UAE Country Facts

We provide comprehensive information regarding, Culture, Work life, Taxation, Visa’s & immigration, Labour Law, recruiting in your country of choice and employment contracts.

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Expanding into UAE generally comes with challenges, however, partnering with us and using Employer of Record (EOR) eliminates the frustrations you could encounter.

Requirements for visas and work permits for the UAE differ depending on the employee’s nationality. Many countries’ nationals are allowed to enter the UAE without having to make an application before they travel. The Gulf Cooperation Council (GCC) nationals (citizens from Saudi Arabia, Bahrain, Qatar, Oman, and Kuwait) can enter the country without a visa. Other nationals can apply for one of the available entry visas online. Like many other nations, the UAE protects its borders and workforce with strict regulations, though it is also a welcoming country. In September 2022, changes to the Federal Decree-Law on Entry and Residence of Foreigners came into effect for visitors, potential employees, and investors to make the UAE a more accessible and attractive location.

The United Arab Emirates was formed as a federation in 1971 with the agreement of the seven heads of the Emirates of Dubai, Sharjah, Abu Dhabi, Fujairah, Ras Al Khaimah, Umm al-Quwain and Ajman. The UAE is a young country with a population of around ten million and nearly nine million expatriates. The UAE shows an impressive literacy rate, especially among women, and is the first country to appoint a minister for artificial intelligence. Fifty years ago, the economy of this bright star of the Middle East was based on fishing and harvesting pearls. Since discovering oil, the UAE’s transformation has put them on a par with the top western European countries for GDP. The strong economy, tax-exempt free zones, a business-oriented infrastructure, and quality of life are significant attractions for companies expanding into the country. But cultural differences can be a challenge.

The different types of Visas and Work Permits for the UAE

Companies bringing foreigners into the Emirates from their home country or elsewhere should ensure they have the correct documentation, as they will function as their employees’ sponsors.

Work Documentation required:

  • Entry Permit / Employment Visa
  • Work Permit a.k.a., Labour Card
  • Residence Visa
  • Emirates ID a.k.a., Resident Identity Card

Entry Permit

This Visa allows entry for a particular reason and stays for a certain period. They can be paper or electronic and applied for before leaving the home country or received upon arrival, depending on nationality. GCC citizens do not require an entry permit. Some of the new visas introduced will not require a sponsor. Most entry permits have a validity of 60 days; therefore, holders must travel before the end of this period. Visas about employment are generally ‘sponsored’ by employers. Also, foreigners fall into three categories depending on their educational qualifications or specialist skill:

  • Category 1 – a minimum of a bachelor’s degree
  • Category 2 – secondary diplomas or similar in any sector
  • Category 3 – high school certificates

This affects the fees the hiring company pays for work permits. The main types of entry permits include:

  • Employment (or Pink Visa) – to enter for work purposes
  • Tourists or to Transit –  A tourist visa from 2022 allows travellers to stay from 60-120 days. The New five-year Tourist Visa gives visitors from 90 to 180 days per year, including for certain business activities. Proof of funds equivalent to AED 14,690 – €3,838, US$ 4,000 required (Sept.2022)
  • Exploring Employment (Sept. 2022) – to attract highly skilled professionals (no sponsor or hosting company is required). Education should be to degree standard and conform to other conditions.
  • Business – To allow investors looking to start a company to explore the country and its business opportunities. No sponsor or hosting company is required.

There are 12 new visa types as part of the new ‘Entry and Residence Scheme’ in 2022, including an updated Golden Visa (residence visa) for investors for three years with AED 5 million (EUR 1.30 million – USD 1.36 million) in property or funds, or five and ten years available for more significant investments. These include a 10-year Golden Visa for highly specialised and talented people and visas for family members. Other new Golden Visa categories for 2022 include:

  • For professionals
  • For scientists
  • For entrepreneurs

There are, moreover, changes to the UAE Green Visa, which gives a five-year residence and no requirement for an employer or sponsor. These are available to skilled workers, the self-employed and freelancers, but there are minimum requirements for salary and education as with the Golden Visa.

Employment Visa

For companies hiring foreigners from abroad, the Employment Visa allows employees to enter for work purposes. The employer gives them an offer of employment with all relevant details, which is submitted to the MOHRE for approval within 14 days. The employer also applies for a ‘quota’ for the Work Permit to MOHRE. MOHRE issues a Pre-approval Work Permit and the Employment Entry Permit.

Work Permit a.k.a. Labour Card

The Work Permit comes under MOHRE for those foreigners employed by incorporated businesses in the private sector; exceptions are the Free Zones companies. The employer applies to sponsor a Work Permit for the employee and requests a quota to employ foreigners. On approval, MOHRE issues a Pre-approval Work Permit and Employment Entry Permit. When the employee arrives in the UAE, the contract is submitted within 14 days of arrival to MOHRE, and the employer applies for the Residence Visa, organises a health check and obtains the Emirates Card before the Work Permit is formalised, which is the proof that workers are legal in the UAE.

Residence Visas

To qualify for a Residence Visa, applicants must:

  • Be employed in the UAE by an incorporated company.
  • Be employed by the UAE government.
  • Be business investors.
  • Own property in the UAE.

Foreigners are issued the Residence Visa after arriving on an employment entry permit. The duration depends on the Work Permit. With a sponsor – up to three years, self-sponsored residence visas for five or ten years. There are several benefits, such as opening a bank account and applying for a driving license.

Emirates ID Card

This card is legally required to be held by all UAE residents and must always be carried. This is necessary to apply for government services and immigration purposes. It is the primary UAE ID and, as of 2022, should also include the Residence Visa for foreigners. It holds biometrics and a digital signature and operates as a smart card. It contains protected personal details.

Note: Employers sponsoring workers apply and pay for the Employment Visa, the Residence Visa and related Work Permit. The responsible authority for the Emirates ID card is the Federal Authorities for Identity, Citizenship, Customs and Ports Security (ICP).

How to Obtain Visas and Work Permits for the UAE

Foreigners require specific documentation to work in the UAE. From April 2022, changes were made to some rules and regulations concerning work documentation and residence visas, to be implemented by September. Also, there have been changes to the National ID Card, and February 2022 saw a New Labour Law implemented. The required documentation for foreigners coming from abroad is as follows:

  • Employment Entry Permit (Visa)
  • Work Permit (Labour Card)
  • Residence Visa
  • Emirates ID Card

Steps for working in UAE

  • The employee receives a job offer letter from a private sector incorporated company. The employer sponsors the employee and manages the work documentation.
  • A Formal Offer Letter should include all employment details as the New Labour Law requires. The employee and employer sign, after which the letter becomes the legal contract and is submitted to the Ministry of Human Resources ad Emiratisation (MOHRE) for authorisation. This offer has to be in Arabic and English and can be translated into one of nine languages.
  • The employer should have a ‘work permit quota allotment’ from the MOHRE to employ foreigners.
  • The employer applies on behalf of the employee for the Work Permit.
  • MOHRE grants a Pre-Approval Work Permit and issues the Employment Entry Permit so the employee can travel to the UAE. It is valid for two months, during which the employee must use the visa and has 60 days to complete all other formalities.
  • After the foreigner arrives, the contract document must be submitted to MOHRE within 14 days to formalise the Work Permit. The labour contract is uploaded by MOHRE and can be tracked and downloaded as required.
  • The employee must take a medical check and have fingerprints and a photograph taken (biometrics) to complete the Emirates Identity Card, including residence visa details, which can be received after 48 hours.
  • After the medical screening and receiving the ID Card, the Work Permit can be formalised.

