Odoo Payroll UAE: Complete Setup Guide for WPS, Gratuity and GPSSA

Quick answer: Odoo payroll UAE setup uses the official l10n_ae_hr_payroll module, which covers salary structures with allowances, WPS SIF export, end of service gratuity, leave provisions and social insurance for Emiratis. You still need to configure your Employer Unique ID, bank routing codes, overtime rules and current GPSSA rates, then test with a parallel payroll run before going live.

Key takeaways

Odoo payroll UAE compliance starts with the official localisation: one module for salary rules and structures, one for payroll accounting.
The WPS SIF file is generated from a posted payslip batch, but only if your Employer Unique ID, IBAN and bank routing code are correct.
Gratuity follows the 21 day and 30 day formula under Federal Decree-Law 33 of 2021; you must check the basic wage basis and the two year cap.
Odoo’s documented social insurance defaults reflect older percentages, so align them with Federal Decree-Law 57 of 2023 for newer Emirati hires.
Overtime, ILOE tracking and company-specific leave policies need deliberate configuration rather than relying on defaults.

What does Odoo payroll UAE localisation actually include?

Odoo publishes an official UAE payroll localisation, documented on the Odoo UAE payroll documentation page. Payroll is an Odoo Enterprise application, so the localisation is available when you run Enterprise on Odoo Online, Odoo.sh or on premise.

The two localisation modules

l10n_ae_hr_payroll: UAE salary rules, calculations and salary structures.
l10n_ae_hr_payroll_account: the accounting side, mapping each payroll rule to debit and credit accounts and creating journal entries per batch or per employee.

What the localisation covers out of the box

Area	What Odoo provides	What you must still decide or configure
Salary structure	Basic wage plus housing, transportation and other allowances on the contract	Any extra allowances, commissions and company-specific benefits
WPS	SIF export from posted payslip batches	Employer Unique ID, salaries bank account, IBANs, routing codes
End of service	Gratuity on archiving, plus a monthly EOS provision	Treatment of unpaid absence, caps and savings scheme participation
Annual leave	Monthly leave provision, remaining balance pay or recovery, unpaid leave deduction	Leave days per contract, carry-forward policy
Sick leave	Three tiers: full pay, half pay, unpaid	Time off types, certificate rules, probation handling
UAE nationals	Social insurance rule and DEWS option	Current GPSSA or ADPF rates for each employee’s scheme
Overtime	An overtime input type that also feeds WPS variable pay	The actual calculation rule and approval workflow
Reporting	Monthly and end of service payslip printouts, Master Report export	Management dashboards and audit packs

How do you set up Odoo payroll UAE step by step?

Follow this order, because the localisation depends on its own data.

Install the modules. Activate Payroll, then confirm the UAE localisation modules are installed for the UAE company.
Configure the company WPS settings. In Payroll settings, enter the Employer Unique ID issued for WPS and select the salaries bank account. That account needs a valid IBAN, a bank record with the UAE Routing Code Agent ID, and Send Money enabled and set to trusted.
Complete employee records. Nationality matters because it drives social insurance and GCC handling. Add the identification number and the employee’s bank account, as WPS needs both.
Build contracts correctly. Set wage type (fixed or hourly), scheduled pay, basic wage, housing, transportation and other allowances, number of leave days and, for Emiratis where relevant, the DEWS option.
Define time off types. Configure annual, unpaid and sick leave types so that payslips pick up the right deductions and provisions.
Add custom rules. Overtime, commissions, ticket allowances and any deductions not covered by defaults belong here.
Map accounts. Link each rule to the chart of accounts, including EOS and leave provisions, so journal entries balance.
Run a parallel payroll. Process at least one month in Odoo alongside your current system and reconcile line by line.
Generate and test the SIF file. Upload a test file with your bank or exchange house before the first live salary date.

How does WPS work with Odoo payroll?

The Wage Protection System is the electronic salary transfer system run by the Ministry of Human Resources and Emiratisation (MOHRE) with the Central Bank of the UAE. Establishments registered with MOHRE must pay wages through WPS using banks, exchange houses or financial institutions authorised by the Central Bank. According to official guidance, salaries for the previous month are due on the first day of each Gregorian month, and penalties escalate if payment is late, starting with alerts and moving to suspension of new work permits and further enforcement. Free zones may apply their own rules, so confirm with your authority.

