Free zones. DEWS. Mainland split. UAE payroll, unified.
UAE payroll is not a single rulebook. It demands a dual-regime engine – mainland Federal Decree-Law plus free-zone-specific employment laws, GPSSA pension contributions for nationals, DEWS savings schemes in DIFC/ADGM, WPS via Central Bank, and MoHRE permit integration. Most providers handle one track. Mercans delivers all of them – on a single proprietary stack with no intermediaries.
native payroll
vs nearest peer
since inception
- Employer GPSSA (Law 57)
- 15% (cap AED 70,000) – post-Oct 2023
- Employer GPSSA (Legacy)
- 12.5% / 15% (cap AED 50,000) – pre-Oct 2023
- Employee GPSSA (Law 57)
- 11% – post-Oct 2023
- Employee GPSSA (Legacy)
- 5% – pre-Oct 2023
- GPSSA Deadline
- 15th of next month
- Expat GPSSA
- Exempt – gratuity only
- Personal Income Tax
- None
- Corporate Tax
- 9% on profits > AED 375k
- DEWS (DIFC/ADGM)
- 5.83% / 8.33% of basic
- Gratuity Yr 1–5
- 21 days / year
- Gratuity Yr 5+
- 30 days / year
- Gratuity Cap
- Max 2 years’ basic
- Overtime Standard
- 125%
- Overtime 9pm–4am
- 150%
- Probation
- Max 6 months
- WPS Channel
- Central Bank · AED only
- MoHRE Permits
- Linked to WPS compliance
Payroll compliance: the details that can’t be missed
The UAE’s dual-regime environment – mainland vs. free zone – doubles the compliance surface. MoHRE suspends work permits for WPS violations. GPSSA levies retroactive penalties on pension under-remittance. Free-zone authorities enforce their own gratuity and DEWS rules independently. These failures don’t announce themselves – they accumulate until an audit or a labour dispute makes them visible.
GPSSA retroactive shortfall + penalties
Under-reported pensionable salary components for UAE/GCC nationals trigger retroactive contribution recovery with penalty interest on every month of under-remittance.
MoHRE permit suspension via WPS
WPS non-compliance – late salary payments, incorrect amounts, or missed filings – triggers automatic work permit suspension across your entire UAE headcount via MoHRE’s automated monitoring.
Free zone vs. mainland misclassification
Applying mainland gratuity rules in DIFC/ADGM – or DEWS contributions on mainland employees – creates dual-direction liability: incorrect accruals and non-compliant settlements on termination.
Gratuity miscalculation = labour court
Incorrect base salary identification, wrong tenure tiers, or exceeding the two-year cap – gratuity miscalculation is the single most common trigger for UAE labour disputes and MoHRE complaints.
The three types of providers who struggle with UAE
Global Aggregator Platforms
Platforms like Deel, Remote, and Rippling operate through a partner network in the UAE — they don’t own the entity, don’t directly manage GPSSA, and don’t control the free-zone vs. mainland compliance split. When regulations change, the instruction travels: platform → partner → your payroll. Each handoff introduces delay and interpretation risk.
- ×No direct GPSSA relationship — third-party intermediary handles filings
- ×Free zone and mainland payroll collapsed into single workflow
- ×DEWS scheme integration absent or manual workaround
- ×Regulatory updates filtered through partner SLAs, not live
Large Global Payroll Incumbents
ADP, Ceridian, and similar incumbents have UAE coverage — in name. In practice, their UAE coverage is often delivered through regional partners or legacy systems that weren’t built for the mainland/free-zone split, GPSSA’s tiered employer subsidy, or DEWS monthly contribution workflows.
- ×GPSSA government subsidy threshold not modelled — flat rate applied
- ×DEWS vs. mainland gratuity treated as single scheme
- ×Long implementation timelines — UAE not a core market
- ×No multi-emirate free-zone rule differentiation
Local UAE Firms
Local UAE accounting and PRO firms know the market — but they can’t scale with you. No payroll technology platform, no HCM integration, no multi-country consolidation, and no data security certifications that multinationals require. Fine for 10 employees. Inadequate at 100.
