An Employer of Record (EOR) in the United Arab Emirates (UAE) acts as the legal employer for workers, handling payroll, benefits, and other employment tasks on behalf of the actual employer. Also known as a Global PEO, it simplifies hiring without the need for entity setup.
Discover the key considerations and essential details you should be aware of before you hire your remote team in the United Arab Emirates (UAE).
On this page: Employment Contracts | Employment Laws in the UAE | Social Security in the UAE | Work Permits and Work Visas | Employee Benefits
UAE at a Glance
| Overview | |
| Continent | Asia |
| Country | United Arab Emirates |
| Capital | Abu Dhabi |
| Time zone | UTC+04:00 |
| Total Time zones | 1 |
| Working hours per week | 40–45 (30 during Ramadan) |
| Working week | Sunday–Thursday (since September 2006[34]) |
| Typical hours worked | 8 to 9 |
| Personal Tax filing deadline | UAE does not levy any income tax on an individual's salary. |
| Financial Year | 1st January to 31st December |
| Date format | dd/mm/yyyy |
| Currency | UAE Dirham (AED) |
| VAT | the standard rate is 5% |
Employment Contracts in the UAE
UAE Employment Contracts are bilingual, and should be in Arabic and English. The employer is required to finalize an employment contract with the worker based on the agreed contract type. This contract should be generated in duplicate; one copy is retained by the employer, and the other is provided to the worker, following the forms outlined by the applicable Implementing Regulation.
Issuance of offer letter and employment contract
All employers must issue an offer letter with the key employment terms, and an employment contract, following the standard format provided by the UAE Ministry of Human Resources and Emiratisation (MOHRE). Employees then must sign on the employment contract in order to receive work permit or employee ID cards, and residence visas in case of non-UAE GCC nationals. The terms stipulated in this contract must align with the initial offer letter. Any alterations require approval from both the MOHRE and the employee.
Key Components of Employment Contracts
The employment agreement must encompass essential details such as
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Types of Employment Contracts
- Full-time: Requires full daily working hours throughout working days for one employer.
- Part-time: Permits working for one or more employers for a specific number of working hours or designated days.
- Temporary Work: Encompasses tasks requiring a set period and concludes upon task completion.
- Flexible Work: Involves variable working hours or days based on workload, economic factors, and operational variables. Workers can engage with employers at different times based on work conditions and requirements.
- Remote work means doing tasks outside the office, using electronic communication instead of being physically present, whether it's part-time or full-time.
- Job sharing is when tasks are split among multiple workers, and they each get paid according to their share. They follow the rules of part-time work.
Fixed-term Contracts
According to Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector, the ‘UAE Labour Law’ (which came into effect as of 2 February 2022), a worker can be hired on a fixed-term employment contract. The term may be extended or renewed for a similar or shorter duration.
If the contract is not renewed or extended upon its expiry, and the parties continue to perform the obligations of the contract, the contract is then considered renewed under the same terms and conditions as those of the original contract.
Any extension or renewal of the terms of the employment contract will be added when calculating an employee’s end of services benefits.
The law also stipulates that unlimited employment contracts are to be converted into fixed-term employment contracts, in accordance with this decree law, within one year of the effective date of the existing contract and may be extended by the Cabinet for further periods as required in public interest. Meanwhile, the provisions of this decree law shall also apply to unlimited employment contracts entered into in accordance with the Federal Law No. 8 of 1980.
Employment Laws in the UAE
Are you a foreign employer eager to tap into the thriving market of the United Arab Emirates (UAE) but hesitant about navigating the intricacies of its employment laws? Don't worry, Employer of Record (EOR) solutions can streamline the process while ensuring compliance. But, understanding the key employment regulations is still crucial for informed decision-making.
This guide, drawing from Federal Decree-Law No. 33 of 2021 Regarding the Regulation of Labour Relations and its implementing Cabinet Resolution No. (1) of 2022, will equip you with the essential knowledge on the below:
Minimum Wages:
- The UAE does not have a federally mandated minimum wage, providing flexibility in salary determination.
- In 2013, the Ministry of Labour set minimum salary guidelines for certain categories of workers, offering reference points for fair compensation based on skill and qualification.
Working Hours:
- Maximum normal working hours are 8 hours per day or 48 hours per week.
- A break is mandatory if a worker exceeds 5 consecutive hours, and during Ramadan, working hours are reduced by 2 hours.
- Workers are entitled to a paid weekend of at least one day as per the employment contract.
Payroll Cycle:
- Employers can choose payroll cycles like monthly, semi-monthly, bi-weekly, or weekly.
- Chosen cycles should be specified in the employment contract, and salaries must be paid within 15 days of the due date.
Probationary Period:
- Employers can appoint a worker under a probationary period, not exceeding 6 months.
- If the worker successfully passes the probationary period, the contract becomes valid.
- Termination during probation requires a 14-day notice, and conditions for movement to another employer are defined.
Notice Period:
- Unlimited contracts require 30 days' notice from the employee and 30-90 days from the employer.
- Limited contracts specify notice periods in the contract or default to 14 days.
