UAE guide · Updated November 2026
How to reimburse employee expenses in the UAE
UAE companies can pay approved expense claims back alongside the salary run or by a separate bank transfer. Employees submit business costs with supporting evidence, finance pays through an agreed process, and reimbursements are recorded separately from wages, even when they are processed with payroll.
How do UAE companies pay employees back?
An employee pays for something the business needs, such as a client lunch, parking or a spare part, and claims the money back. A sound reimbursement has four records:
- Evidence. Normally a receipt, ideally a tax invoice so the VAT details are kept, or other accepted evidence under a documented exception.
- An approval. The manager confirms it was a business cost, and finance checks the claim.
- A payment. Alongside the salary run, by a separate bank transfer or from petty cash.
- A payment record. What was paid, when, and against which claims, kept apart from the wage record.
A complete claim shows the employee, the expense date, the merchant, the amount and currency, the receipt or other evidence, the business purpose, the project or cost center, and who approved it.
Reimbursement or allowance: what is the difference?
| Reimbursement | Allowance | |
|---|---|---|
| What it is | Repays actual business spending the employee paid for | A cash amount agreed in the contract or policy |
| Paid when | When money was spent and the claim is approved | On the schedule and conditions agreed, whether or not money was spent |
| Evidence | Normally a receipt or other accepted evidence for each claim | The contract or policy, and the payslip |
| Relation to wages | A genuine repayment of business spending is recorded separately from pay | A contractual cash allowance can form part of the wage |
| VAT | Tax invoices are collected, so VAT can be reviewed for recovery | The allowance payment is not a supplier tax invoice |
Under the federal labour law, the wage includes contractual cash allowances and benefits, while the basic wage excludes allowances. The name given to a payment does not decide how it is treated, so check your arrangements with an adviser.
Many companies use both: an allowance for routine costs and reimbursement for costs that vary, such as client visits. The UAE VAT guide covers the VAT side.
Three ways to pay employees back
| Method | Works well when | What it needs |
|---|---|---|
| Alongside the salary run | You want a fixed date employees can rely on. | Show the reimbursement as a separate item, not as wage. Processing it with payroll does not mean it belongs in a WPS salary file: confirm with your payroll provider or WPS agent. |
| Separate bank transfer | You want reimbursements clearly apart from wages, or need to pay before month end. | An extra payment run to prepare and approve, and verified bank details for each employee. |
| Petty cash | Small amounts that need paying on the spot. | Numbered payment vouchers, the employee's signature for the cash, the receipts, and regular reconciliation of the float. |
A six-step reimbursement process
- Set a timetableFor example, claims approved by the 20th are paid with that month's salary. Monthly is only an example: weekly or twice-monthly runs work too. Say what happens to claims that miss the cut-off, and when they are paid.
- Collect claims as they happenEmployees send each receipt when they pay, not in a pile at month end. Each claim names the client, project or reason.
- Approve, then reviewThe manager confirms the business purpose. Finance checks the evidence, the coding and the VAT details.
- Prepare the payment batchList every approved claim with the employee and amount, using the payroll identifier or verified bank details the payment method needs.
- Have a second person release itA recommended control, not a legal requirement: the person who prepares the batch should not release it, and nobody should release a payment to themselves.
- Pay, confirm, then recordMake the payment and reconcile the result before marking claims paid. A prepared or downloaded file is not proof of payment. Then tell employees.
Missing receipts
Ask the supplier for a replacement first. If there is none, use a documented exception approved by the manager, and review VAT recovery separately.
Large or urgent expenses
Offer an earlier payment route or an advance, so employees are not expected to fund substantial business costs until month end.
What the employment law means for reimbursement
Whether an employee is entitled to be repaid depends on the applicable law, the employment contract, company policy and the circumstances of the expense. Some costs fall on the employer by law: the federal labour law, for example, makes the employer responsible for relocation and residence costs in the reassignment circumstances it describes. Others rest on what the contract and policy provide.
A contract or policy cannot remove a statutory obligation, and an item missing from a policy does not automatically mean the employee has no entitlement. Legal commentary on individual cases, such as fuel and Salik for an employee who drives for work, turns on that employee's contract and allowances.
So write your reimbursement rules down: what the company repays, what it does not, the limits, the evidence needed and the payment timetable. It gives employees certainty and managers a rule to apply. A written reimbursement policy is also one of the conditions for recovering VAT on some employee costs, such as business parking.
Where does WPS fit?
The Wage Protection System (WPS) is the Ministry of Human Resources and Emiratisation (MOHRE) system for paying wages through approved banks and exchange houses. For establishments in its scope, Ministerial Resolution No. 0340 of 2026 makes wages due no later than the first day of the month for the previous month's work. See the official wage-payment guidance for the full rules.
