Qatar is one of the 21st centuries greatest success stories. Boasting the third largest natural gas reserves in the world, Qatar is the biggest exporter of natural gas in the world. With its plethora of capital, booming growth, and exquisite infrastructure, Qatar should be on your global expansion radar.
Local nationals are very subsidized by the Qatari government, therefore hiring in the country usually is centered on foreign nationals. Let’s take a look at Qatar employment options and best practices for international companies.
Employment Vehicle Options:
1. Independent contractor
When entering a new market, an independent contractor relationship seems appealing and flexible from a cost standpoint. However, contractor agreements established in the US are not valid in Qatar or any foreign country for that matter. Businesses looking to explore this option should seek advice from legal experts to discuss the risks associated with independent contractors.
2. Foreign Subsidiary
Traditionally, to compliantly hire employees in a foreign market you had to establish a foreign subsidiary. However, establishing a foreign subsidiary comes at a big cost. In Qatar, it can take as long as four months and has startup costs around $15k-$20k. Plus, if operations don’t work out, tear-down time and costs are three times as great. Not sold? View 10 headaches associated with creating a foreign subsidiary in this post. Many companies find they value flexibility over the rigid structure of a foreign subsidiary and look to International PEO/ FSaaS.
3. International PEO
Through Velocity Global’s Foreign Subsidiary as a Service (FSaaS) model, companies can enter foreign markets legally and compliantly while maintaining low costs and high flexibility. Through our International PEO model, we become the employer of record and handle all backend HR functions including payroll, local employment contracts, social programs, tax withholdings, and even supplementary insurance and work permits, while you focus on managing your employees and growing your business.
Legal Implications to Consider for Qatar Employment
Foreign workers are subject to Qatar labor law and enjoy certain rights. Employees must not work more than six days a week and 10 hours per day. Overtime must be paid when working more than eight hours per day.
Expats who wish to work in Qatar must have a sponsor to do so. By the end of the year, sponsorship in Qatar must be controlled by an employer, either directly or through visa secondments. Before, practically anyone could sponsor an employee, but now in order to receive a work permit, they have to be sponsored by an employer. This is due to the Kafala law changes which will be implemented in December, which you can read more about here.
This does not mean that foreign employees need to apply for new visas if they change employers in Qatar. Visas can still be transferred from one sponsor to another, so long as the previous sponsor or employer provides an NOC letter or non-objection certificate.
In Qatar, labor law gives the right for both sides to agree to mutually terminate a contract. If an employer terminates employment without cause, they must pay the EOSB (End of Service Benefit), in addition to any salary or accrued benefits. The same is the case if the employee terminates the contract and works out the required notice period.
However, if the employee resigns at the employee’s own discretion without giving appropriate notice, the employee forfeits any due or accumulated leave and any applicable EOSB payments. If the employee is terminated for cause, they are not due accrued leave or payment of the EOSB.
EOSB is not due to the employee if they were terminated for, among others:
- Breaking the law
- Under the influence of drugs or alcohol during working hours
- Assaulting their employer or manager
- Leaving without working out their notice period.
Employment Agreements/ Contracts:
All contracts must be in Arabic, but can be dual-sided to include English, French, etc. In a case of dispute, only the Arabic will be recognized in court. Contracts can be modified, but they have to be compliant with local labor law. Contracts for foreign workers must include language about visa sponsorship, end of service benefit, and repatriation, to name a little.
Exit Permits and Flights:
Exit permits allow foreign nationals to travel in and out of Qatar and must be updated annually. It is customary that the employer pays for the exit permit, although it is not mandatory.
If employment is terminated for any reason, the employer is required to pay for an airline ticket for their employee to return home. This is called “repatriation” and comes at the employer’s discretion. The employer can decide which airline and if they wish to pay for their employee’s family to return home after termination as well.
Similarly, once a year, an employer is required to pay for a round-trip airline ticket to the employee’s home country.
Social Security Contributions:
Social contributions for expats do not exist in Qatar. However, it is mandatory by law that employers of foreign nationals provide private medical insurance for their employees, as expats are not covered by the national system.
Paid Time Off Requirements:
Probationary periods in Qatar can be up to six months. If an employee is in a probationary period, they can terminate their employment and vice-versa with three days notice in writing. After the probationary period, and up to five years of employment, you must give one month notice. After five years, it is up to two months notice and all must be in writing.
As you can see, whether you are hiring local nationals or expatriates, hiring in a foreign country can be very complex. With the abundance of labor laws and tax regulations, it is essential to remain compliant to avoid hefty fines. Give Velocity Global a call today for free advice on expanding operations into Qatar.