Globalization Partners

Hiring in the United Arab Emirates: 5 things you need to know

by Globalization Partners
October 2019

How to Hire in the UAE

How to Hire in the UAE

Hiring in the Middle East is unique in that almost all employees hired by local teams are expatriates (expats), And these employees require visa sponsorship to live and work in-country.

In this region of the world, you want to familiarize yourself with the local laws around hiring expats. First, a company must legally register in the United Arab Emirates (UAE) to sponsor an employee’s work visa and do business in-country. This is often a challenging and lengthy process, though there are easier methods which we will discuss here.

Here are five of the most important things you need to know about hiring an employee to work in the UAE:

1. You Need to Establish a Legal Entity

Establishing a legal entity and obtaining the appropriate trade licenses often takes 8-12 weeks, during which a company cannot sponsor an employees’ visa directly.

2. Expats Will Need a Visa

Companies have to sponsor employee work visas and residency permits in the UAE which can get complicated depending on the geopolitical climate of the region. Of particular note, is the transfer the visa sponsorship of employees from Egypt and Iran right now. This situation catches many clients in a pinch and is worth handling with caution and due care.

3. Financial Compensation Can Include More Than Salary

Compensation is typically paid as a simple flat rate (gross salary) or broken out 60/40, 60% being base salary and 40% being comprised of housing and car allowance. This amount does not include any variable pay like commissions.

4. The Business Week is Different From the Western World

Friday is the weekly holiday and most professionals are off on Friday and Saturday. The business week in the UAE is Sunday through Thursday.

5. End of Service Gratuity Needs to Be Considered in Overall Compensation

Many clients forget to budget for the End of Service Gratuity that is required and accrued as an employer-paid benefit. If an employee has completed one year or more of service, he is entitled to an end of service gratuity equal to 21 days’ pay for each year of the first 5 years of service and 30 days pay for each year after that. The total end of service gratuity maximum is capped at the equivalent of two years’ salary.

Process of Hiring an Employee to Work in the UAE

Process of Hiring an Employee to Work in the UAE

Once your company has done its due diligence in terms of selecting and interviewing the right candidate for your position, it is then very important to follow the strict labor regulations in place in the UAE. In some business areas, there are detailed legal requirements that employers must follow in terms of their obligations toward their employees.

While it is also true that certain business sectors in the country can only hire a specific quota of expats and must hire a percentage of UAE nationals, overall the UAE encourages foreign investment and welcomes foreign workers.

So how does the process work? The first step is the job offer.

1. Documentation

Before any business based in the UAE can hire a foreign worker, it needs to obtain two specific documents, both from the UAE Ministry of Labor (MOL) – an establishment Labor Card (work permit) along with an establishment immigration card. The process for obtaining these cards can be done online and is very straightforward.

As noted above, the UAE has strict employment laws. The hiring company needs to provide a work contract and offer benefits. Employers do not need to offer private health insurance, but they must provide a government health card for every employee. The employment law also lays down maximum work hours per week, how much vacation time an employee gets, and if they receive any special benefits such as maternity leave or sick leave.

2. Receiving the Job Offer

In the private sector, a potential employee must receive a formal job offer. This requires them to sign an employment contract and then receive a work permit and a work visa. The offer letter will contain details about the position along with an annex that summarizes key aspects of the country’s labor laws. Both parties must sign these documents. After an offer letter is signed by both parties, under UAE law it becomes a formal agreement.

3. Making Changes

Once both parties sign the offer letter, an employer is not allowed to change or replace any provisions unless both the employer and the employee have agreed to do so.

4. Understanding the Offer

It is the employer’s responsibility to make sure that their potential employee has read the letter and understood all its provisions. If it turns out later that the employee did not read the annexes before they signed the contract, the employer faces an AED 20,000 (about $5,400 US) fine from the Ministry of Human Resources and Emiratization (MoHRE) for submitting faulty data.

Employers also need to disclose details about the offer letter to MoHRE. The ministry issues work permits based on these offer letters.

5. Signing the Contract

This work contract needs to be based on the offer letter. Both parties must sign and submit it to MoHRE within 14 days of when the employee arrives in the country. This is based on the employment entry permit or from the date of status change — see more on status change below.

The contract must be written in both English and Arabic or in one of nine other languages including Chinese, Dari, Hindi, Nepalese, Bengali, Tamil, and Urdu. This is the case whether the new employee enters the UAE from another country or already resides in the country and is moving between different UAE-based companies.

Procedure for Obtaining a Work Permit in the UAE

Procedure for Obtaining a Work Permit in the UAE

After all the above steps have been taken, the hiring of a new employee first requires an Entry Visa and then a work permit — also known as a Labor Card. To obtain a work permit, some steps must be taken before the arrival of the employee in the UAE — such as those mentioned above — while other steps will need to be taken after they arrive. Once an employee receives a work permit, it is normally valid for two years.