Note:

  1. The employee can work after receiving the pre-approval of the work permit and arriving in the UAE, providing all the pertinent processes are being undertaken towards formalising the work permit.
  2. The employer handles and pays for these documents.
  3. It is illegal under the Labour Law for employers to hold employees’ passports at the company.
  4. The Federal Authority for Identity, Citizenship, Customs and Ports Security ‘Customer Happiness Centres’ issue the Emirates ID, take biometrics and inform where individuals can find the General Directorate of Residency and Foreigners Affairs, which handle the Residence Visa.

Eligibility to work and employ foreigners in the UAE

  • Have a valid passport.
  • Be over 18 years old.
  • The hiring employer must be registered with MOHRE and have received a registration number.
  • The company must have no infringements.
  • The employee’s work experience should match the company’s area of operation.
  • The employer requires a quota for employing foreigners. New regulations in 2022 brought further instructions regarding quotas.
  • As a condition of Work Permit Approval, MOHRE will check that no Emirati can do the job (Labour Market Test).
  • Before going to the Emirates, the educational qualifications of the employee should be notarised at a local UAE embassy or consulate, and their vaccination certificates validated.

Residence Visa – When a foreigner is hired from abroad by a company that has organised an employment visa and work permit, the employer applies for the Residence Visa after the employee arrives in the country. The validity depends on the employment contract, which can be from one to three years. Employees must:

  • Be over 18.
  • Have a medical examination for fitness and to check for HIV etc.
  • Obtain an Emirates ID Card from the Federal Authority for Identity and Citizenship.

Green Visa – is an Entry Visa and Residence Visa, part of a 2022 initiative that allows highly-skilled foreigners to work in the UAE without needing a sponsor. Check the link for details, benefits and eligibility.

Emirates ID Card – All citizens and residents living and working in the UAE require a government-issued ID Card. This is issued on approval of the Residence Visa because, as of 2022, the Emirates ID Card replaces the Residence Visa stamp and contains all relevant details.

How to Apply Visas and Work Permits for the UAE

The employer applies and pays for the work documentation for legally incorporated businesses in the private sector hiring employees from abroad. There have been many changes during 2021 and 2022 regarding Work Permits, Entry Visas and Residence Visas, and Labour Law. So, it is essential to keep up to date with planned updates as the UAE pushes toward further digitalisation. This is where assistance is needed from a Professional Employer Organization such as Bradford Jacobs, with 20 years of experience in all aspects of recruiting, visas, permits and placing staff in companies.

Work Documentation

  • Employment Visa/Entry Permit, which takes between two and seven days
  • Work Permit. Initially, a pre-approval is granted to issue the entry permit through the MOHRE
  • Residence Visa issued when the employee enters UAE after medical screening and biometrics taken
  • Emirate ID Card, which will include details of Residency Visa

Required Documentation

On behalf of the employees:

  • A valid passport for six months from the date of entry.
  • Passport photographs in line with guidelines and biometrics.
  • Any educational or technical qualifications notarised by the local consulate or Embassy in the country of residence.
  • They may be asked for references from previous employers.
  • Entry visa from the MOHRE.
  • Results from medical screening.
  • Pre-approval for the work permit from MOHRE detailing salary, entitlements, conditions etc., as per the New Labour Law.

From the employers:

  • Company e-Signature Card.
  • Commercial license.
  • Valid insurance card for the employee.
  • Labour contract, three copies, which can be downloaded online.
  • Application forms can be downloaded to be completed and signed.
  • Different documentation may be needed for the seven Emirates, Dubai, Sharjah, Abu Dhabi, Fujairah, Umm al-Quwain, Ras Al Khaimah and Ajman. Also, some nationalities may be asked for further paperwork.

The absence of personal income tax in the UAE is one of the compelling reasons for international companies to expand there. The UAE’s success is built on holding 10% of global oil supplies and 20% of natural gas reserves, but in recent years has targeted greater diversification away from a labour-intensive economy. Tourism, renewable energy, aluminium production, aviation, telecommunications and advanced technologies are coming to the fore, while world-class airlines such as Etihad and Emirates have added to the international prestige.

Bradford Jacobs has over two decades of experience among front-line payroll providers worldwide, and we ensure our clients comply with every aspect of legislation wherever they operate. Our local ‘know-how’ plus international expertise is essential for international companies expanding into the UAE and further afield throughout the Middle East and Asia. Dealing with payroll and employment regulations for your staff from overseas always poses complications that demand top-rated guidance – and this certainly applies to the federation of the UAE, which comprises the seven Emirates of Abu Dhabi, the capital, Dubai, Ajman, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain.

Foreign companies must establish a legal entity in the UAE to hire staff and run their payroll. They typically choose to open a limited liability subsidiary, which the Commercial Companies Law regulates. Bradford Jacobs’ dedicated specialists remove the burden of worrying about any complications while you focus on building your business in a new territory. From locating the brightest talent to running your payroll, our Professional Employer Organisation (PEO) and Employer of Record (EOR) specialists will guide you every step of the way!

Overview of Tax in the UAE

Personal Income Tax (PIT):

There is no personal income tax in the UAE, removing the need for registration, reporting, residence qualifications or filing.

Social Insurance Taxes:

These apply to UAE and Gulf Cooperation Council citizens, not expatriate workers. In the UAE, contributions are employers 12.5%, employees 5%, and the government 2.5%. In Abu Dhabi, employers contribute 15%, the government 6%, and employees 5%. Employers deduct 5% of employees’ remuneration and remit to the General Pension & Social Security Authority (GPSSA). Foreign companies and their employees do not contribute.

Corporate Income Tax:

A 9% corporate tax rate will be introduced for all business and commercial activities in the Emirates from June 1, 2023, on companies with taxable profits exceeding AED 375,000 (€97,770, US$102,100). Foreign oil companies can attract CIT at the Emirati level at progressive rates of up to 55% on upstream petroleum activities. A flat rate of 20% applies to branches of foreign banks, and these rates will continue to apply after June 2023. Tax is not applied to income earned outside the UAE.

Value Added Tax (VAT):

Tax is added to goods and services at 5%. Companies must register for VAT when taxable profits exceed AED 375,000 (€97,770, US$102,100). Optional registration is permitted once taxable profits exceed AED 187,500 (€49,100, US$51,050). Zero-rated categories include exports to nations outside the GCC, international passenger transport, import of precious metals, and publicly provided education.

Customs and Excise Duties:  No levies apply to trade between GCC nations. Otherwise, 5% applies to the cost, freight and insurance value of imports. Excise duty of 100% applies to tobacco products and all devices and materials associated with vaping. Carbonated and sweetened drinks are subject to 50%. There are no payroll, withholding, or separate capital gains taxes in the UAE.

There are no payroll taxes, withholding taxes or separate capital gains taxes.

Corporate Deductions and Allowances:

These are assessed individually by the Emirates and will fully come into consideration on June 1, 2023, when a corporate tax rate of 9% is due to be imposed.

Individual Tax Rules in the UAE

There is no personal income tax in the UAE, either at the federal or Emirati level. Consequently, no requirements apply to filing, residence qualifications or deductions.

