Specialists from different countries receiving offers from Dubai companies should keep in mind that current employment legislation here, as in the United Arab Emirates in general, is designed to protect employee rights. According to the UAE Employment Law, in addition to their basic salary, expat employees are entitled to compensation of certain expense items, e.g. housing allowance in Dubai.
So, what are thebenefits of moving to Dubai as employee? Read on to learn more about the breakdown of remuneration and allowances included in the salary package in Dubai.
Housing Prices and Salaries
What is an average salary of people living in Dubai? According to Salary Explorer, the average salary in Dubai in 2023 equalled AED 19,600 (USD 5,800) per month. The range of average salaries used for the calculation is wide: from AED 4,800 (USD 1,300) to AED 99,000 (almost USD 27,000) a month. This does not mean that no one in Dubai is paid less or more than these amounts – simply this is rare.
A number of companies in Dubai offer to future expat employees the so-called total salary package, consisting of:
- basic remuneration, 60%
- compensation package, which includes various benefits, 40%
DAMAC Maison Majestine (Housearch)
This formula works perfectly when inflation is low. However, if the rate of price growth increases, the amount assigned by the employer to cover housing and other expenses is no longer sufficient until an upward revision of compensation.
We should note here that while companies are reluctant to increase benefits for current employees, they are ready to take such action for new job seekers, as disclosed in a survey conducted by the Dubai division of AON Corporation in 2022: only 8% of respondents said that they intended to increase housing allowances for current employees, while 70% declared that they would increase these amounts for future applicants.
At present the real estate market in Dubai is booming. According to analysts from the CBRE international consulting agency, average rents in the emirate increased by 24.2% from May 2022 to May 2023: on average it cost 24.1% more to rent a flat and 24.8% more to rent a villa. Meanwhile, the increase in rent outstrips price growth on the market for finished and off-plan housing: over the same period, average housing prices in Dubai increased by 15.9% per year. So the price of renting a property is growing 1.5 times faster than the purchase prices of flats and houses.
At the same time, as Salary Explorer points out, salaries grow on average 8% in the UAE every 17 months (compared to a global average of 3% every 16 months). So salaries are growing far more slowly than housing prices.
Photo: Max Avans (Pexels)
Housing Allowance
How does housing allowance looks like in UAE? There are different ways in which companies pay the expenses of their employees on renting a house or a flat. It is often the case that a lump sum is paid. In other words, the employer pays the entire cost of the employee’s accommodation for the year immediately and does not require a report on the actual spend of these funds. In this case, the employee is responsible for the availability and quality of a flat, townhouse or villa. In particular, the employee can spend this money either on renting or buying a property. For example, they can use an instalment plan from a property developer in which case the payments will be comparable to rent, or take out a mortgage.
There is another option: the employer owns or rents housing for their employees. In this case, the employer is fully responsible for both the availability and quality of the housing, as well as the conclusion of a tenancy agreement and all other relations with the landlord or the owner of the building. All the employee has to do is adhere to the rules on living in the property.
How the expatriates - future employees in Dubai solve the housing question? During the job interview candidates for senior positions can stipulate from the outset that the company should pay not rent, but instead mortgage payments. In this case, you should buy finished real estate where you can move in immediately after the purchase: banks in Dubai are reluctant to lend money to expats for the purchase of housing in off-plan properties. However, if the company guarantees temporary housing for the employee for the period prior to the completion of the construction of the property that they are buying, the bank may adopt a positive decision.
What is the amount of house allowance in Dubai? The amount of the housing allowance depends on the position and the competencies of a particular employee. For example, major companies pay for luxurious villas on Palm Jumeirah for their senior executives, where rent can easily exceed AED 1 million (USD 272,000) a year, or two-level flats on the Jumeirah coast where prices start at AED 700,000 (USD 190,000) a year. Companies offer simpler flats or townhouses to employees in more junior positions , for example, in Jumeirah Village Circle, depending on the composition of the family. Prices here start at AED 100,000 (USD 27,200) a year for a townhouse. It will cost AED 40,000 (USD 11,000) a year to rent a one bedroom flat.
Explore and compare different neighbourhoods in Dubai with Housearch listings.
Medical Insurance
In 2023 the Dubai Health Authority (DHA) issued a regulation that made health insurance mandatory for every Dubai resident. The same regulation obliges employers to cover the life and health insurance expenses of their employees. It is important to note here that companies may not withhold insurance premiums from their employees or reduce their salaries to minimise costs.
