United Arab Emirates

Employer of Record in the UAE

Skuad’s strong global network and an automated human resource (HR) platform ensure quick onboarding of remote teams, managing their payrolls, and formalizing contracts in compliance with the local laws. Learn more about how, with Skuad, you do not have to worry about a thing related to HR tasks in the country of your expansion.

UAE at a Glance

Population: 9,890,402 people (2020)

Currency: United Arab Emirates dirham (AED)

Capital city: Abu Dhabi

Languages: English, Arabic

Gross Domestic Product (GDP): USD 353.899 billion (2020)

Employment in the UAE

What You Must Know Before Employing in the UAE

The UAE employment laws vary in all the seven federation states. The labor law is applicable for every employment relationship throughout the UAE, excluding agricultural workers, domestic servants, and the public sector. 

The UAE has 35 Free Zones within the federation where companies need to operate under laws based on taxation, foreign ownership, employment, profits, and capital. The two Free Zones, Abu Dhabi and Dubai, have separate employment legislation. The table below enlists basic employee entitlements such as employee benefits, working hours, paid time-offs, and national holidays.

Duties and Rights of the Employer in the Remote Working System: MoHRE

• Employers can choose the working hours for remote working employees.
• Employers hold the right to abolish the remote working system at any point if the employee breaks any rules or regulations.
• Employers are required to hire competent employees who are qualified to take up the job remotely.
• Employers are required to specify whether a particular job opening is suitable for remote working.
• Employers are required to treat both remote working and in-office employees fairly.
• Employers are required to provide any necessary tools and systems to employees to ensure ease in remote working.

Entitlements and Explanations

Statutory Working Hours

The statutory working hours are 48 hours per week.

Overtime Eligibility

Overtime pay is 125% per hour during the workday and 150% per hour for evening shifts (9:00 pm to 4:00 am) and weekends.

Paid Public Holidays

Employees in the UAE are eligible for the following paid public holidays.

• Gregorian New Year: January 1
• Eid Al Fitr: Ramadan 29 to Shawwal 3 (May 12, 2021, four days)
• Arafah Day and Eid Al Adha (Feast of Sacrifice): July 19 to July 22, 2021
• Hijri New Year (Islamic New Year): Muharram 1, that is, August 12, 2021
• Prophet Mohammed’s birthday: October 21, 2021
• Commemoration Day: December 1, 2021 (previously known as Martyr's Day, observed on November 30)
• National Day: December 2 and 3, 2021 

Holiday Pay

An employee is compensated for holiday pay when:

• Authorized leave such as annual or medical leave is immediately before or after a public holiday.
• An employee working during leaves or holiday is granted a rest day and an additional 50% payment on their daily wage.

Medical Leave

• According to the law, employees can avail of a maximum of 90 days of sick leaves.
• They are paid a full wage for the first 15 days, half of the wage for the next 30 days, and no wage for the remaining 45 days.
• No sick leaves are provided during the probation period.

Maternity Leave

• A woman who has completed more than a year of service can avail of 45 days of fully paid maternity leave.
• A woman who is yet to complete a year of service is entitled to maternity leave at half the pay.
• Women employees are granted two paid rest intervals for not more than 30 minutes per day for the first 18 months after the delivery.
• Working fathers are not entitled to paternity leave.

Annual Leave Accrual Entitlement

The employees get annual leave in proportion to the duration of their service at the company.

Duration of Service and Leaves are as follows:

Six months to one year - Two days per month

More than one year - 30 days

Leave Expiry

Annual leaves are awarded only once within two consecutive years.

Accrued Leave At Termination

If an employee resigns, they may be paid for the annual leaves that were not used.

Employee Protection and Anti-discrimination Rights

The UAE has several laws that aim to eliminate hatred and discrimination based on religion, caste, race, and ethnic origin. Also, there are laws defined for equal pay for women and to protect the rights of people of determination.

