United Arab Emirates PEO Employment Services

Velocity Global’s United Arab Emirates PEO (Professional Employer Organization) solution streamlines and accelerates your expansion into the UAE without the need to establish an entity. With expedited employee onboarding, we have you operating in your new market up to 90% faster than entity setup.

When you choose International PEO, Velocity Global becomes your employer of record, we compliantly hire and onboard your new foreign team members on your behalf. No matter how many employees we onboard, you retain full employee oversight. While you keep your business running, our experts oversee all global payroll, compliance, and risk mitigation considerations, and deliver an unrivaled UAE expansion experience.

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United Arab Emirates Fast Facts

Currency: United Arab Emirates Dirham (AED)
Population: 9.87 million
Economy: $3.95 trillion
Top Sectors: Extractive industries (including crude oil and natural gas), wholesale and retail trade, finance and insurance, and construction
National Holidays:

  • Gregorian New Year
  • Hijra New Year’s Day
  • Eid-al-Fitr
  • Arafah Day
  • Eid-al-Adha
  • The Prophet’s Birthday
  • Commemoration Day
  • UAE National Day

Hiring Considerations in United Arab Emirates

Benefits of hiring in the United Arab Emirates:

  • The UAE is the 11th-easiest country in which to do business according to the World Bank’s 2019 Ease of Doing Business Report, and the only Middle Eastern market in the top 45.
  • Foreign-owned businesses take advantage of the UAE’s 45 Free Zones spread among the countries’ seven Emirates. These areas have their own special tax, customs, and import regulations, and accommodate one or more specific industries inside each zone. Some of these Free Zones’ benefits include:
    • 100% foreign national ownership with no local affiliation
    • Personal, import, and export tax exemption
    • Fixed-period corporate tax exemption with renewal option
    • Free transfer of funds
    • Long-term leasing options
  • Although the UAE’s official language is Arabic, English remains widely spoken, as more than 200 nationalities reside in the UAE. With a common language, western businesses easily communicate with potential partners, clients, and customers in the UAE, compared to other Middle Eastern countries.

Challenges when expanding into the United Arab Emirates:

  • Although the UAE’s Free Zones provide attractive business environments, rules and regulations vary between each, particularly between the UAE’s seven emirates. Businesses considering expanding into more than one of the UAE’s 45 Free Zones must ensure they meet each Zone’s respective requirements.
  • Even though the UAE operates in both Arabic and English, all employment records, contracts, and other essential documents should be in Arabic. Single-language documents limit the possibility of inconsistencies between English and Arabic documents, protecting both employers and employees from potential translation issues.
  • Although the UAE boasts diverse demographics and a majority expat population, Islamic cultural traditions prevail. These considerations—including everything from business meetings, formal communication, and courtesy—may impart culture shock on some Westerners.
  • Similarly, the UAE’s mostly-expat population means businesses must follow strict steps for work and resident permits for their employees.

Cultural nuances and must-knows for doing business in the United Arab Emirates:

  • Exhibit good manners and common courtesy, as they remain central to business meetings in the UAE. All participants should arrive on time, though remain patient if kept waiting; it is not uncommon for meetings to begin or run late, and it is not a sign of disrespect.
  • Greet the most senior meeting member before others. Hosts often offer Western-style tea, coffee, and soft drinks, among local non-alcoholic beverages. Politely accept at least one cup. Small talk over these drinks is common, and seen as a sign of developing relationships.
  • Be aware that a more aggressive, down-to-brass-tacks, Western approach to meetings may create friction between participants. Remain patient, engage in conversation with meeting members, and understand that a direct “no” may not occur.
  • Honor the terms of an agreement once reached. Emiratis and non-Emiratis alike take one’s word very seriously, even if an agreement exists only verbally.
  • Return favors of hospitality. If an Emirati host invites you and your colleagues to dinner, extend a similar offer when appropriate.
  • Dress conservatively, whether male or female. Women should cover both arms and legs, and all parties should not schedule meetings during prayer times or Muslim holidays.

Employment Contracts in United Arab Emirates

Minimum wages and salaries:

  • There is no national minimum wage for either local or foreign employees in the UAE. However, the UAE’s Labour Law stipulates that all wages and salaries must meet employees’ basic needs.
  • Cabinet consent and decree determines minimum wage and cost of living index either for general or specific areas and professions, not nationally. Specific minimum wage depends on the area.

