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UAE – Employer of Record

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Country Introduction – United Arab Emirates (UAE)

The UAE is comprised of seven different emirates: Abu Dhabi, Dubai, Sharjah, Ras al-Khaimah, Ajman, Umm al-Quwain and Fujairah. Each emirate has different cultures and traditions. Abu Dhabi is the largest emirate as it accounts for 84% of the total land area of the federation. Abu Dhabi is also the capital city. The UAE created the world’s first government ministry for artificial intelligence, according to the World Economic Forum

Dubai is the second biggest emirate and the economic hub of the region. Dubai is also known for its three manmade archipelagos, two were designed to look like a palm tree, and one to resemble a world map. The UAE have a dry desert climate and temperatures can easily reach more than 40°C/ 104°F in summer. The world’s tallest building is the Burj Khalifa in Dubai, according to the Guinness Book of World Records. The skyscraper is 828 meters (2,717 feet) high.

• Population: about 10 million people live in the UAE (2021)
• Capital City: Abu Dhabi (The Arabic word abu means ‘father’ and dhabi means ‘gazelle’).
• Language: Arabic
• Literacy: About 94% can read and write
• Religions: mainly Muslims 76%, Christians 19%
• Currency: 1 Emirati dirhams = 100 fils
• Government: Federation of monarchies, there are no political parties in the emirates
• National Anthem: Ishy Bilady “Long live my Nation”
• National Symbols: Green, white, red and black (national colours) and golden falcon (national animal)
• National Day: 2 December
• History: The UAE gained independence from the UK on 2 December 1971.

Contract of Employment

Under the UAE Labour Law No. 8 of 1980 and recent updates, there is one type of employment contracts: limited term contract.

In general, limited term contracts mention the start and end dates of the employment period. Unless the contract is renewed, it is automatically cancelled when it expires. These contracts are adopted where an employer needs to engage employees for specific projects or specific duration.  According to recent reforms in the UAE’s labour market, limited term contracts are for a maximum duration of three years. The contract must also include a notice for termination.

Language

Arabic is the official language used in all records, contracts, files, data, etc. provided for in this Law or in any orders or regulations issued in implementation thereof. Arabic is also used in instructions and circulars issued to employees by their employer. Where the employer besides Arabic uses a foreign language, the Arabic version shall prevail.

Termination

Either party can singly terminate a limited contract provided he complies with the legal consequences of early termination. In case of unlimited contracts, an employment relation is terminated if both the employer and employee mutually agree to terminate the contract, or when either party decides to terminate the contract provided that the terminating party abides by the legal notice requirements and continues to honour his obligations.

In certain situations, an employer or an employee can terminate an employment contract without notice. Arbitrary dismissal takes place when an employer terminates an employee or forces him to resign without any justifiable reasons.

After termination of employment contract and cancellation of work visa, the terminated employee is granted a 30-day grace period from the date of cancellation, where he can either obtain a new residence permit or leave the country.

Illegal residents are liable to be fined/deported.

For more information read here

Working Hours and Overtime

Article 65 of the UAE Labour Law identifies the normal working hours for the private sector as 8 hours per day or 48 hours per week. The working hours may be increased to 9 hours a day for businesses, hotels and cafes after approval from MoHRE. Typically, the private sector working hours are 9 hours per day and 45 hours per week, with Friday and Saturday as weekends.

Government entities are not governed by the Labour Law and they operate for 7 hours daily.

Normal working hours are reduced by two hours daily during the holy month of Ramadan.

An overtime is considered if the nature of job demands working beyond normal working hours and it will entitle the employee for a pay equal to normal working hours’ remuneration plus 25 per cent of that pay. It could increase to 50 per cent if overtime is done between 9 pm and 4 am.

Annual Leave

Employees are entitled to an annual leave of:

–  2 days per month, if they have completed six months of service, but not one year
–  30 days, if they have completed one year of service.

The calculation of the duration of annual leave will include official holidays specified by law or by agreement and any other leaves caused by sickness if they fall within the annual leave.

For the annual leave, the worker must receive his basic salary in addition to a housing allowance if such an allowance is stipulated in the contract. If the worker is requested to work during his total annual leave or a part of it and the leave is not carried forward to the next year, the employer must pay him his regular salary, in addition to a leave allowance, which is equal to his basic wage only.