Learn more about employment laws and employment agreements in the UAE from Skuad experts.

Contractors vs. Full-time Employees

Until now, it was difficult for companies to sponsor and legally employ people on a contract that could offer an income and schedule favorable for the employee. The UAE’s Ministry of Human Resources and Emiratisation (MoHRE) issued a statute in 2018 and allowed part-time work or contract-based work, providing a feasible option for employees. 

In general, all employment contracts must preferably be in writing and should specify the following terms. 

• The starting date
• The date of conclusion
• The kind of work
• The location of work
• The remuneration 
• The duration of work, for short-term contracts

Advantages of Hiring Contractors

• Flexibility: Since contractors are hired on a short-term basis, you are free to determine the scope of their work temporarily. If new needs arise, further contracts can be drafted in the short term.
• Independence: Short-term contractors usually work independently. They do not require close supervision, and your resources can be transferred elsewhere, as needed. 
• Cost: Hiring contractors may be cheaper in the long run, although their individual rates are higher than those of full-time employees. This is because such employees are not entitled to employment benefits such as bonuses and tax compensations.

Advantages of Hiring Full-time Employees

• Loyalty and organizational commitment: Full-time employees are likely to be more loyal as they exclusively work for your company. As their individual success depends on the performance of your firm, they are likely to invest more effort into their work. 
• Knowledge: All employees undergo training when they join a firm. The skills and knowledge gained by a full-time employee, however, stay within the organization. 
• Legal freedom: Since full-time employees are defined as such in their contracts from the outset, misclassifications can be avoided completely. When hiring full-time employees, you determine the terms of the contract and entitlements, and these are not liable to change unless mutually decided by both parties. 

Thus, companies can hire employees who work according to schedules or contract-based employees with flexible schedules. Why engage yourself in the arduous process of formalizing employment contracts when Skuad can do it for you? Contact Skuad’s experts to help you deal with full-time and contractual employment.

Hiring in the UAE

The Labor Law and other ministerial decisions govern hiring in the UAE. The majority of laws favor UAE nationals over other nationalities. Hiring employees in the UAE can be done through various online platforms, including, 

• LinkedIn
• Indeed
• Bayt
• Dubizzle

A company can also place advertisements on its website or through agencies. The company should ensure that the platforms through which they are hiring are completely legitimate and the agencies are licensed.

While hiring talent through online platforms, it is essential to conduct personal interviews before onboarding them. When hiring from outside the UAE, you must ensure that the candidates are worthy of the job and no unemployed citizens can replace them. The foreigners applying for the job must have appropriate qualifications and professional competence to fill in the position.

What is the Remote Working System in the UAE?

With the onset of the Covid-19 pandemic, MoHRE issued regulations requiring companies in the country to allow only 30% of the workforce in the office. The rest are to follow the Remote Working System. Employees from all industries other than health, food, medicine, supply, infrastructure, telecommunications, cleaning, and finance come under these regulations.

Book a demo with us to understand how we can help expedite the hiring and onboarding of both full-time and contractual employees in the UAE.

Probation & Termination in the UAE

Probation Period

The probation period for an employee in the UAE is usually three to six months. During the probation period, either the employer can terminate the employee, or the employee may choose to leave without any notice period.‍

Termination of Service

The minimum notice period for termination of employment in the UAE under the Labor Law is 30 days. However, both the employer and the employee may agree upon a longer notice period or completely waive the notice.

Duration of Employment and Notice Period

• More than six months but less than one year - Seven days
• At least one year - Two weeks
• At least five years - One month

Learn more about how Skuad handles all aspects of employment, including probation and termination. Contact us for your specific requirements for expansion in the UAE.

EOR Solution

Establishing a successful enterprise in a different country requires expert intervention, as it is nearly impossible to know the various compliance policies of the country. EOR services can simplify your task of conducting business globally. Their extensive research on the country’s laws and HR policies ensures business expansion at a faster pace. 

