Employer of record in United Arab Emirates | Employment Law

Employment Law in the United Arab Emirates

Contracts

In most cases, employment contracts must be exclusively fixed-term, as mandated by the UAE’s Federal Decree-Law No. 33 of 2021. These contracts cannot exceed three years but may be renewed upon mutual agreement. They must be in bilingual format (Arabic and English) and be registered with the Ministry of Human Resources and Emiratisation (MoHRE). To be legally valid, contracts must contain the information below.

• Employee details: The employee’s full legal name (as per legal ID), proof of identity, nationality, date of birth, educational degrees, and professional qualifications
• Employer details: The employer’s legal trade name, address, and license number
• Job description: The job’s title, level, classification (e.g., full-time, part-time, temporary, and/or flexible) and description, including an outline of responsibilities
• Location: Address(es) where work is to be performed
• Salary/wages: An itemized explanation of payment to be made for work, plus any subsidies for housing, transportations, or other expenses
• Payment details: Frequency of payment and the currency used for payments
• Leave: Entitlements for sick, annual, parental, and other leave
• Probation period: If applicable, the duration of the probation period
• Termination: Conditions, modes, and notice period for termination
• Non-compete: If required, must include the duration and restrictions such as type of work and geographic area

In the UAE, employees are forbidden from bargaining collectively, however, they may raise collective grievances through the MoHRE. As your employment partner in the UAE, Safeguard Global can help you craft employment contracts in line with Emirati laws and cultural expectations.

Termination and notice periods

In the UAE, labor laws generally require a written notice for termination, with periods ranging from 30 to 90 days, depending on the employment contract. In most cases, terminated employees are entitled to a warning and a fair hearing. Just cause for a dismissal includes the following:

• Theft
• Disorderly behavior
• Bribery
• Insubordination
• Habitual negligence of duty
• Lack of capability
• Financial irregularities

Employees with at least one year of service are entitled to end-of-service benefits, calculated as 21 days' wages for each of the first five years and 30 days' wages for each subsequent year. As your employer of record (EOR) in the UAE, we can assist you in managing employee terminations by providing legal guidance and a personalized process to ensure compliance with labor laws and minimize legal risks.

Probation periods

Probation periods in employment contracts are not mandated by Emirati law but are common in many sectors. Probation periods may not exceed six months, and they must be in writing in order to be valid.

Working hours and overtime

The standard working week in the UAE typically consists of 48 hours, spread across six days, with a legal maximum of eight hours per day. During the holy month of Ramadan, working hours are reduced by two hours per day. Employees are entitled to a daily rest period of 12 consecutive hours and a weekly rest period of at least one day, typically Friday.

Any work beyond the standard working time is considered overtime. UAE law limits overtime to two hours per day, and such work must be compensated at 125% of the regular wage, or 150% if performed between 9:00 p.m. and 4:00 a.m. If employees work on their designated rest day, they are entitled to a substitute rest day or additional pay.

Taxes

In the United Arab Emirates, there is no personal income tax or withholding tax deducted by employers from employee salaries. However, most Emirati entities must pay a federal corporate tax on their net profits.

Employer payroll contributions

The United Arab Emirates’ social security system requires employer contributions to the General Pension and Social Security Authority (GPSSA). These contributions are dependent on the total number of employees, and these contributions cover pensions, medical care, disability insurance, and gratuity payments. In addition, workers’ compensation is financed by contributions from state governments, employers, and employees. Social security contributions amount to approximately 18% of a worker’s gross salary, with 12.5% payable by the employer and 5% payable by the employee. (The contribution is higher in Abu Dhabi.)