With its booming economy and growing population, UAE employment is on the rise and if your company is in the midst of the global expansion, this region is one to target. It is the most thriving region in the Middle East including the cities of Dubai and Abu Dhabi. There are not only plenty of qualified and eager candidates, there is also a plethora of new consumers waiting to be tapped into. Learn how about the UAE employment options below to start thinking about your move into this market.
UAE employment using independent contractors
Independent contractors are one option for testing the UAE markets or achieving more manpower in your global operation. What you need to know is that contractor agreements established in the US will not work in UAE, or any foreign country. You need to work closely with an in-country legal expert to develop an enforceable agreement that meets the requirements of both the country and your business.
In addition, you should not work with independent contractors to perform work for your business unless you have a legal presence overseas. The reason you need a legal presence is due to the fact that contractors can challenge their employment status in court. If that occurs, your business may face many penalties, which are laid out in this post. Plus, in order to accurately represent your business overseas, it’s required that you have a taxable presence in-country or utilize an International PEO.
As for UAE in particular, the overall concept of a freelancer doesn’t have an official status in-country. As a result, the rules and regulations surrounding these types of workers are a bit cloudy compared to countries, like the US, where consultant work is more common. There are many people that work as contractors in UAE by getting a visit visa, which has time limits. So your company may face more risks, specifically with availability if your contractors if you choose to go down this route.
Establishing a foreign subsidiary
One way to hire employees, both full and part-time, overseas is by establishing a foreign subsidiary. For some businesses that work in manufacturing or real estate, this may be necessary. We suggest discussing your options with an international consultant before making a concrete decision on the best way to establish a taxable presence in your target country.
A perk to having a foreign subsidiary is the strong, permanent ties you’re awarded in your new market. Establishing a foreign corporation in UAE proves that you’re dedicated to the community and it can help you build trust with new connections. In this particular region, doing business is highly revolved around personal relationships and trust. Initial meetings and consultations are centered on relationship-building and engaging conversations. This cultural focus can your market presence.
Unfortunately, establishing a foreign subsidiary comes with a hefty price tag. It’s also very time-consuming. Subsidiaries typically take an average of $15-30 thousand to startup and roughly three to four months, so if you have a deadline, it will need to accommodate this given time frame.
A simpler, most cost-effective method for establishing a legal presence in-country is through Foreign Subsidiary as a Service (FSaaS). This option allows businesses to transfer their risks, compliance, payroll, and benefits to Velocity Global and focus on their global strategy. It takes a lot less time and money to get in-country and allows you to hire employees while staying compliant.
Using an International PEO to hire in UAE
International PEO allows businesses to establish a legal presence in your target country without establishing a foreign subsidiary. With this solution, you can hire employees in UAE while enjoying the benefits of flexibility, enforceability, and compliance.
An International PEO becomes the employer of record for a client companies employees in the target country. They typically manage the HR functions too, like monthly withholdings, income tax to employer social security contributions, local employment contracts, payroll, etc. It can also assist businesses with the management of supplemental insurance and work permits.
Outsourcing employment responsibilities can be incredibly helpful during international expansion because of the vast amount of potential legal ramifications. One to note in UAE is employee termination, which is very strict, just like many overseas markets. After an employee’s probationary period, labor law provides a 30-day minimum notice period provided the employer has an “acceptable” reason. The problem is that an acceptable reason is not specifically laid out in the labor law leaving plenty of room for conflict. An international PEO handles everything from hiring to firing, so vague rules like termination are taken care of for your business.
Contact us today if you would like to learn more about your options for global expansion!