Social insurance contributions apply to citizens of the UAE and other Gulf Cooperation Council (GCC) nations (Bahrain, Kuwait, Oman, Qatar, and Saudi Arabia). These employees must be registered with the General Pension & Social Security Authority (GPSSA) within one month of starting work.

Other registration requirements include the following:

  • The employee is issued a standard Ministry of Human Resources and Emiratisation (MOHRE) job offer letter detailing the terms and conditions of employment.
  • Employer and employee sign the MOHRE’s official Federal Labour Contract, which should be concluded in Arabic and English.
  • Verify details from the employee’s UAE ID card, mandatory for all citizens and residents and issued by the Federal Authority for Identity, Citizenship, Customs and Port Security (ICP).
  • Register new employees with the MOHRE and the relevant local authorities once the contract is signed (In the case of non-Emiratis, this is done during the visa application process).

Employer’s Social Insurance and Statutory Contributions in the UAE

Employers contribute to the health and social insurance program that is mandatory for United Arab Emirates (UAE) citizens and those from other countries of the Gulf Cooperation Council (GCC). In the UAE, employers contribute 12.5%, with 15% applying to companies operating in Abu Dhabi.

Employers deduct 5% of employees’ remuneration and remit to the General Pension & Social Security Authority (GPSSA). Foreign companies and their employees do not contribute.

One of the options for international companies undertaking an expansion into the Middle East would be to consider a subsidiary entity set up in the UAE to widen their global horizons. There are risks, of course, and establishing a presence in a foreign territory can be costly both in time and money; plus, the effort and financial outlay have no guarantee of bringing success. Therefore, expert guidance is essential for expansion into the UAE.

Incoming companies can operate ‘onshore’ in one of the seven Emirates or ‘offshore’ in the 47 Free Trade Zones (FTZs). The UAE has no personal income tax and, until June 2023, no federal corporate taxes, when the rate of 9% will be one of the lowest in operation. Additionally, in November 2020, the government announced an amendment to the Commercial Companies Law removing the requirement for all onshore companies to have 51% UAE ownership. This will bring them into line with ‘offshore’ companies that could already be 100% foreign-owned, although onshore subsidiaries will still be subject to the regulations of the relevant licensing body.

The most common choice for a subsidiary in the UAE is a limited liability company (LLC), with branch offices being another option, but making such a move is a significant commitment. The sensible alternative is to use a Professional Employer Organisation (PEO) and Employer of Record (EOR), such as Bradford Jacobs, to locate the finest local talent and administer your payroll in the Emirates. Your company will be up and running in days rather than weeks or months without any risks.

How to Set Up an Emirati Subsidiary?

The first step for companies planning to establish their brand in the UAE is to decide on the business structure that best suits their plans. The typical choice is to choose a limited liability company (LLC) which, following a change to the Commercial Companies Law announced in 2020, can operate with 100% foreign ownership ‘onshore’ as well as in one of the 47 Free Trade Zones (FTZs). The registration and other procedures include the following:

  • Register a unique company name with the Department of Economic Development (DED) and obtain initial approval for the company.
  • Create a Memorandum of Association, notarized by a public notary in the UAE and produce corporate documents of the parent company.
  • Sign the office lease agreement and register with the relevant local authority.
  • Requires a minimum of two shareholders and no more than 50, with at least one director or manager appointed by the shareholders.
  • Open a corporate bank account.
  • There is no standard federal requirement for share capital, although different Emirates can require between USD 1 and USD 50,000 (EUR 47,750). Companies must show sufficient funds to complete the incorporation process as part of their notarized Memorandum of Association.
  • Obtain special approval from the Ministry of Economy if involved in contracting or industrial activities.
  • Obtain a business license from the relevant licensing authority according to location.

Each of the UAE’s seven Emirates has ‘offshore’ Free Trade Zones (FTZs) that can apply varying regulations for corporate taxation, customs and imports. Different criteria affect companies established in an FTZ, including such as:

  • ‘Offshore’ location allows 100% foreign ownership.
  • No corporate or income tax for guaranteed 50 years, with 100% repatriation of capital allowed.
  • Exempt from duties on imports into the Zone, but duties apply to goods entering mainland UAE.
  • FTZ companies doing business on the mainland must appoint a UAE-registered distributor ‘onshore’ or establish a branch office in the relevant mainland Emirate.

Benefits of Setting Up an Emirati Subsidiary

The subsidiary has a separate legal identity from the foreign parent company and is treated the same as any local UAE-registered entity. The parent company’s liability is generally limited to the invested share capital, and there is no responsibility for debts, with the same applying to its shareholders.

The subsidiary provides the parent company with the potential for further expansion throughout the Middle East and into Asia as a stepping stone into other regional economies. Additionally, the subsidiary can ‘test the market’ by following its own business ideas and entering into different areas of operation for the owning company. The subsidiary is also free to draw up its own contracts and agreements with clients.

Other benefits for a subsidiary include:

  • Easier to obtain potential benefits and incentives and enter into contracts with other UAE and regional companies.
  • More impact with clients and suppliers, as subsidiaries imply more permanency than branches.
  • Employees feel there is more stability and job security than from being with a branch.

Subsidiary Laws in the UAE

All companies operating in the United Arab Emirates (UAE) come under the Commercial Companies Law, which was amended in late 2020 to allow ‘onshore’ entities to operate with 100% foreign ownership and those in one of the 47 Free Trade Zones (FTZs). General requirements for setting up a limited liability company include the following:

Registration and Documentation:

  • Register a unique company name with the Department of Economic Development (DED).
  • Have a Memorandum of Association notarized by a public notary in the UAE.
  • Provide DED with corporate documents of the foreign parent company, including passport copies of shareholders, directors, managers, and officers.
  • Register a signed lease agreement with the relevant local authority.
  • Obtain approval from relevant local authorities and the Ministry of Economy if engaged in industrial or contracting operations.
  • According to the location, obtain a business license from the relevant DED licensing authority.
  • Update the annual register of shareholders and beneficial owners.

Accounts and Taxation:

  • There is no statutory federal minimum for share capital, although individual Emirates can require between USD 1 and USD 50,000 (EUR 47,750)
  • Companies should have sufficient capital to complete incorporation, as indicated in the notarised Memorandum of Association.
  • There is no requirement to deposit capital in a UAE-registered bank.
  • As of June 1 2023, a corporate tax rate of 9% will apply to companies with taxable profits exceeding AED 375,000 (EUR 97,770, USD 102,100). Multinationals earning more than USD 772 million worldwide will be subject to 15%.
  • Corporate tax returns must be filed for financial years beginning on or before June 1, 2023. Before this, no returns were necessary apart from Value Added Tax.

Management:

  • Minimum of two shareholders and a maximum of 50.
  • Shareholders must appoint a minimum of one director and/or manager.
  • A general assembly of all members is held once a year within four months of the end of the financial year.
  • Meetings of directors/managers are to be held as specified in the Memorandum of Association.

Entering the Emirati market opens the door to a unique economy among global businesses and commerce. The UAE, founded in 1971, is a federation of seven states – Abu Dhabi, the capital; Dubai, the most populous; plus Ajman, Fujairah, Ras Al Khaimah (joined in 1972), Sharjah and Umm Al Quwain. The Emirates’ economic foundation is built on having 10% of global oil supplies plus 20% of the world’s natural gas reserves (contributing 30% of the Gross Domestic Product combined). The modern-day UAE, however, has made impressive strides towards diversification away from a traditional labour-intensive economy.

