Employer of Record in United Arab Emirates

Navigating the intricacies of employment regulations in the United Arab Emirates requires a thorough understanding of local laws, including visa sponsorship, labor contracts, and specific payroll and tax obligations. Businesses looking to expand into the UAE must ensure full compliance from the outset, which can often involve significant administrative overhead and a deep dive into an unfamiliar legal landscape.

When considering hiring employees in the United Arab Emirates, companies generally have three primary options:

• Establishing a local legal entity: This involves setting up a branch, subsidiary, or free zone company, which requires considerable time, capital, and a commitment to managing local registration, licensing, and ongoing compliance.
• Utilizing an Employer of Record (EOR) service: An EOR, such as Rivermate, acts as the legal employer for your staff in the UAE, handling all local employment responsibilities while you retain full control over day-to-day management.
• Hiring independent contractors: This option offers flexibility but carries the risk of misclassification, which can lead to significant penalties if the working relationship is later deemed to be an employer-employee one.

How an EOR works in United Arab Emirates

An Employer of Record simplifies global expansion by taking on the legal and administrative burdens of employment. In the UAE, an EOR handles crucial aspects, ensuring your operations remain compliant with local labor laws:

• Onboarding and employment contracts: Drafting and managing compliant local employment agreements.
• Visa and work permit sponsorship: Facilitating the necessary documentation for your employees to live and work legally in the UAE.
• Payroll processing and tax remittance: Ensuring accurate and timely payment of salaries and handling all local income tax and social security contributions.
• Benefits administration: Managing mandatory and supplementary employee benefits, such as health insurance and end-of-service gratuity.
• HR compliance: Adhering to local labor laws, including working hours, leave policies, and termination requirements.

Benefits of using an EOR in United Arab Emirates

For companies aiming to hire talent in the UAE without the complexity of establishing a local entity, an EOR offers several distinct advantages:

• Rapid market entry: Hire employees in the UAE quickly, often within days, without the lengthy process of entity registration.
• Reduced risk and compliance: Offload the burden of navigating complex and evolving UAE labor laws, minimizing the risk of penalties for non-compliance.
• Cost-efficiency: Avoid the significant upfront and ongoing costs associated with setting up and maintaining a legal entity in the UAE.
• Access to top talent: Recruit and employ the best candidates in the UAE, regardless of your company's physical presence.
• Flexibility and scalability: Easily scale your team up or down as business needs change, without the administrative hurdles.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in United Arab Emirates includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in United Arab Emirates.

In the UAE, there is no personal income tax, but employers must fulfill social security obligations for Emirati employees, managed by the GPSSA. Employers contribute 12.5%, and employees contribute 7.5% of the employee's gross salary, up to a ceiling of AED 70,000 per month. These contributions are paid monthly, with reports due within 15 days after each month, and registration with the GPSSA is required upon hiring Emirati staff.

For expatriates, there are no mandatory social security or income tax deductions. Corporate tax applies mainly to business profits exceeding a certain threshold, not employee salaries. VAT at 5% applies to taxable supplies, with registration required if thresholds are exceeded. Employers should also be aware of specific regulations in free zones.

The UAE's salary landscape in 2025 is highly industry-dependent, with annual salaries ranging from AED 100,000 to AED 700,000 based on role and sector. Key sectors like healthcare, oil and gas, and technology tend to offer higher compensation, especially for specialized roles such as doctors (AED 300,000–700,000) and petroleum engineers (AED 280,000–600,000). Other roles, such as teachers and hospitality staff, have lower but competitive ranges.

Employers typically provide additional benefits beyond base salary, including housing, transportation, education allowances, annual and Ramadan bonuses, and relocation support. Salaries are paid monthly via bank transfer, with the Wage Protection System (WPS) mandated for transparency and timeliness. While there is no universal minimum wage, domestic workers have regulated minimums, emphasizing fair pay standards. Salary trends forecast growth in tech, healthcare, and renewable energy sectors, influenced by digital transformation, Emiratization policies, and cost of living factors.

UAE labor law mandates minimum leave entitlements to promote employee well-being. Employees are entitled to 30 calendar days of paid annual leave after completing one year of service, with pro-rata leave for those with 6-12 months. Employees can carry forward up to half of their annual leave or opt for cash compensation for unused days. Public holidays are observed throughout the year, with key dates including New Year’s, Eid al-Fitr, Eid al-Adha, Islamic New Year, Prophet Muhammad’s Birthday, and National Day.

Additional leave types include sick leave (up to 90 days with varying pay), maternity (60 days with full pay for 45 days), paternity (5 days), and adoption leave (30 days full pay). Bereavement leave ranges from 3-5 days, while study leave is granted based on employer agreement. Employers should ensure compliance with these provisions to maintain a positive work environment.

In the UAE, employers must provide mandatory benefits such as end-of-service gratuity, paid annual leave (minimum 30 days), public holiday leave, sick leave (up to 90 days), maternity leave, and regulated working hours with overtime pay. The gratuity is calculated based on basic salary and years of service, with 21 days' pay for 1-5 years and 30 days' for over five years. Health insurance is legally required in Dubai and Abu Dhabi, covering inpatient, outpatient, maternity, dental, and optical care, while other Emirates strongly recommend it.