The document also states: “While the employer is not required to pay for the insurance of spouses and dependents, the DHA encourages employers to do so in line with best practice in HR management and for the safety of personnel.” If spouses and dependents are not included in the insurance, it is up to the employee to make sure that they have insurance.
A health insurance policy includes emergency care and planned visits to a family physician, diagnostic tests, hospital care, as well as all types of medical care during pregnancy and childbirth. As a rule, consultations and treatment at a dentist are also included.
Photo: Oleksandr Pidvalnyi (Pexels)
Compensation of Transport Expenses
A company can also offer additional bonuses to employees, for example, the compensation of transport costs. Such compensation might consist of a company car with a prepaid petrol package, a Salik card for using toll roads and warranty service or a one-time payment to cover the cost of buying the desired brand and configuration of the car. In all other cases, only fuel costs are covered.
Some employees are eligible for annual compensation not only for vacations, but also plane tickets: in general this is when the employee plans to go on holiday in their home country.
Depending on the future position of the employee, the amount of compensation for transport costs can range from AED 6,000 AED (USD 1,600) to AED 300,000 (USD 81,700) per year and in some cases even more.
In the case of other employees, a company may provide corporate transport: for example, a bus that brings employees to the office in the morning and takes them home at the end of the work day. In this case, the financial part of the bonus is not offered.
Education Subsidy
What are other expat employee benefits? Big companies issue financial bonuses to expats who intend to take up important positions to cover the cost of their children’s education. The incentive for candidates here is high because many schools in Dubai are renowned for the high quality of education. Graduates from these schools can gain admission to almost any university in the world.
However, such education tends to be expensive: the cost of education in the best international schools of the emirate ranges from AED 5,500 (USD 1,500) to AED 95,000 AED (USD 25,800) per year, while annual fees tend to increase as the child progresses from grade to grade.
Rank-and-file employees usually have to pay independently for the education of their children. At the same time, however, some companies provide a special education bonus at the end of the year which may partially cover school expenses.
Binghatti Onyx (Housearch)
Lump Sum Compensation
According to the UAE Employment Law, all expat employees who have worked at a company for at least 12 months are entitled to a lump sum payment on the expiry of their employment contract, as well as on dismissal. It is calculated on the basis of the employee’s basic salary, and each year of work experience increases the amount of this compensation.
For example, if the employment contract was concluded for a fixed period of not more than five years, the employee is entitled to a bonus in the amount of their salary for 21 days for each year of employment. Thus, the amount of compensation for five years will exceed the three-month basic salary (105 days will be paid).
If the employment contract is extended after five years, the employee is entitled to a bonus in the amount of their salary for 30 days for each subsequent year of work. Anyone who has worked at a company for 10 years is eligible for a five-month salary for the second half of their work experience (in other words, a payment for 150 days).
If you have an open-term employment contract and continue working for the same company, you can expect similar bonuses for the same periods. If you quit the company, your compensation will also be calculated based on the number of years of work: from one to three years – one-third of the 21-day basic salary, from three to five years – two-thirds of this amount. If the work experience exceeds five years, then the employee will be entitled to their full basic salary for 21 days.
Expats working under a fixed-term contract should bear in mind that the early termination of such a contract initiated by the employee results in compensation payable to the employer. This compensation equals half of the employee’s remuneration for three months, including salary and allowances.
On the other hand, a company wishing to terminate a fixed-term employment contract early pays a severance package to the employee. The amount of such compensation is equivalent to three months’ salary, including all due allowances.
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In a Nutshell
What is the life of an expat employee in Dubai? Big companies in Dubai have been providing international job seekers with excellent career opportunities and generous compensation packages in addition to basic salary for a number of years. If you are invited for an interview due to your competencies and are applying for a major position, we recommend drawing up a list of the bonuses that you expect in advance.
First of all, you should calculate the cost of your future housing: this will determine whether you move to Dubai alone or with your family. In this case, you will be able to get a housing allowance in Dubai. Then consider the transport expenses. If the job involves frequent travel within the emirate or to other countries, you should discuss in advance how and to what extent the company intends to cover these costs.
Finally, if you plan to move to Dubai when your children are of school age, it makes sense to study the list of suitable schools and raise the issue of compensation for their education during your interview.
Cover photo: San Photography (Pexels)
