Hire in United Arab Emirates through our Employer of Record (EOR)

The United Arab Emirates (UAE) boasts a diverse and dynamic employment landscape, characterized by a predominantly expatriate workforce and a growing emphasis on local talent development. This unique blend of international expertise and national aspirations has shaped a labor market that is both globally competitive and culturally distinct.

Overview of Labor Laws

UAE labor laws provide a comprehensive framework for employment relationships, balancing the interests of employers and employees. Key aspects include:

• Employment contracts must be in writing and specify terms such as job duties, salary, and duration.
• The standard workweek is 48 hours, with provisions for overtime pay.
• Employees are entitled to annual leave, sick leave, and maternity leave.
• The UAE has implemented a mandatory health insurance system for all employees.
• End-of-service gratuity is payable to employees who complete at least one year of service.

Recent reforms have introduced more flexible work arrangements and enhanced protection for workers' rights, reflecting the UAE's commitment to modernizing its labor regulations.

Cultural Considerations

Understanding and respecting local cultural norms is crucial for successful employment in the UAE:

• Arabic is the official language, but English is widely used in business settings.
• The Islamic faith plays a significant role in daily life and work culture.
• Building personal relationships and trust is essential in professional interactions.
• Respect for hierarchy and seniority is important in most workplaces.
• The concept of "wasta" (personal connections) can influence business practices.
• Dress codes tend to be conservative, especially in government offices.

Adapting to these cultural nuances can greatly enhance workplace relationships and professional success in the UAE.

Challenges of Direct Hiring

While the UAE offers numerous opportunities, direct hiring can present several challenges:

1. Complex visa and work permit processes: Navigating the bureaucracy can be time-consuming and requires local expertise.

2. Emiratization policies: Companies must meet quotas for hiring UAE nationals, which can impact recruitment strategies.

3. Cultural differences: Misunderstandings due to diverse cultural backgrounds can lead to workplace conflicts.

4. Legal compliance: Keeping up with frequently updated labor laws and regulations can be challenging for foreign companies.

5. Talent retention: The transient nature of the expatriate workforce can make long-term employee retention difficult.

6. Cost considerations: Expenses related to sponsorship, housing, and other benefits can be significant for employers.

7. Language barriers: Despite widespread use of English, communication issues may arise in multicultural work environments.

Overcoming these challenges often requires local knowledge, cultural sensitivity, and a willingness to adapt to the unique aspects of the UAE's employment landscape.

The United Arab Emirates (UAE) boasts a unique payroll and tax system that sets it apart from many other countries worldwide. Known for its tax-friendly environment, the UAE has long been an attractive destination for both businesses and employees. The country's approach to payroll and taxes is designed to promote economic growth and attract foreign investment while still providing social security benefits for its citizens.

In the UAE, there is no personal income tax, which means employees get to keep their entire salary, minus any voluntary deductions. This policy applies to both UAE nationals and expatriates, making it a highly appealing place to work. However, the system does include some contributions and responsibilities for both employers and employees, particularly when it comes to social security for UAE and Gulf Cooperation Council (GCC) nationals.

Employer Contributions

Employers in the UAE have several financial responsibilities when it comes to payroll and taxes:

1. Social Security Contributions: For UAE nationals and GCC citizens, employers are required to contribute 12.5% of the employee's gross salary to the social security scheme. This contribution helps fund various social welfare programs and retirement benefits for these employees.

2. Pension Fund: In addition to social security, employers must contribute to the General Pension and Social Security Authority (GPSSA) for UAE national employees. The contribution rate varies depending on the emirate but is typically around 15% of the employee's salary.

3. End-of-Service Gratuity: For expatriate employees who are not covered by the new Defined Employment Workplace Savings Scheme (DEWS), employers are required to pay an end-of-service gratuity. This is calculated based on the employee's length of service and final basic salary.

4. Health Insurance: Employers are mandated to provide health insurance coverage for their employees in most emirates, including Dubai and Abu Dhabi.

5. Corporate Tax: As of June 1, 2023, the UAE introduced a flat rate corporate tax of 9% for businesses with net profits of AED 375,000 or more. While this is not directly related to payroll, it is a significant consideration for businesses operating in the UAE.

6. Value Added Tax (VAT): The UAE has a 5% VAT rate on most goods and services. While this is not a direct employer tax, businesses are responsible for collecting and remitting this tax to the government.

Employee Contributions

Employee contributions in the UAE are relatively minimal compared to many other countries:

1. Social Security Contributions: UAE nationals and GCC citizens are required to contribute 5% of their gross salary to the social security scheme. This is typically deducted directly from their salary.

2. No Personal Income Tax: One of the most attractive aspects of working in the UAE is the absence of personal income tax. Employees get to keep their entire salary, minus any voluntary deductions or the social security contribution for UAE and GCC nationals.

3. Voluntary Pension Schemes: While not mandatory, some employees choose to participate in voluntary pension or savings schemes to secure their financial future.

4. Health Insurance Contributions: In some cases, employees may be required to contribute to their health insurance coverage, although this is often fully covered by the employer.

5. End-of-Service Benefits: Under the new DEWS system, which is gradually replacing the end-of-service gratuity, employees may have the option to make additional voluntary contributions to their savings plan.

The UAE's approach to payroll and taxes creates a favorable environment for both employers and employees. While employers have certain financial responsibilities, particularly for UAE national employees, the overall tax burden is significantly lower than in many other countries. For employees, the absence of personal income tax and the potential for end-of-service benefits make the UAE an attractive place to work and save money. However, it's important for both parties to stay informed about any changes in regulations, as the UAE continues to evolve its economic policies to maintain its competitive edge in the global market.

