The cost of an employee is salary plus employer contributions, and those contributions range from almost nothing for expatriates in the Gulf to a large share of pay in France and Germany. Several systems cover only nationals or residents, so the nationality of the hire changes the cost. Employers also act as tax collectors: France withholds income tax through the monthly social declaration, while Saudi Arabia has no personal income tax on salaries.
Who is covered changes the cost
In the UAE, pension contributions apply to UAE and other GCC national employees: 20% of contractual gross pay, of which 12.5% is paid by the employer (15% in Abu Dhabi). In Saudi Arabia, Saudi employees attract contributions of 21.5% of salary (11.75% employer), while for non-Saudi employees the employer pays only 2% for occupational hazards, on salary capped at SAR 45,000 a month. Singapore's CPF applies to citizens and permanent residents, with an employer rate of 17% for employees aged 55 and below in 2026, and not to foreign employees on work passes.
India's provident fund is 12% from the employer and 12% from the employee on wages as defined in the labour codes, and the codes require basic pay and allowances that count as wages to be at least half of total remuneration, which can raise the contribution base.12345
Western Europe and the US
In Germany in 2026, pension insurance is 18.6% and unemployment insurance 2.6% of pay, split equally, up to EUR 8,450 a month; health insurance is 14.6% plus an average additional 2.9 points and care insurance 3.6%, also shared, up to EUR 5,812.50 a month. French payslips carry a longer list of employer contributions, including old-age insurance at 8.55% capped and 1.90% uncapped and family allowances at 5.25% (3.45% below 3.5 times the minimum wage).
UK employers pay secondary Class 1 National Insurance at 15% above GBP 5,000 a year in 2026-27. In the US, federal social security tax is 6.2% each for employer and employee on wages up to USD 184,500 in 2026, and federal unemployment tax is 6.0% on the first USD 7,000, reduced to 0.6% net with the credit for state unemployment tax, which is set separately by each state.67891011
Withholding income tax
French employers withhold income tax at source monthly and report it in the nominative social declaration (DSN), due by the 5th or 15th of the following month depending on headcount. Saudi Arabia has no personal income tax on employment income, though social insurance still applies.1213
| Market | Scheme | Employer rate | Ceiling or base | Source |
|---|---|---|---|---|
| India | Provident fund | 12% | Wages as defined in the labour codes | Secondary summary of the codes |
| UAE | Pension (UAE and GCC nationals only) | 12.5% (15% in Abu Dhabi) | Contractual gross pay | PwC (secondary) |
| Saudi Arabia | Social insurance | 11.75% Saudi; 2% non-Saudi (occupational hazards) | Basic salary plus housing, up to SAR 45,000 a month | PwC (secondary) |
| Singapore | CPF (citizens and PRs) | 17% (age 55 and below) | Employees earning over S$750 a month | CPF Board |
| United Kingdom | Class 1 secondary National Insurance | 15% | Above GBP 5,000 a year | HMRC |
| United States (federal) | Social security; FUTA | 6.2%; 6.0% (0.6% net) | USD 184,500; USD 7,000 | IRS |
| Germany | Pension and unemployment; health and care | 9.3% and 1.3%; 7.3% plus half the additional rate, and 1.8% | EUR 8,450; EUR 5,812.50 a month | Deutsche Rentenversicherung; vdek |
| France | Old-age insurance; family allowances (selected) | 8.55% capped plus 1.90%; 5.25% or 3.45% | Partial list only | Service-Public |
Decisions to make
- What is the nationality and residence status of each hire?123UAE pensions, Saudi social insurance rates and Singapore CPF all depend on nationality or residence.
- How will pay be split between basic salary and allowances in India?54The codes add back excluded allowances above half of remuneration, widening the base for contributions.
- Which US states will employees work in?11Federal unemployment tax assumes the state unemployment tax is paid; state rates and wage bases differ.
- Is the salary above the contribution ceilings?6102German, US and Saudi contributions stop at a ceiling, so on-cost percentages fall for higher earners.
Documents usually needed
- Employer registrations with the tax authority and each social security body
- Payroll calendar with filing and payment dates (for example the French DSN deadline)
- Employee nationality and residence evidence used to determine coverage
- Pay structure showing basic pay and allowances
- Annual reconciliation of contributions against ceilings
Common mistakes
- Budgeting Gulf payroll cost without the end-of-service liability, because social contributions for expatriates are low
- Applying 2025 German or UK rates and ceilings to 2026 payroll
- Ignoring US state unemployment tax because the federal FUTA rate looks small
- Assuming Singapore CPF applies to foreign employees on work passes
What this guide does not yet confirm
These points need checking with a qualified local professional before you rely on them.
- India's provident fund rate rests on a secondary summary; wage ceilings and ESIC applicability to higher earners were not confirmed on the EPFO site.
- UAE and Saudi contribution rates are from a secondary source; the Saudi Social Insurance Law changes for new entrants since July 2024 were not confirmed.
- The full set of French employer rates (sickness, unemployment, supplementary pension) was not confirmed on an official page.
- UK PAYE, US federal and state income tax withholding and German wage tax withholding mechanics were not covered in detail.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 19 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
A foreign worker's end-of-service gratuity is 21 days' wage for each of the first five years of service and 30 days' wage for each further year, capped at two years' wage in total. Mainland private sector. The two-year cap is stated for foreign workers. The wage basis for the calculation and the treatment of UAE nationals were not reviewed here.
Reused from market guide claim ae-people-007.
Questions on this topic
13 statements on payroll, employer contributions and withholding
