By Globalization PartnersAugust 2015
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The United Arab Emirates is comprised of seven different emirates. Most US technology companies, however, only choose to hire sales teams in two of them: Abu Dhabi – which is also the largest – and Dubai. According to the CIA World Fact Book, the country has undergone an enormous transformation from an impoverished region of small desert areas to a modern state with a high standard of living, since the discovery of oil more than 30 years ago. Are you hiring in the UAE, but uncertain about what to expect? Keep the following information in mind and you will be ready to set up payroll in no time.
Employment Termination in the UAE
a) Termination of an Unlimited Employment Contract
If an employee decides to terminate an unlimited contract, s/he needs to draft a resignation letter and declare that s/he will work for only one more month; this serves as the official notice. Similarly, if the employer wishes to end an unlimited employee contract, s/he has to notify the employee in writing and allow for a one month notice period.
b) Termination of a Limited Employment Contract
If an employer decides to cease employment of an employee with a limited contract without a legal reason, s/he is required to compensate the employee with either 3 months of salary or the total salary amount of the remaining contract period – whichever is shorter – unless otherwise noted in the employment contract. Likewise, if an employee decides to leave a limited contract early, s/he has to compensate the employer with 45 days of total salary or the remaining contract period – whichever is shorter – unless otherwise noted in the employment contract.
End of Service Gratuity in the UAE
If an employee has been with a company for more than one year, s/he is entitled to an end of service gratuity payment. The payment is equal to 21 days pay for each of the first five years of service and 30 days for each subsequent. The amount paid to an employee should be calculated based on the last basic salary, but it should never exceed the equivalent of two years’ salary. If an employee dies during his or her employment, the end of gratuity payment will be paid to his or her heirs.
Employees in the UAE are usually covered by medical insurance, which is paid by the employer. Certain providers are pre-approved by the UAE government. Should an employee travel outside of the UAE, the employer needs to ensure sufficient insurance coverage. This is important information for US companies that require their sales teams to travel back and forth between countries on a regular basis. Along with medial insurance, many employers also provide life insurance policies.
Keep in mind that there is a lot more information about hiring in the UAE. This can be very overwhelming at first, but don’t worry; the team at Globalization Partners is here to help. Contact us if you have any questions about the information above or if you would like to use our Global Employer of Record platform to hire an expert sales team in the UAE.