An effective EOR service manages the entire life cycle of the employees. They handle complex HR-related matters and let you focus on your core tasks. Skuad’s UAE EOR solution facilitates hassle-free business expansion. Additionally, we can include the following facilities in the payroll.

• Social security of employees and workers
• No requirement for tax returns
• Legal contribution and social security of employees not available to foreigners
• Corporate tax not applicable
• Local employees can avail of 12.5% of their pension contribution

Hire talent from all over the world and improve your business prospects with Skuad’s platform for managing globally distributed teams. The team of well-informed professionals at Skuad will handle the arduous task of managing global payroll, compliance, and taxation on your behalf. Talk to us and build a global team of efficient workers.

Outsourcing Employment through an Employer of Record

The companies willing to expand in the UAE need to be clear about their hiring process. They can either create a separate team or hire an EOR that will take care of the process for them.

To learn more about Skuad’s bespoke EOR solution for the UAE, book a demo with us.

Types of Visas in the UAE

The different types of visas in the UAE are mentioned below.

Visit Visa

A visit visa can be sponsored by friends, family, or relatives. They will need to apply for your entry permit at the Department of Immigration or the office of the Ministry of Interior Affairs.

Types of Visit as per Validity is mentioned below:

Short-term visit visa - 30 days

Long-term visit visa - 90 days

• This permit does not allow you to take up work in the UAE.
• This permit must be carried at the airport while deboarding for verification.

Tourist Visa

An individual or an outsider from any country can apply for a tourist visa to visit the country. A tourist visa is usually sponsored by hotels, licensed travel agents, or airlines.

• A tourist visa allows the owner to stay in the country for 30 days or 90 days.
• Children below the age of 18 are eligible to get a free visit visa from July 15 to September 15 each year.
• As a tourist, you are not allowed to work in the country.

Residency Visa

• An individual who wishes to become a resident of the UAE needs to apply for a residency visa. 
• The duration of a residency visa for the mainland is two years, and for free zones, it is three years. 
• Individuals testing positive for HIV or tuberculosis are not granted residency visas. 

The various types of residency visas are as follows.

UAE Work Visa

Foreigners applying for jobs or selected for an employment opportunity can apply for this visa. Foreigners need to have any of the following qualifications or skills to be able to get a work permit

• Bachelor’s degree
• A post-secondary diploma in any field
• A high school diploma

UAE Student Visa

A foreign national getting accepted into any educational institution in the UAE is eligible for a UAE Student Visa. The institution that you have been accepted to arrange for your visa and entry permit. An entry permit is required for you to enter the UAE.

• A student visa is valid for one year and can be renewed annually for the duration of your study.
• Students with good grades and exceptional skills are provided with the privilege of a student visa that is valid for five years.
• The criteria to get the student visa validity is students should have at least a 95% or a 3.75 GPA from a university inside or outside the UAE.

UAE Family Visa

The family members of the UAE citizens or foreigners can avail themselves of the family visa. The criteria for your family members to get a visa are,

• A male expatriate should have a salary of at least AED 4,000 or AED 3,000 per month with accommodation.
• A female expatriate should have a salary of at least AED 10,000 or AED 8,000 with accommodation.
• The family members of the foreigners need to get a medical test approved from a government health care center in the UAE.

UAE Investment Visa

This visa is applicable for foreign nationals who make a financial investment in the UAE and is a kind of long-term residence visa. There are two types of investment visas.

1. Ten-year long-term residence visa

• One should invest at least AED 10 million in the public sector.
• One should have specialized skills. Individuals can be doctors or engineers in electronics, computers, biotechnology, culture, and arts.

2. Five-year long-term residence visa

• One should invest in properties in the UAE or be an entrepreneur having a capital of at least AED 500,000.
• One should have good grades: 95% in secondary school and a minimum of a 3.75 PGA from any university.
  

UAE Retirement Visa

This visa applies to older foreign nationals who wish to retire in the UAE and have the resources to do so.