Some of the steps to obtain a work permit include:

1. Getting Visa Quota Approval

Before an employee can get an Entry Visa, they need to receive the MOL’s visa quota approval. The employer applies for this approval for the employee. Please note, if a company applies for a visa for an employee to work in a free zone, the approval must be received before an employee comes to the UAE. This is because free zone companies must observe a quota of one expat worker for every 12.5 m² of their office space.

This is the point where both the employer and the employee sign the contracts, and that the employee has a valid reason for entering the UAE.

2. Work Permit

Even before an Entry Visa is available, an employee’s work permit application needs to be approved. This consists of the MOL checking to see if there is a UAE citizen who could fill the position and that the business sponsoring the employee is a UAE registered entity. If there are no problems with these conditions, the MOL will approve the application.

3. Employment Entry Visa

Once the MOL approves a work permit, it will then issue an employment Entry Visa which will allow the employee to enter the country legally.

If the Entry Visa application was prepared prior to the employee’s arrival, the foreign employee will receive it at the airport. If the new employee was already in the Emirates on a separate visa, they need to apply for a “change of status” visa once an Entry Visa has been issued.

Once an employee either comes to the UAE or has successfully applied for a change of status visa, they have 60 days to finalize details on their work permit and resident visa.

4. Medical

All new foreign employees are required to receive a medical exam prior to any work permit being issued.

5. ID Application and Biometrics

After getting the correct forms prepared, the new employee goes to the Emirates ID service center. To apply for an ID, the employee will need to show a valid passport and employee entry permit.

6. Submitting Labor Contract

This is the point where the labor contract is included in an application to get a work permit. An employee has 14 days to submit it to the MOL after receiving the results of the medical examination. This can be done via the MOL’s website.

At this point the employee will receive their work permit and a copy of their contract with the official start date. The employee is now eligible to receive compensation.

7. Residence Visa in Passport

For an expat worker and their family to legally reside in the UAE, they must have a residence visa stamped in their passport. They will need it to open a bank account, rent a car, and receive mail delivery.

8. Emirates ID Card

Once all of the above finalizes, the new expat employee receives an Emirates ID card. They should carry this with them at all time as it takes the place of having to carry around a passport.

Other Things to Know About Labor Laws in the UAE

A Word About the Different Kinds Of Contracts In The UAE

Since 1980, there have been two main types of private sector employment contracts in the UAE. End of service gratuity and termination create the main difference between the two types. The two main types of contracts are:

  • Limited (or fixed term)
  • Unlimited

1. Limited Contracts

A limited contract has a specified amount of time that it is in effect, although it can be renewed. A limited contract can only be for a maximum of two years as a result of recent reforms in the UAE — previously it was four years. A limited contract needs to include a notice of termination – when the contract will be over and when the employee will need to leave the UAE.

A limited contract requires that both the employer and the employee are fully compensated in the event the other party terminates the contract. Normally, either party must give one to three months of notice that they are terminating the contract.

2. Unlimited Contracts

An unlimited contract, which is the most common kind of contract in the UAE, has no termination date and no specific timeframe. Either party may terminate it with 30 days of notice and a justified reason.

In 2018 MoHRE announced a new rule that will allow companies based in the UAE to hire skilled workers under part-time contracts. Only holders of university degrees or those who hold a two- or three-year diploma in a scientific or technical field may be hired under a part-time contract. A part-time employee can hold several different part-time jobs and work for more than one employer. To do this, however, they need to get a permit from MoHRE.

A part-time contract can’t convert into a regular contract until the end of the part-time contract.

Other Things to Know About Labor Laws in the UAE

Under UAE labor law an employee may only work a maximum of eight hours a day and no more than 48 hours in a week. In some fields, such as cafeteria workers, hotel employees, and guards, employees may work a nine-hour day.

As we mentioned above, it’s important to remember that in this region, salary is considered only a part of the total remuneration package. Travel expenses and housing allowance are considered standard to cover.

When an employer terminates the contract of an expat employee, the employer is responsible for covering the full cost of repatriation.

Let Globalization Partners Help You Expand in the UAE

Let Globalization Partners Help You Expand in the UAE

Building your team in the UAE can be tricky, but it doesn’t have to be. An International Professional Employment Organization (PEO) or Employer of Record company like Globalization Partners can help you through the UAE work visa process, hire the employees you choose and get your organization into the UAE quickly.

We provide Employer of Record services for companies that wish to add a team member without first having to open a branch office or a subsidiary in the country. We hire the employee via our Global Expansion Platform™ . We follow all local labor laws and we can help prepare all the necessary documentation and forms so your team member can get their Entry Visa and work permit. We can have your team member working in the UAE in days rather than months.

If you’re interested in learning about what we can do for your business in the United Arab Emirates, or any one of a number of international destinations, visit our contact us page where you can leave us contact information and some details about how we can help your business. A member of our team will get back to you as soon as possible.

Globalization Partners

Globalization Partners