- Overtime is regulated and should not exceed 2 hours per day, with the standard overtime rate being 125% of the basic salary per hour.
13th Month Salary:
- There is no legal mandate for employers to provide a 13th-month salary.
Overtime Pay:
In the UAE, overtime pay is granted to all employees except those on shift-based schedules. Overtime is triggered after the standard 8-hour workday, with a maximum limit of 2 hours per day. The typical overtime rate is 125% of the basic salary per hour, rising to 150% between 10 pm and 4 am. If an employee works on a public holiday, they are entitled to double their basic salary for that day. Employers must obtain prior permission for overtime exceeding 2 hours per day or 16 hours per week. Employees cannot be compelled to work overtime, and records of overtime hours must be maintained for at least 2 years.
Termination and Severance Pay in the UAE:
Termination:
Termination in the UAE follows specific guidelines. Both employers and employees are required to give written notice based on the type of contract and the employee's position. For unlimited contracts, employers must provide a notice period ranging from 30 to 90 days, depending on salary, while employees need to give a 30-day notice. Limited contracts may specify the notice period in the contract or default to a minimum of 14 days for both parties. Termination without notice is allowed in certain situations, but it demands justification and may lead to legal consequences. Arbitrary dismissal without legal justification is strictly prohibited and warrants compensation for the affected employee.
Severance Pay:
Employees with at least one year of continuous service are entitled to severance pay, calculated based on the duration of service. The formula includes 21 days' wage for each of the first five years and 30 days' wage for each additional year, with a maximum cap of two years' wages. Severance pay must be settled within 15 days of termination. Exceptions exist, and severance pay may not be applicable in cases of serious misconduct leading to termination.
Navigating Work Permits and Visas for Hiring in the UAE
Expanding your business to the UAE? Hiring foreign talent is crucial, but understanding work permits and visas can seem daunting. Here's a simplified guide for employers:
Work Permits:
Foreign nationals in the UAE require MoHRE-issued work permits to legally work for any company within the country.
Multiple types exist, catering to various scenarios:
- Standard: Recruit new employees from abroad.
- Transfer: Existing UAE employees switching to your company.
- Family-sponsored: Residents sponsored by family can work with this permit.
- Temporary: Ideal for short-term projects or specialized assignments.
- One-mission: For specific, short-term projects with a defined completion date.
- Part-time: Allows workers to fulfill part-time roles.
- Juvenile: For youth aged 15-18 under specific work restrictions.
- Student training & employment: Combine training with practical work experience for students.
- UAE/GCC nationals: These nationals don't require permits or visas.
- Golden visa holders: Allows work authorization for individuals holding the Golden visa program's long-term residency.
- National trainee: Training program for UAE nationals, no visa needed.
- Freelance: Enables individuals to work on freelance projects for your company.
Work Visas:
Issued by GDRFA (General Directorate of Residency and Foreign Affairs), these grant residency permission in the UAE, usually for employment purposes.
Types correspond to various work permit categories:
- Standard: Most common visa for employees, valid for 2 years.
- Green: Long-term visa for skilled professionals, renewable for 5 years.
- Domestic worker: Issued for household help like maids, nannies, etc.
- Freelance: Enables individuals to work on freelance projects for your company.
- Temporary: Short-term visa for specific projects or assignments, aligned with the work permit duration.
- Part-time: If permitted, a separate visa might be required, usually aligned with the work permit.
- Juvenile: Permits work for youth under specific conditions and visa requirements.
- Student: Allows students to work part-time under restrictions and specific visa procedures.
- No visa needed: UAE/GCC nationals don't require visas or permits.
- Golden: Long-term residency visa for exceptional individuals in various fields, allowing them to work within your company.
Key Points:
- Work permits cannot exist independently; they require valid work visas.
- Both documents typically share the same validity period.
- You, as the employer, initiate the application process for both.
- Regulations and visa categories are subject to change; consult official sources like MoHRE and GDRFA websites for updates.
- For specific guidance and tailored advice, consider seeking professional assistance from immigration advisors familiar with the UAE system.
Employee Benefits in the UAE
Explore the world of employee benefits in the UAE, where businesses find ways to make work life better for their employees. Discover leaves, health benefits, and unique perks that create a positive and motivated work environment in the United Arab Emirates.
Unemployment Insurance
Article 4 introduces the Unemployment Insurance Scheme in the UAE, providing a limited cash benefit to insured individuals facing unemployment. The UAE Cabinet, based on the Minister's proposal, outlines the scheme's process, functions, application, monthly subscription value, and any necessary requirements or penalties.
Article 5 details eligibility requirements for compensation, including a minimum subscription period of 12 consecutive months, no dismissal for disciplinary reasons, and no fraud or deceit in the claim. Compensation ceases if the insured is employed elsewhere, and the UAE Cabinet can amend eligibility conditions.
Article 6 specifies the compensation amount as 60% of the contribution salary for three months, with a maximum of Dhs. 20,000. The compensation period is three months per claim, not exceeding 12 months during the insured's UAE employment. Additional benefits can be negotiated, and the UAE Cabinet may amend rates, values, and periods to enhance benefits.
