Employer of Record UAE
Infotree Global Solutions provides the UAE Employer of Record services for companies who are looking to hire employees, manage HR and payroll in the UAE. No need to set up a branch office because all your business requirements will be taken care of by a dedicated team of professionals. They will do all the work in compliance with the local labor laws and help in running your global business smoothly and effectively.
Our UAE employer of record would give you insights into the compensation, benefits, and facilities required for your employees in UAE. Here are some of the important factors you need to know before you start hiring in the United Arab Emirates:
Table of Contents
Hiring in UAE
The employment regulations in UAE depend on the structure and how the regulations are governed. The country is a federation of seven emirates, including around 45 different free zones with distinct taxes and customs rates. Complaint business contracts form the basis of business needs because the employment structure in the UAE is entirely regulated. Although a federal Labor Law exists in the country, there are different employment regulations for each Emirate and free zone. For instance, there are free zones such as Abu Dhabi Global Market and Dubai International Financial Centre that have different sets of employment laws that replace the UAE Labor Law. Getting a license and particular locations in free zones such as Dubai, Sharjah, Fujairah, Ras Al Khaimah, Ajman, and Umm Al Quwain can get you complete ownership of your company regardless of your type of business along with different sets of employment laws.
Our Employer of record service in UAE handles all your concerns about hiring international expertise. Let us take care of the administrative functions so that you can completely focus on your core business values. Avoid the maintenance risks of a local entity and make the process of saving costs much easier than ever before!
Working Hours – Weekly working hours in the UAE are maximum of 48 and daily no more than 8 hours. The working week starts from Sunday and goes to Thursday. Employees can not work for more than five hours consecutively without taking breaks for meals, prayer, and rest.
Offices in UAE remain closed on Friday and Saturday. However, private organizations set their work weeks. If an employee works on Friday, he/she may get either an extra holiday during the next week or 50% increased pay for those working hours. Friday is fixed off but daily wage workers can work on Fridays but no more than two Fridays consecutively.
Compensation – While hiring new employees, you must be aware of rules and regulations and updated compensation details. There is no rule of fixed minimum wage in UAE but it depends upon the level of education the employee is on and varies between 3000 AED to 5000 AED.
As per overtime rules, only two hours a day are allowed. Its compensation depends upon the time as if the work is performed between 9 p.m. and 4 a.m. the employee gets time and a half of salary. There should not be a delay of more than 10 days of the completed month’s salary of the workers in UAE. Typically, the employee is supposed to clear the dues once every 14 days.
Probationary Period – A legal probation period is a maximum of 3-6 months in the UAE during which employers can terminate their employment without any notice. The employee is not entitled to any severance too in case the termination happens during the period. The experience is measured after the probationary time only.
Termination and Severance – If the termination is due to a valid cause, an employer does not need to give any notice or compensation. Otherwise, an employee should receive 30 days’ written notice to terminate the contract. An employee is entitled to compensation from the employer along with gratuity. The UAE Labor Law allows employees to get “early termination compensation”.
After termination, whether the employee can get severance or not depends on the type of contract, the valid reason for termination, and the level of employee’s experience.
Bonus – Neither the Employment Law nor the Labor Law determines any bonus offers for UAE employees. Most of the employers themselves decide the offers or schemes like an end-of-year bonus to remain competitive in the market.
The country does not have a standard minimum wage for the required party but there is a salary requirement depending on their education. Any UAE national without a high school certificate cannot earn less than 3000 dirhams per month. People with high school graduation can have a minimum wage of 4000 AED per month and employees with the college certificate are not eligible to earn less than 5000 AED per month. Overtime is another essential factor in the UAE compensation laws. Friday is a designated statutory holiday but any employee who works on the same day is entitled to an increase of 50% or more in pay or another day off.
Maternity leaves – Female employees have the right to have 60 days of paid leave which covers post- and pre- childbirth. The first 45 days are fully paid while the remaining 15 days are half paid leaves. Employees can apply for maternity leave 30 days prior to the expected date of delivery.