Generating the SIF file in Odoo

Create and compute the payslip batch for the period.
Review exceptions, then validate and post the batch.
Create a payment report from the batch and set the export format to UAE WPS.
Download the .sif file and upload it through your WPS agent’s portal.

The SIF contains one Employee Detail Record per employee, Employee Variable Pay records for items such as housing, conveyance, overtime and leave encashment, and one Salary Control Record per file. If an employee’s IBAN or ID is missing, the file will be rejected or the employee will be left out, so validation before posting is essential.

How is end of service gratuity calculated under UAE Labour Law?

Under Federal Decree-Law 33 of 2021, a full time expatriate employee in the private sector who completes at least one year of continuous service is entitled to gratuity. The UAE Government portal sets out the core rules:

21 days of basic wage per year for the first five years.
30 days of basic wage per year after five years.
Proportionate payment for part years once the first year is complete.
Unpaid absence days are excluded from the service period.
Total gratuity cannot exceed two years’ wage.
Payment of gratuity and other dues is required within 14 days of the end of the contract.

In Odoo, gratuity is triggered when you archive an employee with a departure reason, and the end of service payslip printout is used for that month. The daily rate defaults to monthly wage divided by 30. Make sure the wage used is the last basic salary and not total pay with allowances. Odoo also books a monthly EOS provision from contract start, which is useful for accurate financial statements and for corporate tax reporting.

If your company has enrolled staff in MOHRE’s voluntary alternative end of service savings scheme, the standard gratuity rule should not run for those employees. Adjust the structure accordingly.

Which leave and overtime rules must payroll reflect?

Annual leave

Employees earn 30 fully paid days after one year of service, and two days per month between six months and one year. Unused leave is paid on termination based on basic salary. Carry-forward needs employer consent under company rules. Odoo’s annual leave provision and remaining balance rule handle the accrual and the payout or recovery at exit.

Sick leave

After probation, employees can take up to 90 days of sick leave a year: the first 15 days on full pay, the next 30 on half pay and the remaining 45 unpaid. Odoo’s three tier sick leave logic matches this pattern, but you must define the time off types and whether a sick leave certificate is required.

Overtime

Normal hours are capped at eight per day or 48 per week, with overtime limited to two extra hours a day. Overtime is paid at basic salary plus 25 percent, rising to 50 percent between 10pm and 4am. Rest day work earns a substitute day or basic salary plus 50 percent. Shift workers are treated differently. Because Odoo provides only an overtime input type, build a rule that pulls approved hours from Attendances or Timesheets and applies the right premium.

How should Odoo handle GPSSA pension and Emiratisation?

Emirati employees must be registered with the General Pension and Social Security Authority (GPSSA) from their first month of employment, or with the Abu Dhabi Pension Fund where applicable. For Emiratis entering the labour market on or after 31 October 2023, Federal Decree-Law 57 of 2023 sets a total contribution of 26 percent of pensionable salary: 11 percent from the employee and 15 percent from the employer. For private sector Emiratis with pensionable salary below AED 20,000, the government covers 2.5 percent on the employer’s behalf. Employees insured under earlier rules may keep their existing rates.

Odoo’s documentation describes a social insurance rule with a 5 percent employee deduction and 12.5 percent (or 15 percent in Abu Dhabi) employer share. That reflects older contribution levels, so treat it as a starting point. Create separate rules or structures for legacy and newly insured Emiratis, and record GCC nationals carefully, as they follow their home country scheme through the GPSSA extension programme. Accurate pension data also supports Emiratisation reporting, where our PRO and government services team often assists.

Where does ILOE unemployment insurance fit?

The Involuntary Loss of Employment scheme covers Emiratis and residents in the federal government and private sectors. Per the official ILOE website, Category A (basic salary of AED 16,000 or below) costs AED 5 plus VAT a month, and Category B (above AED 16,000) costs AED 10 plus VAT a month. Investors who own their company, domestic workers, temporary contract workers, under 18s and pensioners who have joined a new job are exempt. The subscription is the employee’s responsibility, so it is not usually a payroll deduction. Tracking subscription status as an onboarding checklist item in Odoo Employees is a practical control.

