits solutions.