For expense reimbursement, four points matter:
- Meet the wage-payment obligations that apply to your company in full and on time.
- Record expense reimbursements distinctly from wages.
- Confirm with your payroll provider or WPS agent how reimbursement amounts should be handled.
- Never let pending expense approvals delay a salary run, and do not net a claim against a wage.
Common mistakes
- No written policy. Employees do not know what is covered, and managers decide case by case.
- Mixing reimbursements into wages. It blurs the wage record and the expense record.
- Holding the salary run for late claims. Wages have their own due date. Late claims follow the agreed reimbursement timetable.
- Paying without evidence. No support for the business cost, and no VAT details.
- Paying to changed bank details without checking. Confirm a new IBAN with the employee before money goes to it.
- One person preparing and releasing payments. A second pair of eyes catches mistakes and deters fraud.
- Marking a claim paid before the payment is confirmed. Reconcile first.
- Paying the same claim twice. Once with payroll and again by transfer, or two people claiming one shared bill.
How Reimgo helps you pay people back
Claims arrive with receipts attached
Employees send receipts on WhatsApp, by email or in the app. Each claim carries its receipt, project and explanation through approval.
A batch of approved reports
Finance groups approved reports into a payment batch for the pay date. By default a second person releases it with a fresh authenticator code, and nobody can release a batch that pays themselves.
Changed bank details are held
A payment line is held when an employee's bank details changed in the last 14 days, until a second person confirms it.
A file for payroll, and a record of payment
Download a reimbursement file to add the amounts to your payroll run. After you have paid, mark the batch paid with the date and reference, and employees are told by email.
Reimgo prepares the file and records the payment status. Your business makes the payment, and Reimgo never holds or moves money. For dirham batches Reimgo can also produce a file in the WPS salary file (SIF) layout; check with your bank or exchange house that it accepts this file for reimbursements.
Questions about reimbursing expenses in the UAE
How do UAE companies reimburse employee expenses?
A company can pay approved claims back alongside the salary run, by a separate bank transfer or, for small amounts, from petty cash. Whichever it uses, each claim should have supporting evidence, an approval, a payment and a record kept apart from the employee's wages.
Does UAE labour law require an employer to reimburse work expenses?
It depends on the applicable law, the employment contract, company policy and the circumstances of the expense. Some costs are the employer's by law, and others rest on the contract or policy. Put your reimbursement rules in writing, and ask an employment adviser about specific cases.
Is an expense reimbursement part of an employee's wage?
A genuine repayment of actual business spending is recorded separately from pay. A contractual cash allowance is different: it can form part of the wage. The label alone does not decide it, so ask your adviser where the line falls for your arrangements.
Do expense reimbursements have to go through WPS?
The Wage Protection System is for wages. Paying reimbursements alongside payroll does not mean they belong in a WPS salary file. Confirm with your payroll provider or WPS agent how reimbursement amounts should be handled.
What if an employee loses the receipt?
Ask for a replacement from the supplier first. If there is none, use a documented exception, such as a signed declaration approved by the manager, and review VAT recovery separately, because a missing tax invoice usually means the VAT cannot be recovered.
Can an employee be reimbursed before the next payroll run?
Yes, if your process allows it. Define an earlier payment route, such as a separate bank transfer, or an advance for large or urgent costs, so employees are not funding substantial business spending until month end.
How quickly should employees be paid back?
Set a timetable and keep to it. A monthly cut-off with payment in the next salary run is one common example, but more frequent runs work too. Follow any payment terms in your contracts or policy.
Should we pay a fixed allowance instead of reimbursing?
An allowance is simpler to run, but it is paid on its agreed schedule whether or not money was spent, and it can form part of the wage. Reimbursing against tax invoices keeps the evidence and the VAT details. Many companies use both.
Sources and review date
- Ministry of Human Resources and Emiratisation (MOHRE): Federal Decree-Law No. 33 of 2021 on employment relations, the Wage Protection System and Ministerial Resolution No. 0340 of 2026.
- The official UAE government portal: wage-payment guidance.
- EY: UAE introduces enhanced Wage Protection System, effective 1 June 2026.
- Khaleej Times: should employees pay for fuel and Salik when travelling for work? (one case, not a general rule).
Last reviewed: 10 November 2026. Rules change, and this guide summarises them in plain words. Check the official text before you rely on any point.
This guide gives general information, not legal, payroll or tax advice. It discusses the federal employment law and the MOHRE Wage Protection System, which do not apply to every employment arrangement in the UAE: the ADGM and DIFC free zones have their own employment rules. Ask your adviser how the rules apply to your company.
Pay your team back on a date they can rely on
Try Reimgo with your UAE team: collect receipts on WhatsApp, approve reports and prepare a reimbursement batch for your next payment date.