UAE

UAE PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in United Arabian Emirates to companies willing to enter the United Arabian Emirates market or hire local/expat employees in this country.

The common approach requires setting up a subsidiary in the United Arabian Emirates.  Meantime our solution allows you to start the operations in the United Arabian Emirates within days hence save time and money.  WeHG would hire candidates on your behalf while you keep full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

United Arabian Emirates fast facts

Population, million: 9
Land area:  83,600 km²
Capital: Abu Dhabi
Local currency: UAE dirham (AED)

GDP per capita:$ 421.14
GDP in currency:$ 41420.50

United Arab Emirates, federation of seven emirates along the eastern coast of the Arabian Peninsula.

The largest of these emirates, Abu Dhabi (Abū Ẓaby), which comprises more than three-fourths of the federation’s total land area, is the center of its oil industry and borders Saudi Arabia on the federation’s southern and eastern borders. The port city of Dubai, located at the base of the mountainous Musandam Peninsula, is the capital of the emirate of Dubai (Dubayy) and is one of the region’s most vital commercial and financial centers, housing hundreds of multinational corporations in a forest of skyscrapers. The smaller emirates of Sharjah (Al-Shāriqah), ʿAjmān, Umm al-Qaywayn, and Raʾs al-Khaymah also occupy the peninsula, whose protrusion north toward Iran forms the Strait of Hormuz linking the Persian Gulf to the Gulf of Oman. The federation’s seventh member, Al-Fujayrah, faces the Gulf of Oman and is the only member of the union with no frontage along the Persian Gulf.

Hiring, Negotiating and Doing Business in United Arabian Emirates

Necessity of written employment contract

In circumstances where an employee has signed an employment contract overseas and made that contract subject to foreign law (and that employee has subsequently relocated to work in the UAE), he/she will still be required to execute a standard form Arabic/English employment contract, (the UAE Employment Contract) and no work permit or residence visa can be obtained without the UAE Employment Contract (regardless of what rights and benefits may be included in the first contract (the Foreign Law Contract)).

Different forms of engagement: employment, contracting, work with private entrepreneur

The main law that regulates the employment relationship in the UAE applies to all employees (including foreign nationals) working in the UAE, apart from the following categories of workers:

  • Officials, employees and workers in federal and local government departments, or appointed for federal and local government projects.
  • Members of the armed forces, police and security officers.
  • Domestic servants working in private residences.
  • Workers employed in agriculture (apart from employees of agricultural companies engaged in processing products or operating or repairing machinery required for agriculture).
  • Employees working for a company with a place of business in the Dubai International Financial Centre (DIFC) and who are based in, or ordinarily work in, the DIFC. These employees are subject to the DIFC
  • Employment Law No. 2 of 2019, (DIFC Employment Law).
  • Employees working for a company with a place of business in the Abu Dhabi Global Market (ADGM) and who are based in, or ordinarily work in, the ADGM. These employees are subject to the ADGM Employment Regulations 2019 (ADGM Employment Regulations).

Employees (including foreign nationals) working in one of the many free zones in the UAE (with the exception of those working in the DIFC and ADGM) are subject to the Labour Law and the employment regulations introduced in the relevant free zone. If the free zone regulations are inconsistent with the Labour Law, the Labour Law provisions take precedence. However, this does not apply if the Labour Law is less favourable than the relevant free zone regulations.

The parties can choose the governing law that applies to their contract. However, in practice, during litigation, the UAE courts generally assume jurisdiction as long as the employees are not employed by entities in the DIFC or ADGM (where the applicable courts in the DIFC or ADGM assume jurisdiction).

The Labour Law does not apply to nationals of the UAE working abroad (unless the parties agree to UAE law applying to their employment relationship abroad and provided that the laws of the other jurisdiction allow for the application of non-local laws).

United Arabian Emirates Employment Contract

The UAE Employment Contract is a short form contract covering the basic employment terms such as the designation of the employee, the commencement date of employment and the term of the contract (fixed-term or unlimited term contract).