Development of hydrocarbon reserves, tourism, renewable energy, aviation, telecommunications and advanced technologies have added to an international profile already boosted by the world-class airlines Emirates and Etihad. The Emirates is the most culturally mixed of the Arab nations, with a population of around 10 million, including 90% expatriates. At the same time, a host of multinationals add to the appeal for foreign investment.

Starting a business in the UAE

International companies seeking a foothold in this Middle East market must set up a subsidiary to hire staff and operate payroll – an essential step even though there is no federal personal income tax. The usual option is to open a limited liability company, operating under the Commercial Companies Law, either ‘onshore’ on the mainland or in one of the ‘offshore’ 47 Free Trade Zones.

Complying with the Commercial Companies Law means satisfying various requirements, including:

  • Registering a unique company name with the Department of Economic Development (DED) and having a Memorandum of Association notarised by a UAE notary.
  • Providing DED with the corporate documentation of the parent company and verifying the IDs of the shareholders, directors and managers.
  • Register a minimum of two shareholders and a maximum of 50, who must appoint at least one director and/or manager.
  • Lodging a signed office lease agreement with the appropriate local authority.
  • Obtaining the business license from the relevant DED licensing authority.

There are speedier alternatives to launching a subsidiary, however, with Bradford Jacobs opening the door to a hassle-free route into the United Arab Emirates.

Work alongside our Professional Employer Organisation (PEO) recruitment specialists, then utilise our Employer of Record (EOR) in-country experts to handle every aspect of compliance. Employers can depend on our in-depth knowledge of the UAE and how to navigate its legislative issues that revolve around the Commercial Companies Law.

Expanding your business into the UAE

The UAE is a magnet for foreign investment and workers, but there are inevitably issues when complying with the relevant employment legislation. In the UAE, this revolves around the Labor Law, amended in February 2022, in many key areas, including employment contracts. These laws lay down the employers’ obligations and their employees’ statutory rights.

Opening a business in any overseas territory can be challenging. Moving staff worldwide means lengthy processes to obtain visas and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination, and severance? Drawing up an expansion blueprint is not enough; your business plan must answer all these questions. By partnering with a PEO and EOR such as Bradford Jacobs, companies can plot a time-efficient and cost-effective path to locating and employing staff in the UAE. But for those who want to ‘go it alone’, here are some of the necessary steps.

Finding an office in the Emirates

The United Arab Emirates (UAE) is a federation of seven states offering attractive and prosperous destinations for business. The government has implemented many policies to promote a healthy and thriving commercial environment. Deciding where to locate your office while setting up your company is essential to success in the UAE. A physical office is a legal requirement for obtaining a company license in most Emirates; plus, it can be linked to the visa quota companies are allocated to onboard foreigners. However, locating in one of the many Free Trade Zones can provide solutions such as co-working spaces and shared facilities.

Taking advantage of all this country has to offer to optimise profits, and comply with regulations, means researching and looking for the expertise needed to steer you in the right direction. As a PEO, we can assist you by utilising our local know-how and applying our 20 years of global experience.

When looking for an office in the UAE, some of the considerations are:

  • What government funding, grants, subsidies, or tax benefits exist for start-ups and new companies in the seven emirates?
  • Are the premises near wholesalers, manufacturers, and distributors, and do they need to be?
  • What do the 47 Free Trade Zones in the UAE have to offer?
  • Are there any nearby business hubs or clusters offering business space, and what benefits do they offer?
  • How active and vibrant is the locale?
  • Is the area clean and suitable for mental health, providing services and accommodation for staff?
  • Will it make a good impression on clients with good transport links if you need to move goods?
  • Is it fit for purpose, within budget but still has room for expansion?
  • Does it have good infrastructure with appropriate services?

What the four largest Emirates have to offer:

Abu Dhabi is the largest Emirate and the richest, the capital city with 95% of the country’s oil production. Its infrastructure is second to none and has the facilities to accommodate international commerce with companies such as Deloitte, EY, PwC and KPMG, to name a few. The Industrial City of Abu Dhabi (ICAD) spans over 40 sq. km., providing companies with excellent roads and access to ports and airports. Hubs and business clusters benefit from good communications, connectivity and manufacturing facilities in engineering, construction, and chemicals, as well as high-tech companies with cutting-edge factory space available. Six Free Trade Zones (FTZ) offer diverse finance, media, technology, renewable energy, and industry specialities.

Dubai has a dominant oil and gas sector but also shines in construction, real estate, recruitment, and e-commerce; in fact, Dubai is a digital city with businesses thriving online. It welcomes businesses, and start-ups flourish due to high demand and buying power. It has some of the most iconic modern buildings in the world! Attractions for companies include more than 20 FTZs, world-class financial centres, a multinational educated workforce with an easy atmosphere for business, low set-up costs, and no physical office needed.

Sharjah should be seen as an opportunity for go-getting entrepreneurs as it has excellent potential with lower costs, such as affordable property prices. It offers the same benefits as Abu Dhabi and Dubai, with policies welcoming investment but no need for capital to set up a business. However, it has relaxed business regulations with unlimited visa issuance; therefore, companies can onboard more global talent. They also rely on more sustainable energy solutions rather than the hydrocarbons in the oil and gas production areas of other emirates.

Ras Al Khaimah has richly diverse in history and economy. It has the fourth largest population of the seven Emirates but can still draw investors and businesses to its shores and into the Ras Al Khaimah Free Trade Zone. It is close to Dubai for business but has ready access to Port Saqr and UAE’s principal airports. It offers easy and quick company set-up processes and can supply licenses for industry, consultancy, trading, and commerce. There is no tax on income or profits or on capital repatriation. Additionally, there are affordable office facilities in any of the four dedicated enterprise parks such as the Business Park, Industrial Park, Academic Zone and Technology Park One.

Finding a manufacturer in the Emirates

The United Arab Emirates is ideally located to service the Arabian Peninsula, Africa and South Asia as a manufacturing centre. The UAE was ranked the most competitive sector in the region for industrial performance by the United Nations Industrial Development Organisation (UNIDO), and 28th in the world for ‘value added’ manufacturing per capita.

As of 2021, manufacturing accounted for AED 133bn (USD 36bn) with ambitions to reach AED 300bn (USD 82bn) by 2031 with policies aimed at important sectors such as food and agricultural technology, petrochemicals, medical and space technology with bank investment of AED 30 billion (USD 8 billion) to stimulate employment and productivity.

Manufacturing opportunities exist for new and start-up companies but finding the best manufacturer to partner with is the first step. Choosing wisely can mean the difference between success and failure. A good partnership can build client relationships and assist with cultural and language difficulties, especially when launching a new product into the marketplace. A good manufacturer can be a boon for business and essential when hitting targets for quantities and quality.

However, at the start of any relationship, especially amid new customs and commercial climates, it is prudent to seek references when vetting a company and to practice due diligence when placing orders. Here are some questions to consider when looking for a manufacturer in the Emirates:

  • Are they licensed and quality assessed?
  • Can they produce your goods in the quantities needed?
  • Can they deliver directly to your customer or distributor?
  • Have they made similar products, and can they provide recommendations?
  • Can they keep pace with your expansion plans?
  • Are they financially sound, and can they give a previous audit?
  • Do they have payment terms and require a deposit?
  • Will there be a language problem?
  • Will you have a single point of contact, for example, an account manager?
  • How are their supply chains for sourcing or outsourcing their raw materials?
  • What are their potential lead times to deliver?
  • Processes for dealing with poor quality or missed deadlines?
  • Do they provide sampling or a prototype?
  • Is their manufacturing equipment up to date?

