The United Arab Emirates is a country known for its wealth, extremely tall buildings and large population of expatriates. As a centre for global businesses in all sectors, the UAE offers labour tax exemptions, which makes it an exciting destination for companies wishing to expand abroad and explore different markets.
However, before making this move, it is important to understand the labour laws in the country, the challenges and benefits of hiring people in the United Arab Emirates, and what are some of the cultural clashes you might find.
What you need to know about the United Arab Emirates
Located in the Arabian Peninsula, the United Arab Emirates is an elective monarchy. The country’s president is elected by the Federal Supreme Council and has a five-year term. However, the position has been hereditary since the country was formed, determined by the consensus of the royal family.
The country is formed by seven emirates: Abu Dhabi, Ajman, Fujairah, Ras Al Khaimah, Sharjah, and Umm Al Quwain. An emir governs each emirate; Abu Dhabi’s emir serves as the president, while the ruler of Dubai serves as vice president.
Abu Dhabi is the capital of the country, and Dubai is the most populous city. With a population of over 9 million people, only 12% of the people currently living in the UAE are Emirati citizens. The vast majority of inhabitants of the country are expatriates.
Although the UAE is known for the importance and participation of its oil and gas industry – with a few of the largest reserves located in the country – its economy is diverse. Recently, tourism has become an important sector of the economy, and the country’s tax exemptions have attracted companies to invest and settle in the region.
In the UAE, the official language is Arabic. However, with a large number of expats living in the UAE, English is widely spoken.
Work in the UAE
Business transactions in the United Arab Emirates are, of course, different from visiting the country as a tourist or analyzing the cultural differences in the region.
When hiring abroad, companies must be aware not only of information such as language spoken, political organization, and territory divisions but also be mindful of legal implications and possible economic challenges.
In this section, we will list some factors you need to consider when working or hiring people in the UAE.
Free-trade zones
Understanding the regions of the United Arab Emirates is an important step in hiring people in the country. The majority of companies operating in the country are located in either Abu Dhabi or Dubai, the most well-known city-states.
Aiming to encourage foreign investors to set up their business in the country, the United Arab Emirates has created 46 free-trade zones with specific tax, customs, and import regimes. This means that operating in these areas guarantees companies 100% foreign ownership, 100% import and export tax exemptions, 100% repatriation of profits, up to 50 years of corporate tax exemptions, no income tax, and assistance to recruit people.
Zones are divided according to industries, offering licenses to companies that operate in specific sectors. Some of the free-trade zones’ sectors cover the automotive industry, technology, media production, and investments.
As explained, the free-trade zones’ laws and regulations differ from the rest of the country or even the continent. Labour laws vary depending on the industry, as well as visa requirements and other bureaucratic issues. Before hiring in the United Arab Emirates, it is vital to research the specific regulations of the free-trade zone that covers your sector, assessing with specialists that all norms will be followed through.
Contracts and documents
Employees or future employees in the United Arab Emirates must always have a contract before applying for a visa. Written both in Arabic and English, the document must include the job title of the employee, their primary responsibilities, probation period, information about their salary, benefits, and requirements for ending the contract.
The end of a contract is essential when hiring in the UAE. People who have worked for the same company for at least a year will have the right to receive an amount of money proportional to their time in the company. This benefit is known as gratification and is the equivalent of 21 days of work for the first five years of employment and 30 days for more than five years of service.
Payroll, taxes, and salaries
As discussed above, the UAE does not have income or corporate taxes. Only oil companies or international banks are required to pay corporate taxes in the country. Businesses registered under the free-trade zones will be tax-exempt for a certain period, which can later be extended.
The UAE government determines no minimum wage. Therefore, salaries depend on the agreement companies have with their employees. The free-trade zones, level of education, and experience of employees will heavily influence the amount paid.
Salaries are paid once a month, and employers must be registered with the Ministry of Human Resources and Emiratisation (MoHRE) and subscribed to the Wages Protection System (WPS). Employees will be paid through this system on the date determined by the company.
Failing to pay wages in the UAE is a serious offence and can result in suspension of work permits and fines.
Work hours
Previously, the work week in the United Arab Emirates goes from Sunday to Thursday. The weekend is Friday and Saturday, with Friday being a mandatory resting day.
However, in January 2022, the UAE government declared that official work weeks are from Monday to Friday. On Fridays, a “half working day” is practised to allow Muslim workers in the country to perform their Friday prayers during the afternoon. Despite this, there are still many companies that work on the previous Sunday to Thursday schedule.
Work hours are eight hours a day and up to 48 hours a week. During the month of Ramadan, however, companies must reduce their working hours to respect the local tradition of fasting from dawn to dusk.
Leave period
Labour laws in the UAE determine that employees receive about 30 days of paid leave a year. The precise amount, however, depends on the time of service. Employees can take two days off per month worked after six months of service and 30 days per year after 12 months of service.
Workers are allowed to take at least 15 days of sick leave with no pay cuts but will only get paid half of their salary if it is necessary to stay away from work longer than that.
Women have 45 days of paid maternity leave, while men can take up to 5 days of paid paternity leave.
Since the region is mainly Muslim and the country follows Muslim holidays, employees can also take days off to observe religious holidays, such as Hajj.
Hiring in the UAE
Once you know what to expect from the job market in the UAE and what labour laws ensue, there are other practical and bureaucratic issues to keep in mind. Companies like Mselect can help your business find the right professionals in the country and guide you through these challenges. Our recruiting and outsourcing solutions allow us to find the best employees according to your needs and hire and pay workers in the UAE.
Costs
The costs of hiring professionals in different countries are often more complex than expected.
The amount you will need to invest in hiring in the United Arab Emirates depends on the size of your company, the industry in which you operate, and even the Emirate in which your company is located.
Hidden work costs must also be considered, such as benefits and insurance. In some Emirates, employers must offer their employees and dependents health insurance.
Language and currency
Arabic is the official language for contracts, offer letters, and official documents. Everything must be provided in Arabic and English in case of foreign employees.
Offers and fees are given in the local currency, Dirham, even if payments will be made in another currency later. This allows candidates and employees to be fully aware of their wages and cost of living.
Documentation
Employers must provide a work document to their employees or work authorization, as well as an immigration card. These documents can be obtained from the country’s Labour Ministry.
Conclusion
Hiring abroad can be difficult. Navigating through the bureaucracy, laws, and regulations in different countries is challenging. To hire people in the United Arab Emirates – or any other country – it is crucial to rely on experts who can guide you through the hurdles of this expansion.
In the UAE, ensure your company’s culture is communicated clearly, being careful to respect the culture of people living in the country. With many expatriates currently residing in the United Arab Emirates, the region has a diversity of individuals. It is essential to respect the background of your employees or future candidates, as well as respect the local culture. Conversations and constant training can help with cultural clashes that may arise.
Recruiting can also be a challenge. Mselect offers solutions for recruiting highly qualified individuals. With an office in the UAE, we are equipped to handle finding and hiring the right people for your business.
Our company also offers solutions when it comes to hiring and paying workers in the UAE. By outsourcing your workforce, you don’t have to worry about registering your company in the country or subscribing to the Wages Protection System. We are already able to operate and employ people in the country. Contact us to learn more.