Definitive Guide to Hiring in United Arab Emirates

Hiring in United Arab Emirates

Hiring employees compliantly in United Arab Emirates means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in United Arab Emirates so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in United Arab Emirates; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in United Arab Emirates

Employee Probation Period

• As per UAE Labor Law, probation period is for 6 months.

Annual Leave in United Arab Emirates

• Employers must give the employee one period of special leave during their employment, without pay and not exceeding 30 days, to complete the Hajj pilgrimage to Mecca.
• Employees who have completed at least six months of work but have not yet completed one full calendar year of service are granted two paid days per month of annual leave. 
• Employees who have completed at least one full year receive 30 days of paid leave per year.

Holidays in United Arab Emirates

Maternity Leave United Arab Emirates

• Working females are entitled to 45 days of full pay for maternity leave provided that she has served continuously for at least one year. 
• Maternity leave is paid with half pay if one year of service has yet to be completed. 
• At the end of the maternity leave, the woman has the ability to extend her leave at an unpaid rate for a maximum period of 10 days.
• For the first 18 months following delivery, female employees who nurse their child are granted two paid rest intervals per day, not exceeding 30 minutes, in order to complete this task.

Paternity Leave United Arab Emirates

Sick Leave in United Arab Emirates

• If an employee becomes sick or injured and is unable to attend work, the ailment must be reported to the employer within a maximum of two days.
• After the probation period (three months working) has been completed the employee receives 90 days of continuous or intermittent sick days.
• Sick leave remuneration is as follows:
  • Full pay for the first 15 days
  • Half pay for the next 30 days
  • No pay for the remaining 60 days

Working Hours in United Arab Emirates

• The work week in the UAE consists of a maximum of eight hours per day and forty-eight hours per week. 
• Employees shall not be required to work more than five consecutive hours per day without a period of time allocated for rest, meals, and prayer.
• Working hours may be increased to nine hours per day for those employed in trades, hotels, cafeterias, and as guards.
• Friday is the set day of rest for all workers.

Overtime in United Arab Emirates

• Employees who work overtime are entitled to overtime pay equivalent to their wage pay during ordinary hours plus an additional amount of at least 25% of the wage for the overtime period
• The additional overtime rate increases to a minimum of 50% of the normal wages should the overtime hours fall between 9:00 pm and 4:00 am.
• Workers who complete work on Friday are entitled to request a rest day in lieu which can be taken at a later date or to be paid their basic wage plus an additional rate that is at least 50% of the said wage.

Termination of Employment in United Arab Emirates

Abu Dhabi

• Federal Law No. 8 of 1980 grants both employers and employees the right to terminate the employment contract, should sufficient notice be given, and the circumstances fall within those defined by the Ministry of Labor.
• Additionally, contracts may be terminated without notice under specific cases stated in Article 120 and Article 121 such as failure by either party to fulfill their contract obligations or if harm has been done by one party to the other.
• The death of the employer does not constitute the termination of a labor contract unless the contract is directly related to him personally.
• However, should the employee suffer total disability after their employment begins, the contract may be terminated.
• Partial disability does not constitute the termination of an employment contract if the employee is able to perform other work that suits their health.
• If the employee requests, the employer should transfer them to other work with wages equal to those paid for similar work.

Ajman

• Federal Law No. 8 of 1980 grants both employers and employees the right to terminate the employment contract, should sufficient notice be given, and the circumstances fall within those defined by the Ministry of Labor.
• Additionally, contracts may be terminated without notice under specific cases stated in Article 120 and Article 121 such as failure by either party to fulfill their contract obligations or if harm has been done by one party to the other.
• The death of the employer does not constitute the termination of a labor contract unless the contract is directly related to him personally.
• However, should the employee suffer total disability after their employment begins, the contract may be terminated.
• Partial disability does not constitute the termination of an employment contract if the employee is able to perform other work that suits their health.
• If the employee requests, the employer should transfer them to other work with wages equal to those paid for similar work.

Dubai

• Federal Law No. 8 of 1980 grants both employers and employees the right to terminate the employment contract, should sufficient notice be given, and the circumstances fall within those defined by the Ministry of Labor.
• Additionally, contracts may be terminated without notice under specific cases stated in Article 120 and Article 121 such as failure by either party to fulfill their contract obligations or if harm has been done by one party to the other.
• The death of the employer does not constitute the termination of a labor contract unless the contract is directly related to him personally.
• However, should the employee suffer total disability after their employment begins, the contract may be terminated.
• Partial disability does not constitute the termination of an employment contract if the employee is able to perform other work that suits their health.
• If the employee requests, the employer should transfer them to other work with wages equal to those paid for similar work.