Other considerations:

  • Running market research to avoid saturating the market.
  • Finding a company to both manufacture and distribute.
  • Legalities in the country to protect your intellectual property rights.
  • Regularly monitor your manufacturers’ performance.

Finding a distributor in the Emirates

After setting up your company, locating an office and partnering with a local manufacturer, you now have a product to sell. The best approach in the UAE is to use a local agent for a specific Emirate or a large distribution company to cover the whole of the country, especially if your office is in one of the Free Trade Zones to manage product registration. The main areas of distribution rest with wholesalers, and major retailers such as supermarkets, department stores and shopping malls, with the trend swaying towards telephone and online sales, which have increased to keep up with demand.

A top-rated distributor will be experienced with the larger markets and distribution channels and supply chains of other Middle East nations, Africa, and South and West Asia. They will have a handle on any changes in the marketplace or emerging trends, such as online shopping. A good partner can help formulate goals according to your business plan and budget and inform you of rules and changes in the law to stay compliant before distributing.

Vetting a distributor can be problematic for new companies in a new country; here are a few considerations:

  • Do they provide good storage facilities and have up-to-date machinery for handling goods before distributing them to customers?
  • How do they track changes in market trends?
  • How does your product match or fit in with their existing product line?
  • Do they have well-trained and enthusiastic marketing and sales teams with excellent customer service that can assist with customs, cultural differences and the language?
  • See their plans for your product distribution, and have they worked with foreign companies before?
  • Look at their processes and logistics for distribution.
  • Check out their customers’ history, satisfaction, and financial stability.

Finding the right distributor can mean success for both of you. It is not just about getting your merchandise from one place to another; it’s also about growing and developing together, expanding your horizons into new markets farther afield and increasing your market share. Tips on finding your distribution partner include the following:

  • Check out Trade missions which are usually organised to encourage mutual trade. They can target relevant companies more efficiently, arrange face-to-face meetings, and be aware of the best trade fairs or conferences. They may offer financial incentives if this is a new market for your company.
  • Networking: Joining B2B groups, Chambers of Commerce, exploring social media, e.g., LinkedIn, and Facebook – all good vehicles to become familiar with your new country or to elicit experiences or recommendations
  • Check out the local expatriate community. Some will have magazines or social clubs, attend embassy functions, and many expatriates occupy top positions with international companies.
  • Accessing local directories and magazines, and online websites. Many in-country embassies produce country guidelines.
  • Why not ask your manufacturer? They could be your first port of call.

Some Emirati Facts

  • Capital – Abu Dhabi
  • Population – 10.2 million (December 2022)
  • Dubai Population – 3.54 Million (December 2022)
  • States – Abu Dhabi (the capital and 87% of the country’s total area), Dubai, Sharjah, Ajman, Fujairah, Ras Al Khaimah and Umm Al-Quwain.
  • Official language – Arabic
  • Economy and world ranking – GDP USD 501 billion (est. 2022)
  • Leading sectors – Industry (49.8% of the GDP) – Services (49.2% of the GDP) –Agriculture (0.9% of the GDP).
  • Main Industries –  Petroleum, petrochemicals, fishing, aluminium, cement, fertiliser, ship repair, construction, materials, handicrafts, and textiles.
  • Main exports – Crude petroleum, refined petroleum, gold, jewellery, and broadcasting equipment.
  • Main imports – Gold, broadcasting equipment, jewellery, refined petroleum, and diamonds.
  • Main trading partners – China, India, Japan, Saudi Arabia, Switzerland, Iraq and the United States.
  • Government – Federal Islamic parliamentary elective semi-constitutional monarchy
  • Currency – UAE Dirham

Advantages and Challenges when entering the Emirati Market

Some advantages of entering the Emirati market include the following:

  • Location: Strategically placed at the crossroads of the Middle East and West Asia, at the eastern end of the Arabian Peninsula, on the Persian Gulf, on sea routes to the Arabian Sea and the Indian Ocean.
  • Economy: Firmly based on oil and natural gas reserves but with a growing emphasis on diversification. Increased foreign investment encouraged by Free Trade Zones. The UAE has more than 100 free trade agreements.
  • Developments: Increased emphasis on the digital economy.
  • Politics: Stable governments in the Emirates.
  • Finance: Strong financial reserves and a sound banking system.
  • Commerce: The Middle East’s premier business hub and ranked 16th out of 190 nations in the World Bank’s 2020 final ‘ease of doing business’ report.

Some challenges of entering the Emirati market include the following:

  • Business: The World Bank did not rank the UAE so highly in other categories – 92nd for trading across borders, 80th for insolvency issues and 48th for obtaining credit.
  • Labour: Increasing pressure on having to hire local employees.
  • Payments: Late settlement in the public sector.
  • Red Tape: Different rules and regulations between the seven Emirates.
  • Language: Although English is widely used in business meetings, all documentation, including contracts and record-keeping, must be in Arabic, which will take precedence in legal matters.
  • Payroll: Despite no personal income tax, payroll is still complex, and employers must be prepared to make “end-of-service” gratuity payments.

Foreign companies must establish a legal entity to hire staff in the UAE before being able to offer Emirati employment contracts. The typical choice is to open a limited liability subsidiary. The Labour Law governs the company’s relationship with its employees at the federal level (Federal Law No.8 Organisation of Labour Relations, 1980). Some areas were amended by the Federal Decree-Law No. 33, which came into force in February 2022 and is referred to as the “New Labour Law”.

The New Labour Law specifically changed the points relating to employment contracts. This is among the key considerations to be dealt with during hiring, onboarding and drawing up contracts with new staff. However, thanks to our Professional Employer Organisation (PEO) and Employer Of Record (EOR) solutions, we can provide compliant labour contracts for your employees in the UAE, including local benefits. Our team keeps track of Emirati laws and regulations daily to be duly aware of updates that can be implemented in working contracts and to ensure a smooth entry for your business into the Emirati economy.

The different types of Emirati Employment Contracts

Employment legislation in the private sector is covered at the federal level by the Labour Law, amended by Federal Decree-Law No. 33 in February 2022, with additional benefits for employees and some safeguards for employers. Further interpretations and amendments can apply through ministerial decrees and resolutions.

Two free zones, the Abu Dhabi Global Market and the Dubai International Financial Centre, apply their own legal system and employment legislation. Other FTZs usually follow the federal Labor Law, although some implement different rules regarding the employment of foreigners, salary payments, health and safety and termination of contracts.

Open-ended, indefinite employment contracts are no longer permitted under the New Law. Existing open-ended contracts must be transferred to fixed-term by February 1, 2023. Employees leaving during this period retain notice periods of 30 days for up to five years of service, 60 days between five and ten years, and 90 days for more than ten years.

Fixed-term employment contracts became mandatory from February 2022 for a maximum of three years each, renewable as part of the continuous service period with the employer. Employer amendments to the official Ministry of Human Resources and Emiratisation (MOHRE) template are now permitted. Notice periods are between 30 and 90 days. Employers can opt out of renewing a contract without paying additional end-of-service gratuities.

The maximum six-month probation period still applies under the New Law. Amendments require the employer to give 14 days’ notice of termination. Employees must provide 14 days’ notice when resigning to leave the UAE or one month when resigning to join another UAE employer.