In case an employee is not able to resume work because of some pregnancy issues, she can take additional 45 days of unpaid leave. The leave can be continuous or intermittent. Any medical condition must be proved via a medical certificate. After birth, an employee is entitled to one- or two-hour additional breaks each day for up to 6 months for the purpose of nursing. These are also paid breaks.
Vacation – Employees are entitled to two days of paid annual leave per month who have done more than six months of continuous service. However, those with 1 year or more of continuous employment get a vacation for up to 30 days. Employees are also entitled to paid leave for 10 public holidays but if any employee is required to work on one of these, famous be provided with compensatory leave and a 50% bonus of the daily wages.
Sick Leave – In UAE there is a provision for up to 90 days of sick leave for employees after 3 months of continuous service excluding the probationary period. The first 15 days are entitled to full pay and the next 30 days are at half pay. Thus, any sick leave after 45 days will be unpaid.
Health Benefits – Health insurance for resident expatriates is linked with the employee’s salary, designation, etc. i.e., to what extent employees and their dependents are covered under health coverage. Also, the extent of coverage and type of policy/scheme would determine the cost of medical services.
Currently, only two emirates have made it mandatory for employers sponsored health insurance – Abu Dhabi and Dubai. Both emirates have insurance that covers both employees and their dependents. Though not compulsory, other emirates also provide some form of health insurance to their employees.
Pension – An employee with UAE nationality is entitled to a pension if he completes 20 years of service and is at least 50 years of age. Government, employer, and employee contribute when an employee is eligible for a pension.
A contribution equal to 20 percent of the employee’s salary must be made to GPSSA (General Pension and Social Security Authority) monthly in the following proportion:
- Public sector – employees will contribute 5 percent of their salary and employers will contribute 15 percent of their salary.
- Private sector – employees will contribute 5 percent of their salary and employers will contribute 12.5 percent, while the government will contribute 2.5 percent.
The insurance protection extension system ensures a GCC citizen who works in any of the GCC countries other than his own, also has the right to enjoy insurance coverage in accordance with the retirement law of the country to which he/she belongs. Expat employees are not entitled to pensions but are entitled to end-of-service benefits.
Payroll Tax in UAE
When it comes to setting up payroll in the UAE, wages are the first factor to be considered. while there is no minimum wage in the country the UAE Labor law recommends the basic needs of an employee that must be met by the employer. It varies from level to level of education, but the employers must register with the Ministry of Human Resources and Emiratization it should be followed by a subscription to the electronic salary transfer system. The employee wages must be paid through this transfer system and late or unpaid salary can result in heavy penalties.
In addition to this, there are specific rules for payroll and taxation in the UAE, which depend on whether your organization employs International or local employees. The country has little in the way of corporate tax as there is no individual income tax for employees, social security for ex-pats, no payroll tax, no statutory pension contributions for ex-pats, or withholding tax. In the UAE companies can go for various modes such as remote payroll, local payroll administration, internal payroll, or fully outsource payroll and employee management options.
Infotree Global Solutions takes care of all aspects of payroll and taxes for employees as your Employer of Record UAE, including taxes, withholding, social security payments, or any other statutory requirements for your company.
Employment Laws in UAE
As for the employment laws and contracts in the UAE, the relationship between an employer and employee is governed by the Federal Law of 1980, which relates to Labor relations. The ministry has established a Labor Department to provide easy access to dispute resolution and other labor affairs. However, the labor laws do not apply to employees working in the public sector, or domestic workers in households. Written employment contracts are mandatory for compliance concerning the visa sponsorship of an employee in the UAE. They are also important for companies that are looking forward to hiring new employees.
It is important for these contracts to clearly indicate the respective rate of compensation, benefits, job position responsibilities, and any specific protocols for the termination of the employee. In some cases, the default laws are applicable irrespective of the stipulated employment contract while the same can be avoided by providing clear and distinct clauses in a contract. International businesses must use employment contracts and ensure their compliance with local labor laws.