Fujairah

• Federal Law No. 8 of 1980 grants both employers and employees the right to terminate the employment contract, should sufficient notice be given, and the circumstances fall within those defined by the Ministry of Labor.
• Additionally, contracts may be terminated without notice under specific cases stated in Article 120 and Article 121 such as failure by either party to fulfill their contract obligations or if harm has been done by one party to the other.
• The death of the employer does not constitute the termination of a labor contract unless the contract is directly related to him personally.
• However, should the employee suffer total disability after their employment begins, the contract may be terminated.
• Partial disability does not constitute the termination of an employment contract if the employee is able to perform other work that suits their health.
• If the employee requests, the employer should transfer them to other work with wages equal to those paid for similar work.

Ras Al Khaima

• Federal Law No. 8 of 1980 grants both employers and employees the right to terminate the employment contract, should sufficient notice be given, and the circumstances fall within those defined by the Ministry of Labor.
• Additionally, contracts may be terminated without notice under specific cases stated in Article 120 and Article 121 such as failure by either party to fulfill their contract obligations or if harm has been done by one party to the other.
• The death of the employer does not constitute the termination of a labor contract unless the contract is directly related to him personally.
• However, should the employee suffer total disability after their employment begins, the contract may be terminated.
• Partial disability does not constitute the termination of an employment contract if the employee is able to perform other work that suits their health.
• If the employee requests, the employer should transfer them to other work with wages equal to those paid for similar work.

Sharjah

• Federal Law No. 8 of 1980 grants both employers and employees the right to terminate the employment contract, should sufficient notice be given, and the circumstances fall within those defined by the Ministry of Labor.
• Additionally, contracts may be terminated without notice under specific cases stated in Article 120 and Article 121 such as failure by either party to fulfill their contract obligations or if harm has been done by one party to the other.
• The death of the employer does not constitute the termination of a labor contract unless the contract is directly related to him personally.
• However, should the employee suffer total disability after their employment begins, the contract may be terminated.
• Partial disability does not constitute the termination of an employment contract if the employee is able to perform other work that suits their health.
• If the employee requests, the employer should transfer them to other work with wages equal to those paid for similar work.

Umm Al Quwain

• Federal Law No. 8 of 1980 grants both employers and employees the right to terminate the employment contract, should sufficient notice be given, and the circumstances fall within those defined by the Ministry of Labor.
• Additionally, contracts may be terminated without notice under specific cases stated in Article 120 and Article 121 such as failure by either party to fulfill their contract obligations or if harm has been done by one party to the other.
• The death of the employer does not constitute the termination of a labor contract unless the contract is directly related to him personally.
• However, should the employee suffer total disability after their employment begins, the contract may be terminated.
• Partial disability does not constitute the termination of an employment contract if the employee is able to perform other work that suits their health.
• If the employee requests, the employer should transfer them to other work with wages equal to those paid for similar work.

Notice Period in United Arab Emirates

• The terminating party must give written notice to the other party in order to terminate the contract. 
• The notice period is a minimum of one month and a maximum of three months (If the renewal happened before January 1, 2016, and the notice period was not stated in the contract, the default notice period is three months).

Severance in United Arab Emirates

• Any employee who has completed one year or more of continuous service is entitled to the end of service remuneration at the conclusion of their employment.
• Only paid days of work are included when computing the period of service.
• The remuneration is as follows:
  • Twenty-one days’ pay for each year of the first five years of service.
  • Thirty days pay for each additional year. However, the entire total remuneration shall not exceed two years pay.
  • End of service pay will be prorated for fractions of the year as long as the employee has completed at least one year of continuous service.

United Arab Emirates Salary and Wages

13th / 14th Month Salary in United Arab Emirates

• No
• There is no statutory requirement to pay the 13th or the 14th month salary.
• Employees are entitled to 30 days annual leave.
• In addition, employees are entitled to national holidays, length of which, the government decides before it begins.

Abu Dhabi

• Social security contributions are applicable in the UAE only for UAE and GCC nationals. 
• If UAE/ GCC nationals are employed, then both the employer and the employee will be required to make social security contributions to the General Pension and Social Security Authority (GPSSA). 
• For UAE national employees, social security contributions are calculated at a rate of 20% of the employee's gross remuneration as stated in the local employment contract.
• of the employee's gross remuneration as stated in the local employment contract. Social security obligations also apply to employees of companies and branches registered in a free trade zone (FTZ).
• A higher rate of 26% is applied in the Emirate of Abu Dhabi, where the contribution of the employer is increased to 15%, the Government’s contribution is increased to 6%, and the employee’s contribution remains 5%.
• The employers of an expatriate or an expatriate employee are not required to make any social security contributions in the UAE.