Odoo payroll UAE setup checklist

Payroll and UAE localisation modules installed for every UAE entity.
Employer Unique ID and salaries bank account configured, with IBAN and routing code.
Every employee has nationality, ID number and a validated bank account.
Contracts split basic wage from housing, transport and other allowances.
Leave days per contract match the employment contract and policy.
Annual, unpaid and sick leave time off types created and tested.
Overtime rule built on basic salary with the correct premiums.
Social insurance rules aligned with each Emirati’s applicable scheme.
EOS and leave provisions mapped to balance sheet accounts.
Opening gratuity and leave balances migrated and reconciled.
Parallel run completed and test SIF accepted by your bank.
Access rights restricted so only payroll officers see salary data.

What mistakes should you avoid with Odoo payroll UAE?

Calculating gratuity on gross pay. The law uses basic wage. Contracts that put most pay in basic, or rules that use total salary, inflate liabilities.
Using default pension rates without review. Newer Emirati hires sit under the 2023 law, so default rates can under deduct and under contribute.
Skipping bank data validation. A single wrong IBAN or missing routing code can delay the whole WPS file and put you at risk of late payment penalties.
Ignoring migration balances. Starting gratuity and leave provisions from zero misstates the balance sheet and leads to underpayment at exit.
Treating free zone and mainland entities identically. Salary rules, portals and visa processes can differ, so check each free zone company separately.
Going live without a parallel run. One month of side by side comparison catches most structural errors.

How Emiracle helps

Emiracle Advisory combines UAE company setup, compliance and ERP delivery under one roof. Our Odoo ERP implementation team handles Odoo payroll UAE projects end to end: we configure the UAE payroll localisation, build custom overtime and pension rules, migrate opening balances and support your first WPS submission. Because we also handle licensing, visas and government processes, we make sure HR data in Odoo matches what MOHRE, GPSSA and your free zone hold. Learn more about our compliance and Odoo ERP services.

Ready to run payroll with confidence? Contact Emiracle Advisory, call or WhatsApp +971 52 185 3005, email info@emiracle.ae or visit us at Level 23, Boulevard Plaza Tower 2, Downtown Dubai.

Frequently asked questions

Does Odoo have an official UAE payroll localisation?

Yes. Odoo provides the l10n_ae_hr_payroll module for UAE salary rules and structures and l10n_ae_hr_payroll_account for payroll accounting. Payroll is part of Odoo Enterprise, so confirm your edition and version before planning the rollout.

Can Odoo generate a WPS SIF file?

Yes. After you post a payslip batch, you create a payment report with the export format set to UAE WPS. Odoo produces a .sif file with an employee detail record per employee, variable pay records and one salary control record, ready for upload through your bank or exchange house.

How does Odoo calculate end of service gratuity in the UAE?

When you archive an employee with a departure reason, Odoo applies 21 days of salary per year for one to five years of service and 30 days per year after five years. Check that the daily rate is based on the last basic wage, that unpaid absence is excluded and that the two year wage cap is respected.

Does Odoo handle GPSSA pension contributions for Emiratis?

Odoo includes a social insurance rule for UAE nationals, but its documented default rates reflect older percentages. Emiratis who joined the labour market from 31 October 2023 fall under Federal Decree-Law 57 of 2023, with 11 percent employee and 15 percent employer contributions, so review and adjust the rule before going live.

Is ILOE unemployment insurance deducted through Odoo payroll?

ILOE is the employee’s own subscription, paid directly through the official scheme channels, so it is not normally an employer payroll deduction. Some employers track subscription status in Odoo as an HR checklist item, which helps during onboarding and audits.

Does Odoo calculate overtime automatically for UAE employees?

The UAE localisation provides an overtime input type that feeds the payslip and the WPS file, but the documentation does not describe an automatic UAE overtime formula. Most companies configure a custom rule using basic salary plus 25 percent, or 50 percent for night or rest day work.

How long does an Odoo payroll setup take for a UAE company?

It varies with headcount, the number of salary structures, data quality and integrations. A small company with clean employee records moves faster than a group with several entities, free zones and legacy gratuity balances. Always allow time for at least one parallel payroll run.

Last reviewed: 24 October 2026. Rules change; confirm current requirements with an Emiracle advisor before you apply.