Before February 2022, all employment was considered full-time. The New Law allows for additional employment frameworks, including part-time for one or more employers, temporary, flexible, remote working and job sharing. All employees have the same benefits, with some entitlements adjusted pro rata.

Note: Under the New Labour Law, companies employing more than 50 workers must institute internal workplace policies regarding issues such as health and safety, working hours, promotion, awards and disciplinary procedures.

Emirati Employment Contracts Requirements

General considerations include:

  • Under the New Law, all contracts must be fixed term for a maximum of three years, with renewals included in the total years of service.
  • Existing open-ended contracts must be transferred to fixed terms by February 2023.
  • A minimum of 30 days of notice remains from the previous Labour Law, with a new maximum of 90 days.
  • Employers must issue employees with the standard MOHRE job offer letter.
  • Once the contract is signed, employees must be registered with MOHRE and the appropriate local authorities.
  • MOHRE must permit employers to change the terms of a contract unless operating in a Free Trade Zone.
  • UAE nationals and citizens of the other Gulf Cooperation Council nations (Bahrain, Kuwait, Oman, Qatar, and Saudi Arabia) must be registered with the General Pension and Social Security Authority (GPSSA) within one month of starting work.
  • There is no social security provision for expatriates. Under the Dubai Health Insurance Law, the employer is responsible for ensuring all employees have health insurance that equals or exceeds the minimum benefits required by the Health Authority. Requirements vary in other Emirates.

Employers hiring non-Emirati or GCC citizens face other requirements, including:

  • Obtain the company’s ‘eSignature’ card from MOHRE before applying for a work permit for the employee.
  • Employers must sponsor the prospective employee, satisfying rules such as educational and professional qualifications and legal presence in the UAE; the relevant employment sector does not have suitable Emirati candidates.
  • Register the job offer letter with MOHRE before applying for the employee’s visa.
  • Quotas apply to the number of non-Emiratis employed, according to MOHRE’s limits and depending on the company’s legal structure, type of operation and location.
  • MOHRE requires a bank guarantee of AED 3,000 (EUR 784, USD 816) for each sponsored employee.

Employee benefits in the UAE are dealt with in the Labour Law (Federal Law No.8 Organisation of Labour Relations, 1980), amended by Federal Decree-Law No. 33, in February 2022. The UAE is a federation of seven Emirates that generally follow federal employment legislation. However, two Free Trade Zones, the Abu Dhabi Global Market and the Dubai International Financial Centre, have their legal system and employment regulations. Some other FTZs implement different rules regarding the employment of foreigners, salary payments, health and safety and termination of contracts.

International companies hiring employees in the UAE must establish a legal entity in one of the Emirates and then operate within the relevant legislative framework, which provides safeguards and guarantees for the workforce. Minimum guarantees include paid vacations, working hours, termination, severance and notice periods, sick leave, maternity allowances and benefits. Foreign companies’ responsibilities reach beyond simply complying with social security and payroll regulations – although these still add up to a demanding workload. Failure to comply with specific rules applying to benefits and entitlements runs the risk of fines and sanctions. Employers must have a firm grasp of what is guaranteed for their employees, which will affect the employer-employee relationship.

This is where Bradford Jacobs points you in the right direction, drawing on over 20 years of experience as a Professional Employment Organisation (PEO) and Employer of Record (EOR). We deal with the complexities while your staff focus on work and building the business.

What are the Compensation Laws in the UAE?

The Labour Law (Federal Law No.8 Organization of Labour Relations, 1980) is the main raft of legislation governing federal employment laws in the Emirates. This was amended in February 2022 by the Federal Decree-Law No. 33, which applies to all private companies and is referred to as the New Labour Law.

National Minimum Wage (NMW): Minimum monthly wages for UAE nationals depend on education. Without a high school certificate – AED 3,000 (EUR 784, USD 816); with a high school certificate – AED 4,000 (EUR 1,045, USD 1,090); degree or higher, AED 5,000 (EUR 1,307, USD 1,360). No minimums apply to expatriate workers.

Sick Leave and Benefit: Entitlement is a maximum of 90 days of sick leave per year, continuously or in parts, with the employee producing a medical certificate within three days of stopping work. The benefit is full pay for the first 15 days, half salary for the next 30 days, without pay for the remaining days. Probationers are not paid during their trial period if becoming unwell.

Working Hours and Breaks: The New Labour Law does not specify Friday as the weekly rest day, allowing private sector employers flexibility to amend work schedules. The Law reduced the public sector working week to four-and-a-half days, with the weekend running from Friday afternoon to the end of Sunday. Private sector employees work eight hours daily up to a maximum of 48 in a six-day week. Under the new Law, employees contracted to 40 hours a week can compress their hours into fewer days. During the holy month of Ramadan, working hours are reduced by two per day. Employees are entitled to unpaid breaks totalling one hour if they work more than five consecutive hours. Under the new Law, total working hours, including overtime, cannot exceed 144 hours over three weeks.

Overtime: Employees cannot work more than two extra hours per day, remunerated at 25% above their basic hourly wage, or 50% more if asked to work between 9 pm and 4 am. Employees asked to work on their rest day or during leave, as specified in the contract or workplace conditions, are entitled to the 50% premium or a substitute day off in lieu.

Paid Vacations: Entitlement is 30 calendar days for employees with more than one year’s service or two days for each month worked for those employed between six months and one year. Employers can set the windows for leave but must give employees at least one month’s notice. Leave should be used in the entitlement year, but employers can agree to unused leave being carried over to the following year. Any public holidays or sick leave falling within the holiday are counted as leave.

Public Holidays: Islamic holidays are determined by moon sightings. The dates of two official holidays celebrated within Islam, Eid-al-Fitr and Eid-al-Adha, vary between years. Eid-al-Fitr marks the end of the month-long Ramadan, while Eid-al-Adha marks the end of the Hajj.

  • New Year’s Day, January 1
  • Day of Arafat, July
  • Islamic New Year, July / August*
  • Prophet’s Birthday, September / October *
  • Commemoration Day, November 30
  • National Day, December 2

*Dates vary.

Maternity / Paternity / Parental Leave and Benefits: The New Labour Law allows 45 days leave at full pay, plus 15 days at half pay, without a minimum qualifying period for women employed in the private sector. An extra 45 days of unpaid leave is allowed when a woman is ill due to pregnancy. An additional 30 days of paid leave and a further 30 days of unpaid leave applies if the child has a disability. The employee is entitled to full maternity leave for stillbirth at any stage of the pregnancy from six months on. A woman’s employment cannot be ended during pregnancy or when she informs her employer that she is pregnant. Women working in public sector government departments receive 90 days of paid leave. Fathers receive three days of paid paternity leave. Mothers and fathers are entitled to a combined five days of paid parental leave until their child is six months old.

Discrimination: Specific clauses have been introduced by the New Labour Law, safeguarding employees against discrimination based on race and national origin, gender, social status, religion, or disability. Additionally, the new Law introduces protection against sexual harassment, bullying and any form of verbal, psychological or physical violence.

Health and Social Insurance: Social security contributions apply only to UAE nationals and citizens of other Gulf Cooperation Council (GCC) nations. In this case, both employers and employees pay into the system. Private sector employers contribute 12.5% to the General Pension and Social Security Authority (15% in the public sector), with employees contributing 5% and an additional 2.5% from the government. In Abu Dhabi, a total rate of 26% comprises 15% from the employer, 6% from the government and 5% from the employee. Expat employers and employees are not required to make contributions. The UAE proposes an unemployment insurance scheme for private and public sector workers to be implemented in 2023, covering up to 60% of basic salary. Employees will be compensated with up to AED 20,000 (EUR 5,220, USD 5,445) in the event of unemployment.