Talk to us and get more guidance related to the types of visas and visa work requirements in the UAE. Skuad can handle all your visa requirements and ensure the expansion process is not delayed.

Work Permits in the UAE

To obtain a work permit in the UAE, certain steps need to be taken care of before the arrival of the permit holder. The work permit procedures can be managed and handled by Skuad’s local partner in the UAE.

Can Skuad sponsor Work Permits in the UAE? 

Yes

Processing time

Five working days

Work permit process

The process for a work permit is as follows.

• Step 1: Skuad’s EOR service submits an application on your behalf at the Ministry of Labor online website.
• Step 2: The employer submits all the required documents.
• Step 3: The application is reviewed by the Ministry and the authorities may ask to resubmit any documents or make corrections if any.
• Step 4: After the approval from the Ministry, the employer can download the permit from the website.

Work Permit validity

30 days

When can an employee travel to the UAE?

When the employer issues an entry permit for the immigrant

What’s the cost of a Residence Visa?

AED 100 to AED 140.

Duration of Residence Visa processing

One to two months

To know more about work permits in the UAE and how Skuad can secure them for you, connect with our experts today and kick-start your expansion journey.

Payrolls & Taxation in the UAE

Things You Must Know To Set Up Payroll in the UAE

The UAE has crystal clear rules for payroll and taxes depending upon whether the companies hire foreigners or nationals. The companies registered in the UAE prefer to manage and handle their payroll by an EOR service. The EOR complies with the tax and payroll regulations and immigration.

An EOR service can optimize and facilitate employment performance within any company. The payroll services in the UAE are cost-effective with enhanced security and confidentiality.

Some clients prefer to keep their payroll information confidential from the internal employees. The following services are covered under payroll management.

• Preparing offer letters
• Issuing the No Objection Certificate (NOC)
• Planning and managing leave for the employees, paid holidays, and sick leaves
• Assisting with selection and application of suitable Medical/Health Insurance
• Assisting with the setup of wage protection system
• Calculating statutory gratuity payments as per the UAE labor law
• Issuing of salary certificates, salary payslips, and bank transfer letters for the employees
• The end of settlement calculation in case of termination after probation or during probation as per the labor law of the UAE
  

Taxes in the UAE

Employer Taxation

Why bother getting into the complexities of payrolls and taxation when Skuad can do it for you? Book a demo to know how Skuad as your EOR can help you with payroll and taxation.

Financial Year End Date

Not applicable/no income tax is levied.

Tax Documents

No documents are applicable.

Corporate Tax

This tax is only levied on foreign banks and oil companies in the UAE.

Free Zones in the UAE are exempted from paying tax, and the duration can be extended.

Withholding Tax (For Non-Residents)

No withholding tax is applicable.

Payroll Tax

No payroll tax is applicable.

Employers Social Security and statutory contributions

The social security rate is 17.5%.

Skuad's unified employment platform helps organizations with payroll management and tax compliance. Book a demo to know how Skuad can help you with payroll and taxation.

Employee Taxation

Sales Tax

5%

Income Tax

No tax is levied on income.

Tax Returns

No filing of tax returns, as no individual tax is applicable in the UAE.

Employee Social Security and statutory contributions

The social security rate for employees is 5%.

Bonuses

In the United Arab Emirates, bonuses are not a legal provision. But employees are typically paid 13th and 14th month incentives at the end of a year's employment.

Incorporation: How to Set Up a Subsidiary in the UAE

If you wish to expand your business in the UAE, the first step would be to set up a subsidiary without which the company cannot make a legal presence in the country. The steps for setting up a subsidiary in the UAE are as follows.

• The foremost step in incorporating a holding company in the UAE is choosing the location. The employer must choose the location according to the type of business. It is best to collaborate with a local partner for this.
• Choose the type of entity for your business. The options are a public limited company and a private company.