Types of employment agreements

  • Limited-term contract (fixed-term). In general, limited-term contracts mention the start and end dates of the employment period. Unless the contract is renewed, it is automatically canceled when it expires. These contracts are adopted where an employer needs to engage employees for specific projects or specific duration. According to recent reforms in the UAE’s labor market, limited-term contracts are for a maximum duration of 2 years, unlike 4 years as before. The contract must also include a notice for termination.
  • Unlimited term contracts. An unlimited term contract is open-ended, more flexible, and commonly used in the UAE. It can be terminated with mutual consent or by giving a notice of 1 to 3 months. The parties involved must honor their obligations throughout the notice period. Therefore, an employment relationship is deemed to have ended without due process when either the employer or employee terminates the employment relationship without complying with legally mandated procedures. In this case, the wronged party may initiate legal action and compensation.
  • Part-time contract. In 2018, the Ministry of Human Resources and Emiratisation (MoHRE) implemented a new rule which allows the companies to recruit skilled workers from inside the country or from abroad under a multi-employer contract (part-time contract). These types of contracts are limited only to skilled workers, namely holders of university degrees or higher and those who completed two or three years diploma in any technical or scientific field. Under this new system, part-time contract employees can take several part-time jobs without the approval of the original or other secondary employers; however, they are obligated to take a permit from the MoHRE. The part-time contract is subject to the same rules and penalties applicable to the regular employment contracts common in UAE: limited or unlimited. The part-time contract may not be changed into a regular contract until the end of the part-time employment contract.

United Arabian Emirates working hours

  • Article 65 of the UAE Labour Law identifies the normal working hours for the private sector as 8 hours per day or 48 hours per week.
  • The working hours may be increased to 9 hours a day for businesses, hotels and cafes after approval from MoHRE.
  • Government entities are not governed by the Labour Law and they operate for 7 hours daily.
  • Working for more than 7 hours a day is prohibited in arduous or unhealthy works and industries.
  • Normal working hours are reduced by two hours daily during the holy month of Ramadan.

Overtime

An overtime is considered if the nature of job demands working beyond normal working hours and it will entitle the employee for a pay equal to normal working hours’ remuneration plus 25 per cent of that pay. It could increase to 50 per cent if overtime is done between 9 pm and 4 am.

Vacation leave in United Arabian Emirates

Friday is the official weekend for all workers, except for daily wage workers. If circumstances require an employee to work overtime on that day, he will be entitled for regular working hours’ pay, plus an increase of not less than 50 per cent of that amount.

Employees are entitled for paid leave on public holidays.

Working during official holidays or leave days. If an employee is required to work during holidays or leaves, he will be granted another rest day as well as an increase of 50 per cent on his basic wage for that day. If he could not be granted another day off, he is entitled to receive an additional 150 per cent on his basic wage for that day according to Article 81 of the Labour Law.

United Arabian Emirates Maternity Leave

A working woman is entitled to a maternity leave of 45 day’s including the time before and after delivery. If the woman has completed one year of continuous employment for the same employer, she is entitled to full pay during maternity leave; otherwise, she is entitled to half pay.

In addition, after delivery, the woman is entitled to two additional breaks each day, with each break not exceeding half an hour for nursing her child. The woman is entitled to such breaks for 18 months following the date of delivery and is entitled to full pay.

Males are entitled to three days’ paternity leave.

United Arabian Emirates Severance Laws

UAE Labour Law stipulates a minimum notice period of 30 days or one month. The parties can agree on a longer notice period but can never reduce it to less than 30 days. So yes, if you agreed to serve a notice of two months, you will have to, unless your employer waives it.

An employer may not dismiss an employee or give him a termination notice while the employee is on sick leave. If the employee uses all of his 90 days’ sick leave and was not able to report to work afterwards, the employer may terminate his services. In such a case, the employee shall be entitled to the end of service gratuity in accordance with the provisions of the labour law.

United Arabian Emirates Tax

Personal income tax  – no 

Social security contributions due by an employer and an employer:

  • Employer contribution – 12.5% of employee’s monthly salary (Basic + Housing Allowance)
  • Employee contribution – 5%
  • Late payment fee – 10%
  • For GCC nationals, pension rates will vary depending on their country’s pension scheme

Health Insurance Benefits in United Arabian Emirates

Provisions for safety and health of workers

  • Articles 91 to 101 of the UAE Labour Law specify the provisions for employees’ safety and health care.
  • Mid-day break rule for workers under the sun
  • Construction and industrial workers are not permitted to work during the hottest hours of the day during the summer. Any firm found to have staff working during the designated break time would be fined AED 5,000 per worker up to a maximum of AED 50,000.
  • Also, employees are entitled to work 2 hours less every day during the holy month of Ramadan.