13th Month Salary: There is no statutory provision to pay a 13th month’s salary.

Guarantees and Restrictions on Employee Benefits in the UAE

Guaranteed Benefits:

Guaranteed minimum employee benefits in the United Arab Emirates (UAE) are laid down by the Labour Law (Federal Law No. 8 Organization of Labour Relations, 1980) and the Federal Decree-Law No. 33, updated in February 2022 and which applies to all companies in the private sector and is referred to as the New Labour Law. Entitlements include:

  • Maternity Leave and Benefit: Under the New Labour Law, 15 days of leave on half pay was added to the existing 45 days on full pay. If the mother becomes unwell due to pregnancy, she is permitted a further 45 days of unpaid leave; 30 days of paid leave and a further 30 days of unpaid leave applies if the child is disabled.
  • Sick Leave and Benefit: Maximum annual sick leave is 90 days, with the first 15 on full pay, the next 30 on half pay and the remainder unpaid. Probationers are unpaid if ill during their trial period.
  • Paid Vacations: Employees who have worked more than one year receive 30 calendar days of paid leave. Those who have worked between six months and one year receive two days for each month worked.

Restrictions:

  • Paid Vacations: Employees must have worked one full year for an employer to be entitled to their full allowance of 30 calendar days of paid leave.
  • Sick Leave: Employees are not entitled to sick leave with pay during a probationary period; if illness results from misconduct due to alcohol or drugs; or if they suffer illness or injury through ignoring safety regulations as detailed in workplace bulletins.

Social Security in the UAE

Social security contributions apply only to UAE nationals and citizens of other Gulf Cooperation Council (GCC) nations. Private sector employers contribute 12.5% to the General Pension and Social Security Authority, GPSSA (15% in the public sector) with employees contributing 5% and an additional 2.5% from the government. In Abu Dhabi, a total rate of 26% comprises 15% from the employer, 6% from the government and 5% from the employee. Foreign employers and employees are not required to make contributions and are not covered by the system. The GPSSA provides various pension-related services to Emirati citizens employed in the public and private sectors but not those in Abu Dhabi or Sharjah.

The system covers retirement, death, disability, occupational illness or injury, and employees are eligible after completing 20 years of service and being at least 50 years old. The pension increases by 2% for every year of service after 20 years up until 35 years, with a pension equal to salary after completing more than 35 years. The UAE plans to bring in an unemployment insurance scheme for private and public sector workers due to be implemented in 2023, covering up to 60% of basic salary. Employees will be compensated with up to AED 20,000 (€5,220, US$5,445) in the event of unemployment.

Recruiting in the UAE can bring potential tripwires for companies taking steps to build their international profile. The UAE population of around 10 million comprises 90% foreigners, creating an eclectic mix of international companies recruiting to expand into the country. The huge acceleration in the construction of hotels, offices and skyscrapers – particularly in Dubai, Sharjah and Abu Dhabi – fueled the population growth alongside the development of tourism, hospitality and the financial and banking sectors.

The Indian sub-continent provides the most significant percentage of immigrant workers, close to 50%. The United Kingdom has the largest contingent among western nations, followed by France, the United States and The Netherlands. These are all considerations for foreign companies looking to recruit locally-based employees in one of the UAE’s seven Emirates, including Ajman, Fujairah, Ras Al Khaimah and Umm Al Quwain. Building on the firm foundation of oil and gas reserves, the UAE has developed from a labour-intensive economy towards diversity in tourism, renewable energy, aluminium production, aviation, telecommunications and advanced technologies. Close to 50 Free Trade Zones open up more foreign expansion and recruitment avenues.

Nevertheless, finding and recruiting top talent in an overseas territory that is maybe thousands of miles away is a major challenge for companies setting their sights on global expansion – and it is a venture that faces obstacles. So, where to begin? Bradford Jacobs’ global experience is vital for taking the smartest recruitment route into the UAE. Our benchmark platforms as a Professional Employer Organisation (PEO) have worldwide reach and include a total understanding of the complexities of the UAE’s employment market. You need staff to be ‘up and running’ quickly.

Recruiting in the UAE

Foreign companies recruiting in the UAE must factor in proposals to impose a minimum percentage of Emiratis on their payroll. The UAE government expects private sector companies to have 10% of locals in their workforce by 2026 and will invest AED 24 billion (EUR 6.27 billion, USD 6.5 billion) to create 75,000 jobs for skilled labour. Similarly, the Labour Law allows UAE citizens to be given preference in the job market, followed by nationals of other Arab nations. In the private sector, foreigners can be employed only if no unemployed locals are qualified for the role and if they have all the necessary approvals and documentation.

UAE-based multinationals who cannot fill positions from within turn to employment agencies. As they carry recruitment expenses, they will prefer to recruit in the UAE rather than from abroad. Individuals looking for work are not shy of taking their CVs from office to office and using the internet, newspaper and social media to find contact numbers to submit their details electronically. There are also legal requirements that must be followed in the recruitment process for incoming foreigners. In the private sector, this involves receiving a formal job offer, signing the employment contract and receiving a work permit.

Recruitment is the first stage of making your company operational and competitive in the UAE. However, complications surround moving staff into the country and obtaining visas. Knowing where to locate the finest candidates for your company’s expansion plans is vital to avoid these issues. Once recruited and onboarded, employers must comply with various procedures to ensure employees can legally work in the UAE. Responsibilities include the following:

  • Provide the employee with the standard Ministry of Human Resources and Emiratisation (MOHRE) job offer letter, followed by both employer and employee signing the MOHRE’s official Federal Labour Contract, which should be concluded in Arabic and English.
  • Registering new employees with the Ministry of Labour and relevant local authorities once the contract is signed (which is during the visa application process in the case of non-Emiratis).
  • Ensure the employee possesses a UAE ID card issued by the Federal Authority for Identity, Citizenship, Customs and Port Security (ICP), and mandatory for all citizens and residents.
  • UAE nationals and citizens of the other Gulf Cooperation Council nations (Bahrain, Kuwait, Oman, Qatar and Saudi Arabia) must be registered with the General Pension and Social Security Authority (GPSSA) within one month of starting work. There is no social security requirement for expatriates.

In the case of registering non-Emiratis workers, employers must follow other procedures, including the following:

  • In addition to MOHRE and the ICP, employers must also deal with the General Directorate of Residency and Foreigners Affairs in their Emirate of operation.
  • Before applying for the employee’s Visa, employers must register the job offer letter with MOHRE.
  • Before applying for a work permit, the employer must apply to MOHRE for their company’s ‘eSignature’ card. Pre-approval of the application requires the eSignature card, business license, employee’s photograph and passport with a minimum of six months validity. The UAE’s Ministry of Foreign Affairs and International Cooperation must authenticate the academic qualifications from outside educational establishments.
  • Employers must sponsor the prospective employee, satisfying criteria such as educational and professional qualifications; lawful entry into the UAE, that the relevant employment sector does not have suitable Emirati candidates.
  • Quotas apply to the number of non-Emiratis employed, according to limits set by MOHRE and depending on the company’s legal structure, type of operation, and location.
  • MOHRE requires a bank guarantee of AED 3,000 (EUR 784, USD 816) for each sponsored employee.
  • Employers face fines of up to AED 20,000 (EUR 5,200, USD 5,445) for false or incomplete data.