Probation periods:

  • Probation periods are allowed, but may not exceed six months, as stated in Article 37 of the UAE’s Labour Law. Further, employers may not place an employee under multiple probation periods.

Bonuses:

  • There are no requirements for bonuses, and bonus payments remain at the employer’s discretion. Despite no law stipulating bonuses, most employers choose to pay bonuses to employees.

Termination and Severance Considerations:

  • Limited contracts:
    • These contracts cannot exceed two years and must include the notice period of one month (minimum) to three months (maximum).
    • Employees and employers must both honor the contracts’ obligations during the notice period.
  • Unlimited contracts:
    • Both employer and employee must agree on employment termination and honor the contracts’ terms through the notice period of one to three months.
  • Without Notice:
    • No notice requirement applies to either limited or unlimited contracts. Employer-enacted terminations can occur only under strict circumstances, including but not limited to these events:
      • Employee-forged documents, certificates, identity, or nationality
      • Dismissal during the probation period
      • Employee error causing significant loss to the employer; the employer must report such losses to the UAE labour department within 48 hours
      • The employee violates plainly visible safety instructions or explicitly stated safety instructions in regards to illiterate employees
      • The employee shares company secrets
    • Employees may also terminate a contract without notice if:
      • Their employer did not meet legal or contractual obligations
      • They filed a court complaint against their employer who failed to provide employment
      • The employee wins a labour complaint in a Ministry of Human Resources & Emiratisation-referred labour court

Paid Time Off & Benefits

Maternity leave:

  • Mothers receive 45 days of maternity leave, including pre- and post-birth dates. Those with more than one year of continuous service to one employer receive full pay, while mothers with less than one year’s service receive 50% of their pay.
  • Once back at work, mothers are entitled to two additional, half-hour breaks for 18 months.

Paternity leave:

  • No paternity leave provisions exist in the UAE’s labour law.

Vacation and annual leave:

  • Employees with at least six months, but not one year, of service with one employer receive two days per month.
  • Those with one or more years of service receive 30 days annually.
  • These calculations include official holidays and sick leave.
  • Employees receive basic salary and housing allowance, but only if the employment contract explicitly outlines a housing allowance.
  • If an employer asks an employee to work during annual leave, the employer must pay their regular salary in addition to leave pay.

Sick leave:

  • Paid and unpaid sick leave stipulations apply only after an employee accrues three months of continuous service to one employer. After three months, employees receive 90 days of leave for either continuous or intermittent leave under the following:
    • 15 days at full pay
    • Next 30 days at half pay
    • Final 45 days with no pay
  • Employees must inform their employers of sick leave within two days. Employers may request a medical examination, as well as the authenticity of the employee’s leave request.
  • Employees under a probation period are not eligible for paid sick leave, if the illness arises from worker misconduct, or if the employee works for another employer during their requested leave.

Payroll

Average workweek hours:

  • Private sector employees work eight hours per day, or up to 48 hours per week. Working hours reduce by two hours during Ramadan.
  • Upon approval from the Ministry of Human Resources & Emiratisation, businesses, hotels, and cafes may increase working hours to nine hours per day.
  • Arduous or unhealthy working sites and industries may not require that employees work more than seven hours per day.

Overtime considerations:

  • Any work beyond normal working hours entitles employees to their standard pay plus 25%. Any work completed between 9 pm and 4 am entitles the employee to standard pay plus an additional 50%.

Employer Contributions

Contribution

Burden

Gratuity (End-of-Service Benefit)

Fixed*

Total:

3.74%

*This is the highest possible end-of-service gratuity. Salary, length of service, and termination/resignation impact the payout.
**Employers must provide employee health insurance and plan for significant costs.
***These details cover expats. There are other contribution rates for GCC nationals.

Choose Velocity Global

Expanding your company into new, overseas markets is a huge step for overall growth and market share—which is why choosing the right partner to help ensure a compliant, streamlined expansion process remains central to an international growth strategy. Velocity Global’s International PEO solution affords a quick, compliant UAE expansion. As your Employer of Record, we handle all of your business’ risk mitigation, payroll, and compliance concerns, so you remain focused on running your company.

Whether you expand into the UAE to hire one essential employee, take advantage of a time-sensitive project, or as your first step towards a long-term presence in the Middle East, International PEO grants the flexibility and agility needed to make it happen. Our global expansion solution saves your firm up to 60% and gets you operating in-country 90% faster when compared to entity establishment.

Ready to learn more about how International PEO is the most flexible, cost-effective global expansion solution available? Let’s talk.