How To Hire And Pay Employees In the United Arab Emirates
Emerald Technology's guide to hiring employees in the UAE
United Arab Emirates Dirham is the official currency of the UAE. Its currency symbol is د.إ, AED.
Estimated at 12.5 of employee's salary
Arabic is the official language of the UAE.
Salaries are usually paid monthly, and on the last working day of the month
GROW YOUR TEAM IN THE UAE
TABLE OF CONTENTS
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 government and public sector work is still conducted in 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 most popular destinations for foreign workers, with almost 90% of the population being expatriates. Employees typically work in an office or under a hybrid model.
The United Arab Emirates is the only country in the Middle East offering a digital nomad visa.
There are specific rules for foreign/Emirati individuals. Income tax for employees is not applicable but UAE/GCC nationals must pay 5% social security contributions.
Start growing your remote workforce now
Employer Costs
| Cost | Rate |
| Social Security - Emirate local citizen | 12.5% |
Benefits
Mandatory
Employers are required to offer the following benefits to all full-time employees:
- Pensions - citizens only
- Social Security - citizens only
- Unemployment - expat only
- Private Health Insurance
- Paid Annual Leave
- Gratuity - expats only
Employment
Contract
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. It is advised to include the following:
- Contact details: Name, address, email, phone number
- Job title
- Country of employment
- Line manager details
- Salary and currency
- Bonus and commissions
- Housing and car/transport allowance
- Start date and end date if applicable
- Working hours, overtime and probation details
- Annual leave/ vacation allowance
- Benefits
Emerald Technology can create a compliant contract in the UAE in 1 day
Probation Period
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.
Restrictive Covenants
Is it acceptable to include restrictive covenants in the employment contract, provided that the employee is at lease 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 liquidated damages clause in the employment contract as it 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.
Insurance
Healthcare
In the UAE employers are required to provide health insurance coverage for their employees. Employees are required to obtain insurance cover for their resident dependants.
Social Security
For local citizens, 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%.
Leave Policy
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.
Paternity Leave
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 six months.
Sickness Leave
Employees are entitled to up to 90 days' sick leave per year, only applicable after the end of the 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 stipulates the necessity of the leave.
Onboarding
As the legal employer, Emerald Technology requires the following employee documents to ensure complete compliance:
- Information required for employment contract
- Passport / ID
- National ID copy
- CV
Emerald Technology can onboard employees in the UAE in one day - a week
Resignation and Dismissal
Details
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
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 continuous service is entitled to 21 calendar day's 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. Subject to change down to employers discretion.
Statutory Time Off
Annual Leave
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.
Public Holidays
There are 14 official public holidays in the UAE
- New Year's Day
- Eid al-Fitr
- Day of Arafat
- Eid al-Adha
- Islamic New Year
- Prophet Muhammad's Birthday
- Commemoration Day
- UAE National Day
Work, Pay and Taxes
Minimum Wage
For expats, there is not 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
Working Time and Overtime
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.
Salary Payments
The payroll cycle in the UAE is generally monthly, with payment made on the last working day of the month.
Bonus
Employers in the UAE are not required to pay a bonus to employees.
Income Tax
There is no personal income tax in the UAE.
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.