Every entity has different laws; the employer must select the entity according to the business requirements. Even though the subsidiary will be an independent entity, the foreign company will still act as a shareholder; thus, it will give the decisional power of the subsidiary to the company. If a foreign company wants to set up a subsidiary in the UAE, the subsidiary will operate independently under business forms in the UAE.

The most common forms of establishing a subsidiary in the UAE are public and private companies. A foreign company can establish a subsidiary in the Free Zones of the UAE as a free-form company. Free Zones give a lot of benefits and some tax relaxation to the companies. A subsidiary is subject to legislation tax that favors both the local and the parent company. To set up a subsidiary in the UAE free zone, no local sponsor or partner is required, and it requires minimal paperwork and takes relatively less time. The registration of a subsidiary in the UAE is similar to that of a foreign national company.

Learn more about setting up a subsidiary in the UAE with Skuad’s effective EOR solution.

Professional Employer Organization (PEO)

A professional employer organization (PEO) in the UAE manages all HR-related functions, such as employee benefits, payroll management, taxes, and risk management. A PEO firm acts as a co-employer, while an EOR firm acts as a legal employer.

Businesses willing to expand into another country must first establish a legal presence in the country. Collaborating with a PEO firm will require the companies to set up a legal entity separately; however, when you partner with an EOR team, you can legally start working and hiring employees in the country as it is already a legal employer.

A PEO can take over the responsibilities and liabilities of the company and handle all HR-related matters. In addition, an EOR company allows organizations to set up legal entities in different countries and mark their presence in the global market.

Skuad’s integrated platform acts as an EOR. The expert professionals manage all HR-related functions; right from recruitment to termination, everything is handled by the single platform of Skuad. You can build an efficient team of workers remotely while complying with the local laws. Skuad handles all the functions such as onboarding workers, both full-time and contractors, managing their payroll and taxes, and sponsoring work permits. Connect with us and elevate your business prospects while saving your time and money with the advanced UAE EOR solutions of Skuad.

Conclusion: What Gives Skuad’s UAE Solutions an Edge?

Expanding into the UAE is a fantastic choice for your business as the country is one of the fastest-growing economies in the world. Choosing Skuad as your EOR service to outsource the human resources function will simplify and expedite your expansion in a cost-effective way. 

Skuad has an extensive network in 150+ countries across the globe and provides a single interface to onboard and manage employees and contractors. It offers consistent prices irrespective of the location and manages the payment of your team through a single invoice. It also ensures that your IP, invention rights, and sensitive employee details are fully protected wherever you operate.

Connect with Skuad experts to know more.

FAQs

1) What is the employer of record in the UAE?

An Employer of Record (EOR) in the UAE legally hires employees without setting up a local entity. An EOR, like Skuad, handles payroll, taxes, and benefits, and ensures compliance with UAE labor laws.

2) What is the difference between employer of record and co-employment?

An Employer of Record (EOR) assumes full-fledged legal responsibility for employees, including compliance, payroll, and benefits. Co-employment model is followed by the Professional Employer Organization (PEO). It involves shared responsibility of HR tasks only between the PEO and the client company.

3) What is the employer of record service agreement?

An Employer of Record (EOR) service agreement is a contract between an EOR provider and the client company. It contains the terms and conditions under which the EOR will manage employment responsibilities, such as payroll, compliance, taxes, and benefits administration.

4) How much does an EOR cost in the UAE?

The cost of an Employer of Record (EOR) in the UAE changes based on the provider and the services required. Generally, EOR services charge a percentage of the employee's salary, ranging from 10% to 20%. Skuad, for instance, starts at just $199 per employee.

5) What are the employment contracts in the UAE?

There are two main types of employment contracts in the UAE: limited-term (fixed-term) and unlimited-term contracts. Limited-term contracts are for a specific duration and end on a predetermined date, while unlimited-term contracts are open-ended and continue until terminated by either party with appropriate notice.