- ×No proprietary payroll technology — manual spreadsheet-based processing
- ×No HCM connector — Workday, SAP, Oracle feeds require custom work
- ×No data security certifications (SOC 1/2, ISO 27701, BCR)
- ×No GCC consolidation — cannot report across UAE + other Gulf entities
The only provider that closes every gap
Mercans is the only UAE payroll provider that combines a proprietary payroll technology stack, full-time in-country compliance teams, direct authority relationships, and enterprise-grade data security – simultaneously, on one contract, with no intermediaries.
The only engine built for the UAE’s actual dual-regime architecture
G2N Nova™ is the world’s only API-first gross-to-net payroll engine. It natively models the UAE’s mainland/free-zone split – Federal Decree-Law gratuity alongside DEWS monthly contributions – handles GPSSA tiered employer rates with government subsidy thresholds, enforces WPS compliance outputs per Central Bank specifications, and routes GCC pension contributions automatically. This isn’t configuration. It’s engineering.
Full-time UAE team – not a partner you phone when things break
Mercans employs full-time payroll and compliance professionals in the UAE. They maintain active relationships with GPSSA, MoHRE, and free-zone authorities – not through a contact directory, but through ongoing regulatory engagement. When MoHRE issues a circular, when GPSSA updates a contribution threshold, when a free-zone authority changes employment rules – we know before it reaches your inbox.
The security posture multinationals require – and the UAE now mandates
The UAE’s Federal Decree-Law No. 45 of 2021 (PDPL) requires payroll processors handling employee personal data to maintain documented privacy controls and data residency frameworks. Mercans holds BCR approval, ISO 27701 certification, SOC 1 & 2 certifications, and ISO 27017/27018 – the only payroll provider in the GCC with this complete certification stack. Zero security breaches since inception.
Where Mercans wins on every UAE-specific capability
Each row is a UAE-specific capability. Each cell shows native coverage as a fill bar – full = native in-platform, half = partial / manual workaround, empty = gap.
UAE Capability Coverage · 11 dimensions
New: 15%/11% · Legacy: 12.5%/5%
DIFC · ADGM · DMCC · JAFZA
Workday · SAP · Oracle
Every rate. Every cap. Every obligation.
UAE payroll operates across two regimes with exact numbers and hard deadlines. Mercans builds every figure below into G2N Nova™ and monitors them proactively – so you’re never discovering a rate change from a penalty notice.
UAE · Rate & Compliance Dashboard
Live 2025–26GPSSA Dual-System – Law 57/2023 vs. Legacy
Under Law 57/2023, employees hired after October 2023 contribute at ER 15% + EE 11% on a salary cap of AED 70,000/month. Legacy employees (pre-Oct 2023) remain under the old structure: ER 12.5% (or 15% above AED 20k threshold) + EE 5%, capped at AED 50,000. A compliant UAE payroll must apply the correct system per employee based on hire date.
→ Modelled natively in G2N Nova™Mainland Gratuity Cap Changes Settlement Outcomes
UAE Federal Decree-Law caps total gratuity at two years’ basic salary regardless of tenure length. Employees with 15+ years of service can hit this cap, and the capping logic differs from the accrual formula. Payroll systems that calculate without enforcing the cap create over-accrual liabilities.
→ Cap enforcement automated in G2N Nova™DEWS Replaces Gratuity in DIFC & ADGM
Employees in DIFC and ADGM are not subject to mainland gratuity. Instead, employers make monthly DEWS contributions (5.83% for years 1–5, 8.33% thereafter) into individual savings accounts. Applying mainland gratuity formulas to DEWS-eligible employees creates compliance exposure in both directions.
→ Dual engine: mainland gratuity + DEWS on same platformPDPL Compliance Is a Payroll Processor Obligation
The UAE’s Personal Data Protection Law (Federal Decree-Law No. 45 of 2021) places explicit obligations on entities processing employee personal data – including payroll providers. Non-compliant processors create direct liability for the employers they serve.