In all cases, annual leaves may not be forwarded for more than once within two consecutive years. The employer may determine the date of the commencement of the annual leave and may divide it into two or more periods.

Maternity Leave

A working woman is entitled to a maternity leave of 45 day’s including the time before and after delivery. If the woman has completed one year of continuous employment for the same employer, she is entitled to full pay during maternity leave; otherwise, she is entitled to half pay. In addition, after delivery, the woman is entitled to two additional breaks each day, with each break not exceeding half an hour for nursing her child. The woman is entitled to such breaks for 18 months following the date of delivery and is entitled to full pay.

Parental Leave

Employees of the private sector are entitled to a parental leave of 3 working days from the day of the birth of their child to six months. The parental leave is a paid leave that can be applied for by both mother and father of the baby.

Sick Leave

An employee is entitled to a sick leave of not more than 90 days per year, only after a period of three months’ continuous service following the probation period. The 90 days sick leave can be continuous or intermittent, and the salary is paid as follows:

–  Full pay for the first 15 days
–  Half pay for the next 30 days
–  No pay for the rest 45 days.

According to Article 82 of the UAE Labour Law, as amended, the employee must notify the employer about his sickness within maximum two days. The employer has the right to put the employee under a medical examination in order to verify the illness, and the authenticity of the employee’s leave. The employer is entitled to request the employee to present a medical report, which justifies the employee’s absence and the calculation of the entitlement of the pay.

The employee is ineligible for a paid sick leave in the following situations:

–  During the probation period
–  If the illness directly arises from the misconduct of the worker, such as the consumption of alcohol or narcotics
–  If the employee works for another employer during the sick leave.

An employer may not dismiss an employee or give him a termination notice while the employee is on sick leave. If the employee uses all of his 90 days’ sick leave and was not able to report to work afterwards, the employer may terminate his services. In such a case, the employee shall be entitled to the end of service gratuity in accordance with the provisions of the labour law.

Hajj leave

Employees may be granted a special leave for the performance of Hajj under the provisions that the leave:

–  Is given without pay
–  May not exceed 30 days
–  Is granted only once during the employment duration with the company.

Public Holidays

The UAE Cabinet granted equal leaves to the public and private sectors.

–  Gregorian New Year: 1 day
–  Eid Al Fitr: 4 days
–  Arafah day and Eid Al Adha (Feast of Sacrifice): 4 days
–  Hijri New Year (Islamic New Year): 1 day
–  Prophet Mohammed’s birthday: 1 day
–  Commemoration Day: 1 day
–  National Day: 2 days

Note: Islamic holidays are determined according to moon sighting.

End of Service Compensation (Reward)

An employee who has spent one year or more in continuous service shall be entitled to an end of service gratuity upon the termination of his service. In all cases, the total gratuity shall not exceed the wage of two years. The days of absence from work without pay shall not be included in the calculation of the period of service.

For more information read here

Tax and Social Security

There are no income tax or social security contributions in UAE.

VAT is applied at 5% on specified goods and services.

Work and Residence Permits (Expatiates)

EWS can provide work and residence permit for expatriate workers.

Procuring a work visa involves Ministry of Human Resources and Emiratisation (MoHRE) and the General Directorate of Residency and Foreigners Affairs (GDRFA) of the emirate where a person is employed. The process starts with procuring a work permit for an expatriate from MoHRE. The work permit allows the holder to enter the UAE for employment and it is valid for two months from the date of issue.

After the employee enters the UAE on the basis of the work permit, the sponsoring company arranges to complete the formalities of medical testing, obtaining UAE Resident Identity (Emirates ID) Card, Labour Card and stamping the work residency permit on his passport within a scope of 60 days. The work residency permit on the employee’s passport denotes that he is sponsored by the company he is employed by.

After this process, the employee can sponsor his family members and bring them into the country. Read about sponsoring family members.

Retirement visa for UAE residents

Retired residents over the age of 55 can get a long-term residence visa for a period of 5 years. The visa may be renewed if the eligibility criteria is met.

In September 2018, the UAE Cabinet approved a law to provide retired residents over the age of 55 a long-term visa for a period of 5 years. The visa may be renewed if the eligibility criteria is met. For a retiree to be eligible for a 5-year renewable retirement visa, he must fulfill one of the following criteria:

–  Invest in a property worth AED 2 million
–  Have financial savings of no less than AED 1 million
–  Have an active income of no less than AED 20,000 per month

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