The United Arab Emirates has emerged as a suitable stop in many businesses’ global expansion journeys. Although probably best known for deriving its wealth from the oil and gas industries, recent years have seen the UAE diversify into other business sectors, including transport, financial services and tourism. The country’s robust infrastructure and global connectivity have also put it high up on the list of places for businesses to consider when expanding globally.
The UAE is comprised of seven ‘emirates’, the most well-known of which are Dubai and Abu Dhabi. The country is popular with UK expatriates, and foreign nationals make up more than 88% of the UAE’s population. As such, employers operating in the UAE can benefit from tapping into a multi-lingual, skilled and culturally diverse workforce.
You’ll also find 45 designated ‘free-trade zones’ in the UAE, created to encourage foreign investment. Specific industry categories are allocated to each zone, and each one only offers licences to companies that fall within those categories. The zones allow for 100% international ownership, total import and export tax reductions, zero personal income taxes and corporate tax exemptions.
Key considerations for your expansion
Many of the standard provisions around employing in the UAE — such as annual leave, maternity pay and probationary periods — follow a reasonably straightforward format.
However, there are some specific regulatory and cultural nuances to be aware of when expanding into the UAE.
Visas and work permits
Perhaps one of the most important considerations to take into account when employing in the UAE is the country’s strict visa requirements. Every foreign national working in the UAE must have an employment visa or a ‘work permit’. By law, employee visas are sponsored by their employer, and if an employee has a partner or dependants in the UAE, they’ll also need visas. Whilst it’s not a legal requirement for the employer to meet the costs of any additional visas, many employees negotiate for this to be included in their job offer. Anyone on a tourist visa isn’t eligible for work.
And whilst citizenships aren’t available for expats — meaning they’re likely to move around frequently — this shouldn’t pose much of a problem in our new world of remote work.
In February 2022, labour laws were amended to stipulate that all employees must be moved from an unlimited term contract to a limited or fixed-term contract. The contract may not exceed three years but is renewable for the same period (or less) if agreed by both parties. Existing unlimited employment contracts must be converted to limited-term contracts and entered into by 1 February 2023.
In a limited-term contract, an employee is contracted to work for a set amount of time, allowing businesses to find team members that are looking for a short-term commitment or onboard expats that move between countries regularly.
Employers must have a written contract for each new employee before submitting visa applications. The contract must be written in both Arabic and English.
Other employment provisions
As of 1 January 2022, the UAE operates on a working week that runs from Monday through Thursday, with a flexible half-day on Friday. Previously, the weekend in the UAE fell on Friday and Saturday, meaning employees often worked Sunday to Thursday. The maximum working hours in the UAE are eight hours a day and up to 48 hours per week. During Ramadan, businesses must reduce their daily work schedules by two hours, and most work takes place either very early in the morning or after the sun has set.
There’s no set national minimum wage for expatriates or nationals. In the latter case, the government issues localised minimum wages that depend on the employee’s region and education level. On any given workday, employees can work up to two hours of overtime and receive 125% of their usual wages, increasing to 150% if worked between 9 pm and 4 am or on a Friday.
If an employee has been with a company for a year or more, they’re usually entitled to an ‘end-of-service gratuity’ (commonly known as severance pay).
Did you know businesses employing in the UAE don’t have to pay any corporate taxes? Typically, the government only levies taxes on oil companies and international banks. A 5% VAT was also introduced in the UAE in 2018, providing the country with a new source of income to provide high-quality public services.
Hassle-free employee management
If you’re employing in multiple countries worldwide, staying on top of all the relevant employment legislation is essential. But with so many different provisions to remember, how can you be sure you don’t miss anything important?
Falling out of compliance with local employment regulations could set you back a hefty fine or risk damaging your business’ reputation, which will likely drive the top talent away.
Fortunately, a global employer of record (EOR) like TopSource Worldwide can help you navigate employing in the UAE and further afield, thanks to our comprehensive knowledge of hiring overseas. Our suite of total employer services can assist with all areas of your global expansion, including HR, legal matters and employee benefits — allowing you to focus on running your business.
We’ll take care of onboarding new employees, ensuring employment contracts are executed correctly and that all employees receive the right benefits. As well as our international EOR services, we’re also a global payroll provider — offering a centrally managed payroll system for smooth payroll processing, plus consolidated invoicing that allows you to pay employees in multiple locations and currencies with one single payment.
Instructing an EOR is the smart choice when it comes to hiring overseas. Why not take advantage of our employer of record services to make your expansion seamless? Get in touch today to find out more about how we can help.