UAE Employer of Record

If a lack of speed or local expertise are among your top concerns when expanding to or employing workers in the United Arab Emirates (UAE), an employer of record may be the best option for achieving your global growth objectives.

An employer of record, sometimes known as an international PEO, enables you to quickly hire and onboard workers in the UAE―often in as little as two weeks―without having to take on the cost and risk of establishing a local entity.

Learn about the hiring, employment, payroll and benefits requirements for workers in the UAE and how our employer of record service, Global Employment Outsourcing (GEO), and local HR experts can help you manage your international employment needs.

Hiring in United Arab Emirates

To understand employment regulations in the United Arab Emirates (UAE), it is important to first understand how the country is structured and governed. The UAE is a federation of seven emirates, which include roughly 45 different free zones—economic areas with preferential tax and customs rates.

While a federal labor law exists, employment regulations can differ from emirate to emirate and free zone to free zone. Some free zones, such as the Abu Dhabi Global Market (ADGM) and Dubai International Financial Center (DIFC), have employment laws that supersede the UAE Labor Law.

Additionally, trade unions and collective bargaining are not authorized in the UAE.

Since employment in the UAE is highly regulated, compliant employment contracts are an essential business need. As your employer of record and PEO in the UAE, we can ensure that every contract, for every worker, meets all requirements. We can also provide you with guidance about cultural norms and hiring best practices and keep you up-to-date with employment regulations as they change.

Employment contracts in UAE

As you look to hire employees in the UAE, here are some common regulations you’ll need to know to create a compliant contract, as well as how an employer of record and PEO can provide support for your unique HR needs.

Working hours
Work hours cannot exceed eight per day or 48 per week over a six-day workweek.

The workday may be increased to nine hours for commercial establishments, hotels, cafeterias, security services and other businesses designated by the Minister of Labor and Social Affairs.

During Ramadan, daily work hours must be reduced by two hours per day.

No employee may work more than five consecutive hours without breaks for rest, meals and prayer.

An employee who works on a day off is entitled to another day off or overtime pay of time and a half, while an employee who works on a paid holiday or during their annual leave is entitled to a substitute day(s) of leave plus overtime pay.

Although the UAE government has a five-day workweek with its weekend on Friday and Saturday, private businesses are free to set their own workweeks.

Friday is the typical day off, except for workers who are paid daily, and employees cannot be required to work more than two Fridays in a row.

Compensation
As you consider the appropriate salary to offer new employees, keep in mind:

There is currently no minimum wage. However, the February 2022 update to the UAE Labour Law provides that a minimum wage may be set in the future.
Overtime pay is time-and-one-quarter, or for work done between 9 p.m. and 4 a.m., time-and-one-half. Overtime is limited to two hours a day.

As your employer of record in the UAE, we can provide you with resources and insights about employee compensation, so you are better equipped to make a competitive employment offer.

Bonuses
Though not required, it’s customary for employers give an end-of-year bonus.

Probationary period
An employee may be hired for a probationary period of no more than six months, during which they can be terminated without notice or severance. If they continue their employment after the probationary period, that time must be counted toward the total years of service.

Termination and severance
An employer may terminate an employee at any time with 30 days’ written notice. Notice of termination may not be given while the employee is on sick or annual leave. An employer may terminate an employee without notice or compensation if the reason for termination is considered valid.

The requirements for severance differ depending on whether the contract is for a definite or indefinite period, who ends the contract (employer vs. employee), the reason for termination and the employee’s total years of continuous service. Generally, the employer will owe the employee compensation, unless the termination is considered valid.

As your employer of record in the UAE, we can work with you to quickly handle the unforeseen event of an employee termination, providing legal guidance and a personalized process that ensures you stay out of labor court.

Employee benefits and paid leave in UAE

When negotiating terms of an employment contract with a candidate in the UAE, here are some of the statutory benefits and paid leave requirements to keep in mind, as well as how an employer of record can support your company’s benefits strategy.

Maternity leave
Pregnant employees receive 45 days of maternity leave, including time off before and after the birth. Employees who have completed at least one year of continuous service receive full pay, while employees with less than a year receive half pay.

After maternity leave is exhausted, an employee can take off up to 100 days unpaid (consecutive or nonconsecutive) if the absence is due to illness resulting from pregnancy or delivery. The employee must provide a medical certificate.

For the first 18 months after delivery, a female worker is entitled to two additional breaks per day of 30 minutes or less each to nurse her child. These breaks are considered part of working hours and are thus paid.