→ BCR · ISO 27701 · PDPL agreements standardRun a UAE payroll. Right here, right now.
Switch nationality. Move the sliders. Every number you see is the same calculation G2N Nova™ runs in production – GPSSA pension logic, expat gratuity accrual, DEWS contribution mapping, and true cost of employment exposed live.
UAE Payroll Sample · Live
G2N Nova™ engineEight things only UAE experts know to handle
These are the compliance details that don’t appear in standard payroll setup guides – but appear in every GPSSA audit, MoHRE inspection, and labour court case we’ve encountered in the UAE over 20 years.
GPSSA Now Runs Two Parallel Systems (Law 57/2023)
Employees hired after October 2023 fall under Law 57/2023: ER 15%, EE 11%, cap AED 70,000/month. Legacy employees (pre-Oct 2023) remain on the old system: ER 12.5% (or 15% above AED 20k) + EE 5%, cap AED 50,000. Applying a single set of rates to all nationals is the most common UAE pension error.
Mainland and Free Zone Are Two Different Labour Laws
Federal Decree-Law No. 33 of 2021 governs mainland employment. DIFC and ADGM operate under their own employment laws with different gratuity calculations, probation rules, and termination entitlements. Applying mainland rules to free-zone employees – or vice versa – creates systematic compliance exposure.
DEWS Monthly Contributions Replace Lump-Sum Gratuity
In DIFC and ADGM, the traditional end-of-service lump sum is replaced by monthly DEWS contributions (5.83% for years 1–5, 8.33% thereafter) into individual savings accounts. This is not a parallel scheme – it fully replaces gratuity. Running both simultaneously for the same employee is a dual-liability error.
GCC Nationals Require Home-Country Pension Routing
Non-UAE GCC nationals working in the UAE are not GPSSA-exempt. Under the GCC Unified Pension System, their contributions must be coordinated with and remitted to their home country’s social insurance authority via GPSSA as liaison. Most platforms don’t model this cross-border workflow.
WPS Compliance Is a Work Permit Dependency
The UAE’s Wage Protection System, administered via the Central Bank, cross-references salary payments against MoHRE work permit data. Late payments, incorrect amounts, or payments through non-approved channels trigger automatic permit suspension – affecting your entire UAE operation, not just the non-compliant employee.
Gratuity Cap at Two Years Changes Long-Tenure Settlements
UAE Federal Decree-Law caps total gratuity at two years’ basic salary regardless of tenure. An employee with 20 years of service accrues significantly more under the tiered formula – but the cap applies. Payroll systems that calculate without enforcing this cap create over-accrual liabilities that surface at termination.
Emiratisation Quotas Carry Financial Penalties
Private-sector companies with 50+ employees must increase their Emiratisation ratio by 2% annually. Non-compliance triggers fines of AED 96,000 per unfilled national position per year. Tracking, reporting, and maintaining compliance requires real-time workforce nationality data integrated with payroll.
Corporate Tax at 9% Has Payroll Cost Implications
The UAE introduced a 9% corporate tax on profits exceeding AED 375,000 effective June 2023. While there is no personal income tax, the corporate tax interacts with payroll cost structures – particularly for owner-managed entities where salary vs. dividend allocation affects the total tax burden.
One workforce. Two entirely different compliance tracks.
The foundational split in UAE payroll – UAE/GCC nationals on GPSSA vs. expatriates on gratuity – is not a configuration toggle. It requires two distinct calculation engines, two sets of filing obligations, and two different terminal settlement frameworks. Mercans runs both simultaneously on every pay cycle.
Parallel Compliance Engines
GPSSA registration is mandatory from Day 1. Under Law 57/2023 (post-Oct 2023 hires): ER 15%, EE 11%, cap AED 70,000/month. Legacy (pre-Oct 2023): ER 12.5%/15%, EE 5%, cap AED 50,000. Remittance by 15th of following month.
Law 57/2023 creates a hire-date-based rate split. Post-Oct 2023 hires: ER 15%, EE 11%, cap AED 70,000. Legacy employees retain the old tiered structure (12.5%/15% with AED 20k threshold, EE 5%, cap AED 50,000). Both systems can coexist in the same payroll run.
