Hiring Your First Employee in the UAE: WPS, Unemployment Insurance and Health Insurance

Short answer

Establishments registered with the Ministry of Human Resources and Emiratisation (MOHRE) must pay wages through the Wage Protection System (WPS) [S1]. Private-sector employees must join the unemployment insurance scheme, with some exclusions [S2]. And since 1 January 2025, employers must buy health insurance before applying to issue or renew residence permits for private-sector employees [S4].

1. Check who regulates your employees

First check whether your company's employment falls under MOHRE or a free-zone authority. The UAE Government portal has a separate page on recruiting in free zones [S5].

2. Paying wages through WPS

All MOHRE-registered establishments must pay wages on the due date through WPS [S1].
Wages for the previous month are due on the first day of each Gregorian month. Employers must transfer at least 85% of the total wages due to employees on time (where lawful deductions apply). [S1]
Wages are transferred through banks, exchange houses or financial institutions authorised by the Central Bank of the UAE [S1].
Measures for late payment start from the second day after the due date, including electronic alerts and monitoring [S1].

3. Unemployment insurance

Employees in the federal government and private sectors are required to join the scheme by buying a policy [S2].
Excluded: investors (the owner of the establishment where they work), domestic workers, employees on temporary contracts, juveniles under 18, and Emirati citizens who have met the conditions for retirement or retirees who receive a pension and have joined a new job [S2].
To claim, the insured must have been subscribed for at least 12 consecutive months and paid the premiums; must show the unemployment was not due to resignation; must not have been dismissed for disciplinary reasons; and must submit the claim within 30 days of the end of employment [S2][S3].

4. Health insurance for residence permits

From 1 January 2025, employers must buy a health insurance policy as a prerequisite for issuing or renewing residence permits of private-sector employees and domestic workers [S4].
The requirement was already mandatory in Abu Dhabi and Dubai and extends to Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah [S4].
According to the UAE Government portal, it does not apply to employees with work permits issued before 1 January 2024 that remain valid; it becomes mandatory when their residence permits are renewed [S4]. Check the latest guidance from ICP or MOHRE before relying on this exception.
The policy is valid for two years [S4].

Note on Lexoford

Lexoford Services helps with company setup and visas. This page summarises published government guidance; it is not legal or HR advice, and authorities decide every application.

For reference only. The competent authority's rules prevail.

Sources

FAQ

Do small companies have to use WPS?

All MOHRE-registered establishments must pay wages through WPS [S1].

When are salaries due under WPS?

On the first day of each Gregorian month for the previous month, under Ministerial Resolution No. 340 of 2026 [S1].

How much of the salary must be paid on time?

Wages for the previous month are due on the first day of each Gregorian month. Employers must transfer at least 85% of the total wages due to employees on time (where lawful deductions apply). [S1]

Does the company owner need unemployment insurance?

Investors who own the establishment where they work are excluded [S2].

Who else is excluded from unemployment insurance?

Domestic workers, temporary-contract employees, under-18s, and Emirati citizens who have met the conditions for retirement or retirees who receive a pension and have joined a new job [S2].

When can an employee claim unemployment insurance?

After at least 12 consecutive months of subscription with premiums paid, if the unemployment was not due to resignation and not a disciplinary dismissal, with the claim submitted within 30 days of the end of employment [S2][S3].

Is health insurance required for an employee's residence visa?

Yes. Since 1 January 2025, employers must buy it before issuing or renewing private-sector residence permits [S4].

Are existing employees exempt from the health insurance rule?

The UAE Government portal says employees with valid work permits issued before 1 January 2024 are exempt until their residence permits are renewed [S4]. Check the latest guidance from ICP or MOHRE before relying on this exception.

Does a free-zone company follow the MOHRE rules?

Check with your free-zone authority first; the UAE Government portal covers recruiting in free zones separately [S5].