Employees’ Legal Checks in the UAE

The federal Labour Law generally applies to restrictions on background checks, which the employer or a third party can carry out. Employees’ background checks can include the following:

Medical checks: There are no restrictions on employers requiring pre-hire medical checks, and they can refuse employment to individuals who do not comply. Nearly 90% of the UAE population are foreign, and medical checks are a requirement for obtaining a residence Visa.

Drug and alcohol checks: There are no restrictions on checks, particularly as drug control is strictly enforced and failing a test can indicate criminal activity.

References: The new employer can request references from the previous employer, although the latter is under no statutory requirement to provide them.

Education:  Where candidates are from outside the UAE or Gulf Cooperation Council nations, employees must have educational qualifications authenticated by the Ministry of Foreign Affairs and International Cooperation as part of the work permit process. Employers are entitled to request verification of academic qualifications from locals.

Required:  Foreign employees must have prior approval from the MOHRE or the appropriate Free Trade Zone Authority and immigration services to be hired on a local contract.

Basic Facts when Recruiting in the UAE

In the UAE, employment legislation is generally governed at the federal level by the Labour Law (Federal Law No.8 Organisation of Labour Relations, 1980). Some areas were amended by the Federal Decree-Law No. 33, which came into force in February 2022, referred to as “the New Labour Law”.

  • Under the New Labour Law, as of February 2022, all new contracts must be fixed-term for a maximum of three years, and renewals are included in the total term of service.
  • Existing open-ended contracts must be transferred to fixed-term by February 2023.
  • A minimum of 30 days’ notice remains from the previous Labour Law, with a new maximum of 90 days.
  • Employees on previous open-ended contracts have the following notice periods: 30 days up to five years of service; 60 days between five and 10; 90 days for more than 10 years.
  • Employees must be issued the standard MOHRE job offer letter detailing the terms and conditions of the employment.
  • Once the contract is signed, employees must be registered with MOHRE and the appropriate local authorities.
  • Employers need MOHRE’s permission to change the terms of a contract unless operating in a Free Trade Zone.
  • UAE nationals and citizens of the other Gulf Cooperation Council nations (Bahrain, Kuwait, Oman, Qatar and Saudi Arabia) must be registered with the General Pension and Social Security Authority (GPSSA) within one month of starting work.

The United Arab Emirates is an Islamic country, and the Emirati work culture is, therefore, more conservative than most international companies undertaking their International Expansion there. The UAE has a truly multinational population, with roughly 10% of around 10 million inhabitants being Emiratis. Expatriate workers among business professionals explore a rapidly diversifying economy which has moved away from being labour-intensive and heavily reliant on huge amounts of oil and gas (which account for 10% and 20% of global reserves, respectively). Renewable, hydrocarbons and green energy development, telecommunications, tourism and hospitality, and advanced technologies have come to the fore. The Emirates has been ranked in the top 30 worldwide for business services to multinationals. The World Economic Forum ranked the UAE in the top 30 of the ‘most networked’ nations.

Founded in 1971, the UAE is at the crossroads of Asia and Africa, at the eastern end of the Arabian Peninsula, on the Persian Gulf, with sea access to the Arabian Sea and the Indian Ocean. It shares borders with Saudi Arabia, Qatar (disputed), and Oman and maritime borders with Qatar and Iran. Dubai, founded in 1833, is the most populous Emirate in the UAE, which also comprises the Emirates of Abu Dhabi (the capital), Ajman, Fujairah, Ras Al Khaimah, Sharjah and Um Al Quwain. Dubai, the most famous of the seven Emirates, is renowned for luxury shopping, tourism, nightlife and stunning architecture, including the 830m tall Burj Khalifa tower. Yet the Emirati work culture remains very traditional in many respects. Despite the international influences, adjustments must be made whichever country incomers arrive from.

The Basics of the Emirati Work Culture

Language: The business language is English, and the official language is Arabic, so learn some suitable phrases.

Working hours and conditions: Generally speaking, the UAE workday runs eight hours, from 9 am to 5 pm. Additionally, the workweek runs from Sunday to Thursday. Weekends are on Friday and Saturday instead of Saturday and Sunday. Conversely, during the holy month of Ramadan, most people only work six hours a day.

Punctuality: Emirates respects punctuality. Be respectful by being on time and confirming appointments a couple of days beforehand.

Communication: Because of its conservative culture, communication is more formal here. For instance, you should address people as “Mr” or “Ms” when you first meet them. And while men can exchange a light handshake, when meeting with women, you should always wait for them to offer their hand and not prolong eye contact. Members of the opposite team should be greeted individually, most senior first, with a handshake with the men and saying “As-salamu alaykum” (peace be upon you), with “Wa ʿalaykumu s-salam” (and upon you be peace) as the reply. Only use the right hand to shake hands.

Meetings and Negotiations: Business meetings can be formally staged in the boardroom or break-out rooms over a “getting to know you” cup of coffee. In business meetings, compliments are customary. Because relationship-building is such an essential part of the culture, it is common to flatter your hosts and their organisation. Similarly, small talk and social conversation always kick off every meeting. Chatting about families, the country, and local food, for example, is an excellent way to go. However, avoiding divisive topics such as politics and religion would be best. Despite a seemingly relaxed approach, meetings will be based on a great deal of strategic planning. Lower levels of staff may carry this out, but decisions come down from the top in a vertically hierarchical business structure. Decisions can take time – be patient and do not try to force the pace.

Business Cards: In a meeting, you will typically exchange cards at the beginning. Always do so with your right hand when giving your card, as it is impolite to use your left. All company employees should have a business card. Your card should include your company name, designation, phone number, e-mail, and website. Moreover, the card should be in both Arabic (the official local language of the UAE) and English (the local business language). Always present the Arabic face-up.

Dress Code: Most locals wear traditional clothing in business situations: dishdasha for men (the long white shift) and an abaya for women (a floor-length robe). While expatriates should not adopt the local dress, they should wear formal attire that is modest and not revealing. Men should choose suits and dress shoes. Meanwhile, women should pay close attention to their outfits. Make sure to cover your shoulders, chest, upper arms, and knees at all times. Long skirts and dresses are a good option. You could also wear a light blazer and shirt over loose, flowing trousers. In any case, it is best to avoid wearing flashy jewellery and heavy perfume.

Gifts: When meeting potential clients for the first time, giving a token offering is a nice gesture. Similarly, giving a gift when closing a deal is always appropriate. Gifts are also appropriate to mark big religious festivals, such as Ramadan. If you can buy it from overseas, so much the better. Locals appreciate receiving gifts from different cultures. It is best to refrain from exchanging gifts across genders. If you must give a gift to a woman, however, it is best to have a woman on your team present it. At the very least, you could say it is from a female relative. The same applies to a woman having to present a gift to a male business associate. You should also avoid giving certain items as gifts, as they can offend Muslim associates. For instance, do not give alcohol, pigskin products, personal items, anything with pork, or anything related to dogs.

Out of Hours: Always accept hospitality offers, as a business is often conducted over lunch or dinner. Be prepared for conservative Emiratis not being willing to eat with a member of the other sex, particularly in restaurants. Always accept tea or coffee when offered at the meeting.

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