How To Hire And Pay Employees In the United Arab Emirates

Emerald Technology's guide to hiring employees in the UAE

CURRENCY

United Arab Emirates Dirham is the official currency of the UAE. Its currency symbol is د.إ, AED.

CAPITAL CITY

Abu Dhabi, the capital of the UAE sits off the mainland on an island in the Persian Gulf.

LANGUAGE

Arabic is the official language of the UAE. 

POPULATION The current population of the UAE is 9.991 Million 2021 based on World bank numbers.
PAYROLL FREQUENCY

Salaries are usually paid monthly, and on the last working day of the month

PUBLIC HOLIDAYS The UAE has 7 public holidays lasting 14 days

GROW YOUR TEAM IN THE UAE

NO ENTITY, NO PROBLEM

To start growing your team in the UAE, you must establish a local entity- including an account with a local bank, a local office and an address registered as a subsidiary. This allows you to manage payroll, tax, benefits and compliance for your employees, but can take several months. 

Emerald can hire and payroll your workers, quickly and compliantly with their ready to go entity. Make growing your team simple with Emerald as a global partner.

PROS AND CONS OF HIRING IN THE UAE

With a renowned infrastructure and rich technology access, the United Arab Emirates is a strategic country for international expansion in the Middle Eastern area. The country’s economy is one of the most open and dynamic in the world. English proficiency is considered very good but, most of the government and public sector work still uses Arabic. 

Doing business in the United Arab Emirates requires a company to have a local partner or an Emirati sponsor who owns at least 51% of the business. Additionally, there are trade limitations set within the country’s different free zones and some business activities are still forbidden. Partnering with an already established entity can accelerate the business setup time and avoid non-compliant situations. 

Employee costs in United Arab Emirates are expected to be 5-10% of their- salary. For UAE/Gulf Cooperation Council (GCC) nationals, companies must pay 12.5-15% for social security contributions.  

WHY THE UAE IS GOOD FOR REMOTE WORKERS

United Arab Emirates is one of the top countries regarding expatriate numbers with almost 90% of the population being expatriates. Its population is mostly working in an office or in a hybrid regime.

The United Arab Emirates is the only country in the Middle East offering a digital nomad visa and it’s one of the preferred destinations in the region. 

There are specific rules for foreign/Emirati individuals. Income tax for employees is not applicable but, UAE/Gulf Cooperation Council (GCC) nationals must pay 5% for social security contributions. 

START GROWING YOUR REMOTE WORKFORCE NOW

WORKING TIME AND OVERTIME IN THE UAE

Working hours in the UAE must not exceed eight hours per day, or 48 hours per week over a six-day week. Working hours can be increased to nine hours per day for some types of business. During Ramadan, working hours are reduced by two hours per day. All work above the standard weekly working hours must be paid as overtime and is regulated by employment contracts. In general, overtime is calculated at 125% for hours worked between 9pm and 4am, and at 150% for hours worked at any other time. Fridays must be paid at 1.5x regular salary, plus a compensatory day off.

ANNUAL LEAVE AND THE UAE'S PUBLIC HOLIDAYS

Employees with greater than six months’ service but less than a year’s are entitled to a minimum of two days’ paid leave for each month they are employed. Once the continuous service period exceeds on a year, employees are entitled to 30 days’ paid annual leave. There are 14 official public holidays in the UAE.

January 1st: New Year's Day 
April 20th: Eid Al Fitr
June 27th: Afrah Day 
June 28th: Eid Al Adha
July 19th: Islamic New Year
September 27: Prophet Muhammad's Birthday 
December 1st: Commemoration Day
December 2nd: National Day 

PROBATION PERIOD IN THE UAE

The probation period in UAE for permanent employees is generally between three and six months. UAE Labour Law stipulates a minimum of 14 days’ notice when terminating an employee on probation.

RESIGNATION AND DISMISSAL IN THE UAE

The termination process is standard in UAE and based on Labor Law requirements, unless an employer can provide sufficient cause for dismissal without notice. A minimum of 30 days' mandatory notice is required, which must be put in writing and sent to the relevant governmental authorities. Severance pay is determined by length of service and, if applicable, must be paid within 14 days of the termination date. An employee who has completed one year or more of continuous service is entitled to 21 calendar days' basic salary for each year of the first five years of service, and 30 calendar day's basic salary for each subsequent year of service, provided that the entire total remuneration does not exceed two year's salary. 