Public Holidays
- Workers get full pay on official public holidays defined by the Cabinet.
- If a worker works on a public holiday, they receive compensation: either another day off or the day's wage plus a 50% increase.
Annual Leave
Workers are entitled to an annual leave with full wage, minimum:
- 30 days for each year of service
- 2 days for each month of service (if over six months)
- A leave for parts of the last year if service ends before using the balance.
Part-time workers get leave based on actual working hours, defined in the contract. The employer can grant leave during probation, but if the worker doesn't pass, they get compensated. Leave should be taken in the entitlement year, dates can be specified by the employer, and approval is needed to carry forward leave.
Workers get their wage during leave. Public holidays within leave are included unless the contract or regulations state otherwise. Employers can't prevent workers from using leave accrued for over two years, unless the worker agrees otherwise or wants a cash allowance.
If a worker quits before using accrued leave, they get paid for those days. The details and conditions are defined in the Implementing Regulation.
Maternity Leave
Female workers get a 60-day maternity leave—45 days with full pay and the next 15 days with half pay. After maternity leave, if the woman or her child faces health issues, she can take up to 45 days off without pay, confirmed by a medical certificate.
This applies if delivery occurs six months or more after pregnancy. If the child is sick, she gets an extra 30 days with full pay after maternity leave, extendable for another 30 days without pay based on a medical report.
Maternity leave can start a month before expected delivery, and it doesn't affect other leave rights. If she works for another employer during this leave, the original employer can withhold wages or seek reimbursement.
Termination due to pregnancy, maternity leave, or related absence is not allowed. After returning, for up to six months from delivery, the female worker can take one or two breaks per day, each not exceeding an hour, for breastfeeding.
Sick Leave
If a worker falls sick due to a non-work-related illness, they must inform the employer within 3 working days and provide a medical report from a healthcare provider.
During the probationary period, no paid sick leave is granted. However, the employer can consider unpaid sick leave based on a medical report indicating the necessity.
After the probationary period, a worker can have a sick leave of up to 90 days per year:
- a. First 15 days: Full pay
- b. Next 30 days: Half pay
- c. Subsequent days: Unpaid
No wage is granted for sick leave if the sickness is due to the worker's misconduct, as defined by the Implementing Regulation.
If the worker can't return to work after the sick leave, the employer may terminate the service, ensuring the worker receives all financial entitlements per the law and regulations.
Bereavement Leave
- 5 days for the death of a spouse.
- 3 days for the death of a parent, child, sibling, grandparent, or grandchild.
Parental Leave
- 5 working days for a new parent (either father or mother) within 6 months of childbirth.
Other Leaves
- Leaves as specified by the Cabinet.
Study Leave
- Up to 10 working days per year for workers enrolled in approved educational institutions to take exams, with a minimum service term of two years.
Sabbatical Leave:
- National workers are entitled to paid leave for national service as per state legislation.
To avail themselves of various leaves, including bereavement leave, parental leave, study leave, and sabbatical leave for national service, workers must provide documentary evidence from the relevant authorities. The Implementing Regulation governs the granting and regulation of these leaves, delineating provisions for their application, approval, and management.
Unpaid Leave
Workers can request unpaid leave with the employer's approval, distinct from other specified leaves. Notably, such leave won't be considered part of the worker's service term or contribute to the retirement scheme period as per prevailing legislation.
Opting for an Employer of Record (EOR) in the United Arab Emirates (UAE) is a strategic move for businesses venturing into global expansion. Entrusting responsibilities such as navigating local employment laws, managing payroll intricacies, and ensuring compliance to the EOR facilitates a smooth establishment of operations in the UAE without the challenges of establishing a legal entity. This collaborative alliance empowers businesses to concentrate on their primary goals and expansion plans while ensuring that their workforce in the UAE operates in full adherence to local regulations. The EOR simplifies international employment procedures and offers expert assistance in navigating the complex terrain of UAE employment regulations.
Social Security in the United Arab Emirates (UAE): An Overview
Important Note: Social security benefits in the UAE are primarily available to UAE nationals and GCC nationals employed in the UAE. Some emirates offer voluntary schemes for residents, but this guide focuses on the main programs. Additionally, recent changes have been made to GPSSA contributions for new members joining after October 31, 2023. Please consult with a qualified professional for specific information and updates.
Understanding the Landscape:
The United Arab Emirates operates a decentralized social security system with separate entities managing programs in different emirates. These entities share the common goal of providing social security and retirement benefits to eligible individuals. This guide outlines the key players:
GPSSA (General Pension and Social Security Authority):
Contributions:
ADRPBF (Abu Dhabi Retirement Pensions and Benefits Fund):
Contributions:
Benefits: Retirement pensions, other benefits based on contributions and service duration.
SSSF (Sharjah Social Security Fund):
Conclusion:
Understanding the nuances of social security in the UAE can be complex due to its decentralized nature and variations across emirates. This guide provides a basic overview, but remember to consult with a professional for specific details and advice, especially considering recent changes and potential eligibility factors for residents.