The United Arab Emirates (UAE) offers a comprehensive set of employee benefits, combining mandatory protections with optional perks that enhance the overall work experience. As an Employer of Record (EOR), Rivermate expertly manages these benefits, ensuring compliance with local labor laws while helping companies attract and retain top talent. By handling the intricacies of both mandatory and optional benefits, an EOR like Rivermate allows businesses to focus on their core operations while providing employees with a rewarding work environment.

Mandatory Benefits

• End of Service Gratuity: Employees receive a gratuity payment based on their length of service and basic salary upon termination of employment.
• Annual Paid Leave: A minimum of 30 calendar days of paid annual leave is provided after one year of continuous service.
• Wages and Payment: Salaries must be paid at least once a month, with overtime pay for work beyond standard hours.
• Workplace Safety: Employers are legally required to ensure a safe working environment and provide necessary safety training and equipment.
• Public Holidays: Employees are entitled to paid leave on all UAE public holidays.

Optional Benefits

• Financial Security:

  • Private pension plans
  • Performance-based bonuses
  • Stock options or profit-sharing plans
  • Tuition reimbursement for job-relevant education

• Work-Life Balance:

  • Flexible work arrangements (remote work, compressed workweeks)
  • Additional paid leave beyond the mandated minimum
  • Wellness programs and gym memberships
  • Relocation assistance for expatriate employees

• Additional Perks:

  • Company cars or transportation allowances
  • Meal vouchers or allowances
  • Family benefits (childcare subsidies, family health insurance)
  • Social and recreational activities for employee engagement

• Career Development:

  • Professional training programs
  • Mentorship opportunities
  • Career advancement pathways

By offering a mix of these mandatory and optional benefits, employers in the UAE can create attractive compensation packages that not only meet legal requirements but also foster employee satisfaction and loyalty. As an EOR, Rivermate expertly navigates these benefits, ensuring seamless implementation and administration for businesses operating in the UAE.

The process of termination and offboarding in the United Arab Emirates (UAE) is governed by the UAE Labor Law, which outlines specific procedures and requirements for employers and employees. Understanding these regulations is crucial for both parties to ensure a smooth and lawful transition.

Termination Process

Grounds for Dismissal

In the UAE, employers can terminate an employment contract for various reasons, depending on the type of contract:

1. Unlimited Contracts:

   • With notice: For non-disciplinary reasons or either party's wish to end the contract
   • Without notice: For gross misconduct as outlined in Article 120 of the UAE Labour Law

2. Limited Contracts:

   • Completion of contract
   • Mutual agreement
   • Valid reasons with notice
   • Gross misconduct (summary dismissal)

Notice Requirements

• Unlimited Contracts: Minimum 30 days, up to 90 days based on the employment contract
• Limited Contracts: As stipulated in the contract, or 30 days if not specified

Severance Pay

Employees are entitled to end-of-service benefits, calculated based on:

• 21 days' basic salary for each year of the first five years
• 30 days' basic salary for each additional year

Note that employees may forfeit severance pay in cases of summary dismissal due to misconduct.

Offboarding Process

Exit Interview

Conducting an exit interview is a good practice to gather feedback and ensure a smooth transition. This can include:

• Discussing the reasons for leaving
• Collecting insights on the work environment
• Addressing any concerns or questions

Handover of Responsibilities

Ensure a proper handover of duties:

• Document ongoing projects and tasks
• Transfer knowledge to colleagues or replacements
• Provide access to necessary files and information

Return of Company Property

Collect all company-owned items, such as:

• Laptops, phones, and other devices
• Access cards and keys
• Uniforms or any other company-provided equipment

Final Settlement

Prepare the final settlement, including:

• Unpaid salary
• Accrued leave balance
• End-of-service gratuity
• Any other outstanding payments or deductions

Cancellation of Visa and Work Permit

The employer must:

• Cancel the employee's work permit
• Cancel or transfer the residence visa
• Provide the necessary documentation for the employee to leave the country or transfer to a new employer

Documentation

Ensure all necessary documents are prepared and provided:

• Experience certificate
• Relieving letter
• Final settlement statement
• Other relevant certificates or references

By following these steps, employers in the UAE can ensure a compliant and professional termination and offboarding process, while employees can be aware of their rights and responsibilities during this transition.

The United Arab Emirates (UAE) is a popular destination for foreign workers, attracting talent from around the world with its thriving economy and diverse job opportunities. However, before embarking on a career in the UAE, it's essential to understand the visa and work permit requirements for foreign nationals.

Types of Visas

Employment Visa

The most common visa for foreign workers in the UAE is the Employment Visa. This visa is sponsored by the employer and allows the holder to live and work in the country legally.

Mission Visa

For short-term work assignments lasting up to 90 days, a Mission Visa may be appropriate. This visa is typically used for consultants or professionals visiting for specific projects.

Work Permit Requirements

To work legally in the UAE, foreign nationals must obtain a work permit in addition to their visa. The process typically involves the following steps:

1. Job offer from a UAE-based employer
2. Entry permit application by the employer
3. Medical fitness test upon arrival in the UAE
4. Emirates ID registration
5. Labor card (work permit) application

Important Considerations

• Visa sponsorship: In most cases, the employer is responsible for sponsoring the employee's visa and work permit.
• Validity: Employment visas are usually valid for two years and can be renewed.
• Family sponsorship: Employees meeting certain salary requirements can sponsor visas for their immediate family members.
• Emiratisation: Some sectors have quotas for hiring UAE nationals, which may affect job opportunities for foreign workers.

Conclusion

While the process of obtaining a visa and work permit for the UAE may seem complex, many employers are experienced in handling these procedures. It's crucial for foreign workers to ensure all necessary documentation is in order and to comply with local regulations to maintain their legal status in the country.