GCC nationals require home-country pension routing. The UAE’s GPSSA acts as liaison – contributions remitted to the national’s home GCC state social insurance body. A cross-border remittance workflow most platforms don’t model.
Emiratisation compliance is tied to payroll data. Nationality ratios, headcount movements, and compensation structures reported to MoHRE draw directly from payroll records. Misaligned data triggers penalty assessments.
GPSSA-exempt does not mean liability-free. End-of-service gratuity is a mandatory unfunded liability that accrues from Day 1. It must be calculated on basic salary only, tracked, and reconciled continuously – not computed at exit.
The two-year cap changes long-tenure settlement outcomes. Total gratuity cannot exceed two years’ basic salary regardless of tenure. An employee earning AED 30,000 basic with 20 years of service hits this cap – but the accrual formula produces a higher number. The cap must be enforced at settlement.
Health insurance is mandatory for the full contract term. Employers must maintain valid coverage throughout employment. Emirates-specific mandates (e.g., DHA in Dubai, HAAD in Abu Dhabi) impose different minimum coverage requirements.
True employment cost exceeds salary by 30–45%. Housing, transport, air tickets, schooling, and mobile allowances are standard expectations for professional-level expatriate hires. A line item that surprises companies hiring rapidly.
Every obligation. Every authority. Mercans owns the calendar.
UAE compliance runs across GPSSA, MoHRE, the Central Bank, and free-zone authorities on monthly, annual, and event-triggered cadences. Mercans’ managed payroll absorbs every filing as standard scope – you don’t track deadlines. We do.
GPSSA Pension Remittance
GPSSA pension contributions remitted for all UAE and GCC nationals via the GPSSA employer portal. Law 57/2023 hires: ER 15% / EE 11%, cap AED 70,000. Legacy hires: ER 12.5%/15% / EE 5%, cap AED 50,000.
WPS Salary Transfer File
All employee salaries processed through the Wage Protection System via UAE-based bank accounts in AED. MoHRE cross-checks WPS records against work permit data – violations trigger automatic permit suspension.
DEWS Monthly Contributions
Employers in DIFC and ADGM must remit DEWS contributions monthly – 5.83% of basic salary for years 1–5 and 8.33% thereafter – into individual employee savings accounts managed by approved custodians.
Emiratisation Progress Report
Companies with 50+ employees must report Emiratisation ratio progress to MoHRE. Non-compliance with the 2% annual increase target triggers fines of AED 96,000 per unfilled position per year.
MoHRE Labour Contract Registration
Every new hire, contract amendment, and termination must be registered with MoHRE. The labour contract is the legal basis for work permits, WPS matching, and end-of-service calculations. Mismatched data triggers compliance flags.
End-of-Service Gratuity Settlement
Final settlement applying tiered gratuity logic per tenure bracket and the two-year cap. Calculation base is last drawn basic salary. Miscalculation is the leading cause of UAE labour complaints filed with MoHRE.
Health Insurance Compliance
Mandatory health insurance coverage for all employees. Dubai (DHA), Abu Dhabi (HAAD/DoH), and other emirates enforce minimum coverage requirements. Lapses trigger fines and can block visa renewals.
Corporate Tax Return (FTA)
UAE-incorporated entities must file annual corporate tax returns with the Federal Tax Authority. The 9% rate on profits > AED 375,000 interacts with payroll cost structures, particularly for owner-managed businesses and free-zone entities claiming qualifying income exemptions.
UAE is one market. Mercans covers all six.
For companies running payroll across multiple Gulf states, complexity multiplies – not adds. Each GCC country runs its own labor authority, social insurance body, and wage protection mandate. Mercans covers all six on a single platform with country-specific compliance engines running in parallel.
covered
1 contract
consolidation
GCC
Every filing. Every format. Submission-ready.
Mercans generates the exact file types that GPSSA, MoHRE, the Central Bank, and free-zone authorities expect to receive — not formatted summaries that need reformatting before you can submit them.
