UAE's Shift to Performance-based Bonuses?

Why More Companies in UAE Are Paying Bonuses in 2026?

Companies in the United Arab Emirates (UAE) are increasingly leaning towards performance-based bonuses instead of general salary increases. According to a recent survey, 77 percent of companies plan to pay bonuses to their employees in 2026 based on the results of the year 2025. This marks a significant 5 percent increase compared to the previous year when 72 percent of companies reported similar plans. This trend reflects the continuous momentum in the UAE's economy, with employers being willing to financially acknowledge good performance.

Bonuses, Not Salary Increases

The shift towards a bonus policy is driven by companies aiming to reward differently: not everyone automatically receives more; instead, extra compensation is awarded to those who truly excel. This approach has become crucial in economically active and competitive environments, where productivity and business impact are measurable through specific metrics. While increases in fixed salaries remain modest, bonuses provide room for flexibility and rewarding individual achievements.

Behind the Data

According to the Bonus Report 2026 published by global HR consultancy firm Cooper Fitch, 77 percent of companies operating in the UAE are paying bonuses this year. Meanwhile, 23 percent are not planning payouts, which is lower than the previous year's 28 percent. The research also reveals that 36 percent of employees receive bonuses equivalent to 1–2 months of their base salary, while only 7 percent receive premiums of six months or more.

While the largest bonuses have become rarer, more people are receiving some form of bonus than before. This also indicates that companies strive to balance recognition and cost control.

Why Bonuses Have Become More Popular?

Company leaders increasingly believe it's more equitable to honor outstanding performance with separate compensation than to provide the same level of wage increase to everyone. This is particularly important in fields where turnover is high, finding suitable professionals is challenging, and individual contributions are easily measurable. The survey suggests that UAE employees accept that if they perform well, they deserve rewards – if not, they realistically do not expect extra compensation.

Moreover, the bonus system gives companies the opportunity to strategically retain key personnel or encourage employees to exceed expectations.

Outstanding Sectors

The banking, financial services, and insurance sector continues to lead the field, with 13 percent of companies providing bonuses of six months or more. This is the highest value among all sectors. Bonus equivalent to three to five months of salary is most common in the media and entertainment sector (38%), followed by strong activity in the FMCG (fast-moving consumer goods) sector (35%), as well as the energy, utilities, and renewable energy sectors (28%).

In contrast, the highest proportion of companies not paying bonuses is found in marketing, PR, and advertising (53%), but a high percentage of non-paying companies is also recorded in media and entertainment (43%), retail, e-commerce, and luxury goods (43%), as well as in heavy industry and mining (33%).

What Can Employees Expect?

According to the survey, most employees can expect a bonus equivalent to one or two months, which in the current economic environment is considered a stable foundation. This trend is particularly characteristic of fields where increases in fixed salaries are stagnant or merely inflation-adjusted.

Bonuses continue to serve as a strong incentive factor, especially in sectors where performance is well measurable, and results directly affect the company’s profit. It also becomes clear that companies increasingly distinguish between strategic, transformation-needed professionals, and general executive roles.

Final Thoughts

UAE companies remain among the region’s leaders in bonus policy. While wage increases are restrained, bonuses allow employers to respond more dynamically to the economic situation and internal performance. The results suggest that the UAE market is not only competitive but is increasingly attempting to recognize the value of human resources in a sophisticated manner — which can have a positive impact on labor market stability and employee satisfaction in the long run.