RESTRICTIVE COVENANTS

It is acceptable to include restrictive covenants in the employment contract, provided that the employee is at least 21 years of age when entering into the restrictions, the employee has become acquainted with the employer's clients or confidential information, and the covenants are limited in relation to their duration, geographic scope and the nature of the business to be protected. Parties are permitted to include a liquidated damages clause in the employment contract as it is not possible to obtain an injunction onshore in the UAE, although there are rules against ‘exorbitant’ penalties being applied in employment contracts under the Civil Code. It is possible to seek a ban on the employee's residence visa if they are in breach of a restrictive covenant which would prevent them from working in the territory of UAE. Non-compete clauses and customer non-solicit clauses typically last no longer than 6-12 months. Employee non-solicits are also permissible.

READY TO HIRE YOUR EMPLOYEES IN THE UAE?

CONTRACT OF EMPLOYMENT IN THE UAE

As part of the residence visa and employment permit application process, all workers in the UAE must enter into a standard template-written dual language contract provided by the Ministry of Human Resources and Emiratisation. Before signing the employment contract, all workers must sign an offer letter stating the basic terms of employment. The terms of the employment contract must not be less beneficial to the worker than those agreed to in the offer letter. Some free zones require the parties to enter into employment contracts using a template specific to the relevant free zone. Subject to the provisions of the Labour Law, the information that must be included in employment contracts varies among the free zones.

THE UAE'S MATERNITY LEAVE

Expectant mothers are entitled to 60 days’ maternity leave, paid at 100% of the regular salary rate for the first 45 days and 50% for the remaining 15 days. Employees can take maternity leave before and after the due date.

Employees are also entitled to take up to 45 days (consecutive or intermittent) of unpaid leave in the event of any post-partum complications, upon producing a medical certificate. There is no provision for paternity leave in UAE law but for private-sector employees, both parents are entitled to five days’ paid leave, which can be taken any time until the child reaches the age of 6 months.

SICKNESS LEAVE IN THE UAE

Employees are entitled to up to 90 days’ sick leave per year, only applicable after the end of their probation period. The sick leave can be continuous or intermittent, and is payable as follows: First 15 days: 100% Next 30 days: 50% Remaining 45 days: Unpaid During their probation period, employees may be granted sick leave without pay, subject to the approval of the employer and based on a medical report that stipulates the necessity of the leave.

SOCIAL SECURITY

The employer is required to contribute 12.5% Social Security (basic social security plus housing allowance, based on monthly minimum of 1,000 AED and maximum of 50,000 AED). A higher rate is applied in the Emirate of Abu Dhabi, where the employer is required to contribute 15%.

HEALTHCARE AND INSURANCE

In the emirate of Abu Dhabi, employers and sponsors are responsible for the providing health insurance coverage for their employees and their families (1 spouse and 3 children under 18 years). In the emirate of Dubai, employers are required to provide health insurance coverage for their employees. Sponsors are required to obtain insurance cover for their resident dependants.

Employment of

FOREIGN NATIONALS IN THE UNITED ARAB EMIRATES

Any foreigners coming to work in UAE will need to be registered with the UAE immigration authorities. All expats must have secured a job offer from a company operating in the UAE. For working in Dubai, a UAE Employment Permit is required. In general, these are valid for up to two years for anyone offered a job in the UAE and provide the right to live and work in the UAE for the duration of the visa, which is renewable after two years.
Salary Taxes

MINIMUM WAGE IN THE UAE

For expats, there is no mandatory minimum wage. For UAE nationals, the minimum wage is determined by the level of education: No high school certificate: 3,000 AED High school certificate: 4,000 AED College degree or higher: 5,000 AED The upcoming Federal Decree Law of 2022 will set a minimum wage, to be determined and announced by the UAE Cabinet after a proposal by the Minister of Human Resources and Emiratisation.

THE UAE'S INCOME TAX

There is no personal income tax in the UAE.

SALARY PAYMENTS IN THE UAE

The payroll cycle in the UAE is generally monthly, with payment made on the last working day of the month.

SOCIAL SECURITY CONTRIBUTIONS IN THE UAE

The employee contributes 5% of their salary to Social Security, in addition to the employer contribution of 12.5% and an additional 2.5% contribution made by the Government. A higher rate is applied in the Emirate of Abu Dhabi, where the employee contribution is the same but the employer contributes 15% and the Government 6%.

WORKER MISCLASSIFICATION IN THE UAE

Similar to other countries, the UAE has strict rules on classifying individual contractors and full-time employees differently. Misclassifying your workers can put your business at risk of fines.

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