- Overview: United Arab Emirates (UAE)
- Global HR Compliance
- Global PEO and payroll
- Work permit for hiring expats via PEO
- Expand without a company set up
- Contractor vs. employee: which is better?
Global HR Compliance in The United Arab Emirates
If you hire international workforce, or plan to hire, then Hiring and Firing Workforce in the United Arab Emirates Guide below will help you understand the nuances of labor legislation in the country.
Companies hire international workforce for various reasons but in most cases they are:
- entering the foreign markets to sell company products. To do so, the company hires sales representatives who would represent their product and sell it to their local client base.
- hiring a global talent with unique skills that is unavailable in the local market or costs the company less than the talent with similar skills hired in the home country.
Before entering a certain foreign market or engaging a global talent, it is crucial for the company to understand how it can make local hires and reward its workers on a monthly basis. Growing companies often face a challenge of paying benefits and bonuses to the commission-based independent sales representatives they are working with.
If you intend to hire and pay your foreign workforce in full compliance with labor laws and regulations of the United Arab Emirates, then the Global Employer of Record service from Acumen International may be the best way for you to go. We are an International PEO company and we specialize in global employment, meaning we can employ your employees in the United Arab Emirates and act as their legal employer on your behalf. We will payroll your foreign workforce monthly and provide benefits to them through our global network so you don’t have to set up your own legal entities there.
We are experts in global workforce employment in , and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.
Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.
With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in the United Arab Emirates.
Hiring and Firing Workforce In The United Arab Emirates Guide
There are many benefits of doing business in one of the tourist-commercial hubs of a region: diversity and easy access to over 2 billion consumers, good infrastructure that booths business, easy access to labor and low labor cost, and so forth. The legal framework in the UAE has been constantly developed to attract, retain and support foreign investors. The UAE has about 20 free zones, as well as operate in a zero percent income tax basis.
Just as the attractions of owing your business in the UAE can be huge, so are the pitfalls associated with it, of which some may be a direct consequence of not knowing and/or adhering to the labor laws of the country.
To help prevent these challenges, it will be best to employ the services of those who do not only know the ins and outs law of the country but also have sustained experience of dealing with them.
For the general tip on what to expect when doing business in the UAE, we have drafted a simple roadmap of employment law in the UAE below:
# Employment Contracts
Contract of employment in the UAE can either be limited contract or unlimited contract. Limited contracts are contracts that have a stipulated start and end date with the maximum duration of 4 years. Unlimited contracts, on the other hand, are awarded with definite start date up till when the employer or the employee decides to terminate the contract. A limited contract may automatically translate to an unlimited contract if an employer fails to terminate or renew it after the due date.
# Minimum (Statutory) Employment Rules and Regulations in the United Arab Emirates
# Hours of work
Workers in the UAE generally operate in 5.5 or 6 work days per week, and work from 7.30am through 2:30pm (for public sectors) and varying times (for those working in the private sectors). The maximum hours of work that are legally approved for almost all the businesses in the UAE are 8 hours per workday and 48 hours per workweek. A maximum of nine hours is allowed for employees who work as traders, as guards, in cafeterias and hotels. During the Ramadan period, employees are allowed to work 2 hours less than their normal working hours.
# Probation period
Probation period can last till 6 months depending on the terms of an employment contract. An employer can dismiss an employee who is on probation without being liable to any gratuity payment or any other compensation for that matter. An employee who has completed his/her trial period must be included in the payment of service gratuity and other terminal benefits.
# Annual leave
The legal holidays in the UAE are New Year, Israa & Miaraj Night, Ramadan expected to begin, Eid Al Fitr, Hajj season, Arafat Day, Eid Al Adha, Hijri New Year’s Day, Martyr’s Day, Prophet Mohammed’s Birthday, and the UAE National Day.
An employee must have served for up to 6 months before he/she can be entitled to an annual leave. Employees who have not served up to one year, but at least 6 months in a company are eligible for 2 days leave for every month they have worked in the company.
Employees whose service period have exceeded one year from the day of employment in the company are entitled to 30 days’ annual leave. Employees on annual leave are paid their normal wage, their usual work allowances and housing allowance when applicable.
# Parental leave
Female employees with not less than one year of continuous employment with the company are entitled for 45 days of fully paid leave during maternity. Those who have not served up to one year before their maternity period are still eligible for a maternity leave, but with the benefit halved. New mothers can extend their maternity leave by 100 unpaid days at a maximum, after they have completed their 45 days’ leave.
# Sick leave
There is no sick leave entitlement for employees who are on probation. Employees who have worked for at least 3 months following the period of probation are entitled to their complete wage during the first 15 days of sickness and 50 percent of their wage during the subsequent 30 days. There will be no pay afterwards.
The normal overtime per day must not be larger than 2 hours. An employee can work more than 2 hours’ overtime if the reasons correspond with that provided in Article 69 of the labor law. Employees who work overtime are entitled to an overtime rate that must be equivalent to their normal hourly wage plus 25 percent of such wage. An overtime worked during the night hours (between 9.00 p.m. and 4.00 a.m.) requires a compensation at a rate equivalent to the employee’s normal hourly wage plus 50 percent of such wage. Employees must be given a day off or be paid their normal hourly wage plus 50 percent of such wage if they work on Fridays.
# State minimum salary
There is no prescription for the minimum amount an employer can pay his employee for the services they render. This means that both parties of employment should discuss the terms of remuneration, including when, how much etc.
# Employment termination
Contract of employment can be terminated after the agreed period of service has ended or on mutual consent, under the condition that the employee must agree in writing or unilaterally (by the employer or employee). For limited employment, an employer must terminate a contract based on the reasons spelled out in Article 120 of the labor law, otherwise will be required to compensate the employee against any damage sustained as a result of the termination. Likewise, an employee who unilaterally ends a contract but not in accordance with the reasons specified in Article 121 will be obligated to compensate the employer.
If an unlimited contract must be terminated, it must be done on the provision of a prior notice of 30 days. This notice requirement can be waived if the party that should give the notice decides to make a payment (equivalent to one month wage) instead. An employer or the employee has the right to terminate an employment contract without any notice under the conditions stipulated in Article 120 and 121 respectively.
Acumen International can help you fast-track your possibilities of entering and expanding your business in the United Arab Emirates by providing you with an Employer of Record services. Our unique mix of PEO/EOR solutions will enable you to jumpstart your global operations almost immediately, cost-effectively and compliantly without any requirement to set up a legal entity first or thereafter.