Insurance

  • Abu Dhabi and Dubai applies compulsory insurance coverage for all employees: nationals and expatriate residents. Read about insurance in the health section.

Medical check-up

  • At least once every six months, employers have to assign at least one physician to examine thoroughly the employees who are exposed to the possibility of contracting one of the occupational diseases. The results of such examination should be recorded on the employees’ files.

Prohibition of alcohol on work premises

  • No employer may bring or allow others to bring any kind of alcoholic drinks for consumption on work premises.

Protection against injuries

  • Employers should provide their employees with suitable means of protection against injuries and dangers such as a fire which may result from the use of machinery and other work equipment and against occupational diseases which may be contacted during work.
  • Employers shall display in a permanent and visible place at the work site, detailed instructions regarding the means of preventing fire and the means through which employees can protect themselves from hazards to which they might be exposed during work. These instructions shall be in Arabic, and if necessary another language understood by the employee.
  • Employers must keep a first aid kit or kits containing medicines, bandages and other first aid material readily available.

In case of an injury or death at workplace

  • According to Article 149 of the Labour Law, the compensation for death at work is equal to the basic wage of the worker for 24 months, provided that the amount of compensation is not less than AED 18,000 or more than AED 35,000.
  • The amount of compensation is calculated on the basis of the last wage received by the worker prior to his death.

Additional Benefits in United Arabian Emirates

Each employer who employs employees in areas that are remote from cities where there is no access to normal means of transportation shall provide employees with the following facilities:

  • Adequate means of transport
  • Adequate accommodation
  • Drinking water
  • Proper foodstuff
  • Medical aid equipment
  • Entertainment and sports amenities.

Areas to which all or part of the provisions of this Article apply shall be stated by decision of the Minister of Labour & Social Affairs.

With exception of foodstuff, all services referred to in this Article shall be at the expense of the employer and nothing hereof is to be borne by the employee.

General market practice benefits/additional allowances

Bonus schemes are common in the UAE. There are no statutory restrictions or guidelines on what bonuses can be awarded, either under the Labour Law, the DIFC Employment Law or the ADGM Employment Regulations.

However, the bonus schemes of employees working in the UAE office of EU headquartered banks and financial institutions are subject to EU legislation and applicable restrictions on variable pay.

United Arabian Emirates Holidays

Here is a list of public holidays for the years 2019 and 2020 applicable to both public and private sectors.

  • Gregorian New Year: 1 January
  • Eid Al Fitr: From last day of the Islamic month of Ramadan to 3 Shawwal* (4 days)
  • Arafah day and Eid Al Adha (Feast of Sacrifice):  From 9 to 12 Dhu al Hijjah* (4 days)
  • Hijri New Year: 1 Muharram* in 2019 and on 23 August in 2020
  • Prophet Mohammed’s birthday: 9 November in 2019 and on 29 October in 2020
  • Commemoration Day: 1 December (previously known as Martyr’s Day and observed on 30 November)
  • National Day: 2 and 3 December (2 days).

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.

FAQ UAE

  • Working hours in UAE

    Article 65 of the UAE Labour Law identifies the normal working hours for the private sector as 8 hours per day or 48 hours per week.

  • What are the main holidays in UAE?

    • Gregorian New Year: 1 January
    • Eid Al Fitr: From last day of the Islamic month of Ramadan to 3 Shawwal* (4 days)
    • Arafah day and Eid Al Adha (Feast of Sacrifice):  From 9 to 12 Dhu al Hijjah* (4 days)
    • Hijri New Year: 1 Muharram* in 2019 and on 23 August in 2020
    • Prophet Mohammed’s birthday: 9 November in 2019 and on 29 October in 2020
    • Commemoration Day: 1 December (previously known as Martyr’s Day and observed on 30 November)
    • National Day: 2 and 3 December (2 days).
  • What are payroll taxes in UAE?

    Personal income tax  – no  Social security contributions due by an employer and an employer:

    • Employer contribution – 12.5% of employee’s monthly salary (Basic + Housing Allowance)
    • Employee contribution – 5%
    • Late payment fee – 10%
    • For GCC nationals, pension rates will vary depending on their country’s pension scheme
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