Vacation
Employees with more than six months of continuous employment but less than one year are entitled to two days of paid annual leave per month of employment. Employees who have completed one year or more of continuous employment are entitled to 30 days.

Annual leave may be divided into no more than two periods and any unused time cannot be carried over from one year to the next. Employees are entitled to be paid before leave begins.

Holidays
Employees are entitled to paid leave for 10 public holidays:

New Year’s Day
Birthday of Prophet Mohammed
Al Isra and Al Mi’raj
Eid al-Fitr (2 days)
Eid al-Adha (3 days)
New Year’s Day (Islamic calendar)
UAE National Day

If an employee must work on one of these holidays, the employer must provide compensatory leave and a bonus equal to 50% of the employee’s daily wages. In lieu of leave, an employer can pay a bonus equal to 150% of the employee’s base salary for each day worked.

Sick leave
After three months of continuous service (not including the probationary period), an employee is entitled to up to 90 days of sick leave. The first 15 days are with full pay and the next 30 days are at half pay. Any sick leave after 45 days is unpaid.

An employee who suffers a non-work-related illness or injury must tell their employer within two days and may be required to undergo a doctor’s exam for verification.

If an employee takes sick leave as a result of their own behavior, leave is unpaid.

If an employee resigns due to illness before using their first 45 days of sick leave, they are entitled to compensation for the unused portion of that sick leave.

Health coverage
Medical care coverage in the UAE is legally required for everyone, although employer requirements differ by location.

In some emirates, employers are required to provide health insurance for all employees and to pay for it in full. While they may not be obligated to cover dependents, they are encouraged to do so.

In other emirates, employers are required to cover dependents, up to a certain number.

As your employer of record in the UAE, we may be able to provide optional supplementary medical insurance coverage for professionals and their dependents at a more cost-effective rate.

Pensions
UAE nationals are eligible for pensions and other retirement benefits after reaching age 50 with at least 20 years of employment. Employees, employers and the government contribute to the fund as follows:

Employees contribute 5% of their monthly salary.
Employers must contribute 15% of the employee’s salary.

Employees working in the UAE who come from countries that form the Gulf Cooperation Council (Saudi Arabia, Kuwait, Qatar, Bahrain and Oman) are entitled to pensions as established by their home countries.

Expat workers are not entitled to pensions but are entitled to severance or gratuity payments.

Workers’ compensation
In the case of a work-related injury or illness, the employer must file a report with the police and the Labor Ministry and pay the cost of medical treatment until the employee recovers or is deemed disabled.

If the injury or illness prevents the employee from working, the employer must pay the employee’s full salary for the period of convalescence or for six months, whichever is shorter.

If the convalescence lasts longer than six months, the employer must pay half the employee’s wages for an additional six months or until the employee recovers, is declared disabled or dies, whichever occurs first.

Employee onboarding with an employer of record in UAE

We write and validate all local employment contracts, streamlining the onboarding process for you and your employees in the UAE—all you have to do is provide relevant information and review and approve the employment agreement.

As your employer of record in the UAE, we will:

Schedule a welcome call to discuss HR and employment information for the UAE, as well as answer any questions
Prepare a customized employment contract in English and in Arabic (or other local language)
Share the employment contract and benefits information with the new employee for signature and review
Gather tax and banking information from the employee to set up payroll
Provide a local point of contact to the employee to answer any questions regarding their employment, local HR or payroll

The entire onboarding process for the employee is often completed in as little as two weeks.

Partner with Safeguard Global as your UAE employer of record and PEO

With over a decade of service, we are the longest-serving employer of record and PEO provider in the international market. Organizations around the world rely on Global Employment Outsourcing (GEO) to expand and hire in over 179 countries around the world, quickly and compliantly.

We’ve seen just about every global employment circumstance imaginable—and with our extensive knowledge of local law and culture, we know what it takes to get employment right in the UAE. We provide written contracts in the local language, salaries in the local currency and HR support in your employees’ time zone.

Additionally, as a global payroll provider we support payroll administration—including payments, filings and other calculations—in more than 150 countries and can accommodate the payroll outsourcing needs of any size organization.

Whether you’re looking to hire as part of a strategic expansion or to meet specific talent needs, our global solutions advisors can walk you through your international hiring options so you can make the right choice for your organization. Contact us today

The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.

Learn more about Global Employment Outsourcing

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