Optional benefits commonly offered include health and life insurance, housing and transportation allowances, education and airfare allowances, company cars, performance bonuses, and wellness programs. Retirement options differ for nationals (covered by GPSSA) and expatriates (relying on gratuity or additional savings schemes like Dubai’s DEWS). Benefit packages vary by company size and industry, with larger firms typically providing more comprehensive coverage.

Benefit costs, especially for health insurance and housing allowances, can be significant, and compliance with labor laws is essential to avoid penalties. Employers should stay updated on evolving regulations to maintain competitiveness and legal adherence.

Employment agreements in the UAE are essential for defining the rights and obligations of employers and employees, and must comply with the UAE Labour Law to be legally enforceable. The two main types are fixed-term and indefinite contracts, each with specific legal and operational implications.

Employers must ensure contracts adhere to legal standards to avoid penalties and disputes. Properly drafted agreements foster a compliant and fair workplace environment.

The UAE has embraced remote and flexible work, supported by the 2021 Labour Law (Federal Decree-Law No. 33), which allows employers and employees to define remote work terms through clear contractual agreements. Employers are responsible for providing a safe remote work environment, including necessary equipment and support, while remote workers are entitled to the same rights as on-site employees, such as salary and benefits. The legal framework emphasizes non-discrimination and compliance, ensuring remote arrangements are fair and well-regulated.

Flexible work options are expanding in the UAE, with common arrangements including full remote work, hybrid models, and flexible hours. These practices help attract talent and boost productivity while maintaining legal and operational standards. Key data points include:

This evolving legal and practical environment positions UAE as a competitive hub for remote work, emphasizing compliance, technology infrastructure, and inclusive policies for employers aiming to adapt to modern workforce expectations.

Terminating an employee in the UAE must comply with the UAE Labour Law (Federal Decree-Law No. 33 of 2021). Notice periods vary based on service length: 30 days for less than 1 year and up to 5 years, and 90 days for over 5 years. During the notice period, employment remains active, but parties can agree to waive or shorten it, with payment in lieu of notice if terminated immediately. Probationary periods, typically up to six months, have different rules, often requiring shorter notices.

Severance pay is due after at least one year of continuous service, calculated at 21 days' basic salary per year for under 5 years, and 30 days' for over 5 years, capped at two years' salary. Entitlement varies if the employee resigns, with full gratuity after 5 years, and partial amounts for shorter tenures. Employees terminated for gross misconduct may forfeit severance rights.

Grounds for termination include cause (e.g., misconduct, insubordination, confidentiality breaches) which allows immediate dismissal without notice or severance, and without cause (e.g., redundancy, restructuring) requiring notice and severance. Employers must follow procedural steps: written notice, documentation, final settlement, visa cancellation, and exit procedures. Employees are protected against wrongful dismissal; they can file complaints within one year, and if successful, may receive compensation up to three months' salary or reinstatement.

The UAE is experiencing a notable increase in freelancers and independent contractors, reflecting a global shift towards flexible work arrangements. This trend is driven by technological advancements and the need for specialized skills on a project basis. Employers must navigate the legal landscape carefully, ensuring proper classification of workers to avoid misclassification penalties. Key factors distinguishing employees from contractors include control over work, integration into business operations, financial dependence, provision of tools, relationship duration, and payment methods.

A robust contract is crucial when engaging independent contractors, outlining scope, payment terms, confidentiality, IP rights, and termination conditions. Contracts should explicitly state the independent contractor status to clarify tax and insurance responsibilities. As of June 1, 2023, freelancers may be subject to Corporate Tax if their income exceeds AED 375,000 annually, and they must register for VAT if their taxable supplies exceed AED 375,000. Contractors are responsible for their own health, professional indemnity, and public liability insurance.

Independent contractors are prevalent in industries such as media, technology, consulting, education, marketing, construction, and healthcare. Employers benefit from the flexibility and expertise of freelancers but must understand the legal and operational frameworks to integrate them effectively.

Foreign workers in the UAE need both a visa and a work permit for legal employment, with requirements varying by nationality, job type, and emirate. The most common visa types include Employment Visa (sponsored by employer, valid 1-3 years), Investor Visa (for business investors), Freelance Visa (for independent contractors), and Visit Visa (for job seekers, 30-90 days, no work allowed). Employers must hold a valid trade license, register with MoHRE, and sponsor employees, while employees need a valid passport, attestations, medical clearance, and security checks.

The application process involves obtaining employer approval, an entry permit, medical exams, Emirates ID, labor card, and visa stamping, typically taking 1-3 weeks with costs varying by case. UAE offers a "Golden Visa" for long-term residency (5-10 years) to investors, entrepreneurs, scientists, students, and talents, providing benefits like family sponsorship and greater work flexibility. Dependent visas enable residents to sponsor family members, requiring proof of relationship and minimum salary thresholds (around AED 4,000).