Challenges when expanding into the United Arab Emirates
The UAE is a federation of seven emirates, consisting of Abu Dhabi (The capital), Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah, and Umm Al Quwain. Each emirate has its own distinct regulations for running a business. Though their free zone attracts investors across the globe, there are still some challenges, awareness of which helps businesses to work on their strategy effectively.
- Though English is a go-to language for business meetings and transactions, keep in mind, it is not an official language. All employment records, including contracts and instructions to employees, should be in Arabic.
- The UAE is resolutely tied to its Islamic traditions. Business communication follows a formal approach in which chivalry is greatly admired. Foreigners are free to practice their religion but they are expected to express the same level of respect for their traditions. Blending in the local environment may take some time for foreign employees.
- Working week runs from Sunday to Thursday, weekends include Friday on which Islam’s congregational prayers are performed.
- The UAE is mostly a tax-free country but lately, they have introduced a low 5% VAT. The Federal Tax Authority regularly scans to see whether companies are strictly compliant with tax laws. Businesses can incur a penalty as high as DH20000 for late registration in VAT or avoiding other tax compliances.
- Work permits and visas need careful attention as these must be compliant with all the regulations set by the General Directorate of Residency and Foreign Affairs and other governing bodies.
- The law in UAE states that a company license must always be linked to a physical office space. Some small businesses are affected by this law. And also size of office space is linked to visa allowance for the company.
Despite some of these challenges, The UAE is quite lucrative for expanding businesses. An experienced EOR / PEO can help any business to tackle these challenges competently.
Benefits of UAE Employer of Record
To simplify your expansion process let Infotree Global assist you to deal with all the complexities. Be it hiring employees or distributing payroll or taking care of expenses, we are there to assist you at every step. Partner with us and start your global business without worries.
Market Access– Relying on the professional expertise of an Employer of Record is the best way to enter an unknown market quickly. By using Employer of Record services, an international organization can avail the expertise of UAE employees to work for its company. Besides quick access to the United Arab Emirates market, the EOR also enables the client to ease off worries related to payroll and HR.
In Country Laws– It is hard to ignore the importance of regulations and compliance in a foreign country. If you are operating a business in UAE you need to be well aware of the payroll and taxation rules. With UAE Employer of Record services, a company can hire a foreign individual or local employees and deal with the complexities of the country’s rules. Be it income tax, social security contribution, expanse management, withholding charges, or business tax, an EOR company takes care of it all with total compliance.
Diverse Solutions– No matter whether you already have a company in an international location or you are going to establish the one, an employer of record can help you significantly. The EOR Company can hire staff on your behalf without having the need of setting up a branch in the UAE. If your company is already operating, using EOR for managing payroll tasks can be a great idea as they can present an effective solution to tax and accounting responsibilities in the country.
Why Infotree Global Solutions?
Setting up a branch office or just a subsidiary in UAE to assist with a micro-level team is a time-consuming and complicated process. There are stronger worker protections for labor law in UAE that need greater attention and expert details to understand the best practices.
As an Employer of Record UAE, we take all the responsibility to make it a smooth and easy journey for you to expand into UAE as we help you to hire your employees. We also offer customized end-to-end solutions to handle your HR matters to ensure that your practices comply with the regulations without suffering from the burden of establishing a foreign subsidiary or branch office hassle-free.
In addition to this, you get immense value and benefits including, but not limited to –
- Power-packed strategies and consultation to expand your business to UAE. We will help you with proven and powerful strategies to expand your business in the United Arab Emirates with proper Visa and regulation compliance from starting to the end.
- Easy onboarding and administrative activities for employment locally. We will also take care of payroll management systems and payments for all of your employees.
- We provide you with the supply of local benefits administration for recruitment expenses including employment arrangements.
- Hassle-free compliance with local laws and regulations so you don’t have to worry about any placement laws in the United Arab Emirates for your recruitment needs.
- You also won’t have to stress about any additional payroll taxes. It can immensely save countless hours that go into processing and submitting taxes for each specific case and business operation.
If you wish to share your concerns or need assistance regarding UAE EOR/PEO Services, contact us today!