Immigration United Arab Emirates

• All foreign nationals wishing to visit the UAE on business must have a valid visa status to enter the UAE, with the exception of nationals of GCC (Gulf Cooperation Council) countries (excluding Qataris).
• Foreign nationals may enter the UAE for business purposes under a company sponsored visit visa or free visa on arrival.
• Business activities allowed under company-sponsored visit visas or free visas on arrival are generally restricted to training, conferences, meetings, seminars and similar activities.
• Companies wishing to sponsor foreign national employees must apply for employment residence permits for the individuals, unless they are eligible for a non-sponsored labor or Free Zone identification card.
• Companies must be eligible to sponsor foreign nationals and have available quota.
• For companies located in mainland jurisdictions, the applications go through the Ministry of Human Resources and Emiratizations and the General Directorate of Residency and Foreigners Affairs (GDRFA).
• For companies located in Free Zone jurisdictions, the applications go through the Free Zone authority and the GDRFA.
• The application by the sponsoring company must include, among others, the following documents:
  • A copy of the prospective employee’s passport
  • Passport photos of the prospective employee
  • A legalized university diploma (for professional roles)
• The overall process for a UAE employment residence permit should take four to six weeks.
• In Free Zone jurisdictions, work can begin when the employment residence permit is stamped within the employee’s passport. 
• For mainland jurisdictions, work can begin when an individual has entered the UAE on an employment entry permit or has undergone a local status amendment. 
• If a company wants to hire a GCC (Gulf Cooperation Council) national (except for a Qatari national) or a female who is sponsored under her husband’s or father’s sponsorship, it can seek a non-sponsored labor identification card for the individual. 
• This is an alternative way for an individual to become authorized to perform work-related activities, without the need of sponsoring the individual’s UAE employment residence permit. 
• As of recently in the UAE mainland jurisdictions, this option is also available to non-GCC male employees. 
• Individuals who want to pursue self-employment, establish a business, invest in property or set up a foreign subsidiary in the UAE should seek analysis and advice on a case-by-case basis.

Value Added Tax (VAT) in United Arab Emirates

Abu Dhabi

• Value Added Tax (VAT) was introduced in the UAE on 1 January 2018 with a rate of VAT 5%.
• The VAT, as a general consumption tax, will apply to the majority of transactions in goods and services.
• UAE imposes VAT on tax registered businesses on a taxable supply of goods or services at each step of the supply chain.
• A business must register for VAT if the taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.
• Furthermore, a business may choose to register for VAT voluntarily where the total value of its taxable supplies and imports (or taxable expenses) is in excess of the voluntary registration threshold of AED 187,500.
• The 0% VAT rate applies to goods and services exported outside the VAT-implementing Gulf Cooperation Council (GCC) member states, international transportation, the supply of crude oil/natural gas, the first supply of residential real estate, and some specific areas, such as healthcare and education.
• A VAT exemption applies to certain financial services, as well as to the subsequent supply of residential real estate.
• Further, transactions in bare land and domestic passenger transport are also exempt from VAT.

Mandatory Benefits in United Arab Emirates

Abu Dhabi

• These are mandatory benefits as postulated by law
• These include probationary period, annual leave, public holidays, sick leave, maternity leave, overtime pay, notice period, and severance pay
• Statutory benefits also include social security benefits

Payroll Accrual in United Arab Emirates

Country Accruals Additional Information

Description

The employer is responsible for withholding and remitting employee social security contributions.In the Dubai International Financial Centre (DIFC), the DIFC Employee Workplace Savings Scheme (DEWS) has been introduced, replacing the End of Service Gratuity Benefit (EOSG) , with the aim of protecting long-term employee savings. The new scheme was rolled out on 1 February 2020, and employers now are required to make monthly contributions to DEWS or an alternative regulated.Qualifying Scheme, as opposed to paying a lump sum ‘gratuity payment’ to an employee at the end of their employment. Employers are required to contribute monthly contributions of 5.83% or 8.33% of the employee’s basic salary (the actual percentage is contingent upon the employee’s length of service) into the scheme.

Payroll Accruals Additional Information

Accrued Benefits in United Arab Emirates

Why use Global Expansion to hire in United Arab Emirates

Establishing a branch office or subsidiary in United Arab Emirates can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because United Arab Emirates labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by United Arab Emirates law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into United Arab Emirates. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our United Arab Emirates Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.