An Employer of Record (EOR) is a third-party organization that takes on the legal and administrative responsibilities of employing workers on behalf of another company. The EOR handles payroll, benefits, taxes, and compliance with local labor laws, allowing businesses to hire and manage employees in the United Arab Emirates without establishing their legal entity.
Hiring workers from the UAE offers several benefits due to the country’s strategic location, modern infrastructure, and business-friendly environment. The UAE is known for its thriving free-market economy and is one of the world’s largest financial and tech hubs. The country boasts a highly skilled labor market in finance, technology, and engineering.
According to recent data, the UAE’s economy is the strongest in the Gulf region, with a GDP of $655.79 billion. The country has a population of approximately 9.92 million, with a high percentage of expatriate workers. The UAE offers more than 40 multidisciplinary Free Zones, where foreign investors can fully own their companies and benefit from various incentives.
To effectively use an Employer of Record in the UAE, follow these 6 steps:
- Find talent to hire in the UAE
- Compare using an EOR to setting up a legal entity in the UAE
- Get the information needed from your talent
- Choose an EOR provider with expertise in the UAE
- Communicate your hiring needs to the EOR
- Have the EOR set up the contracts and hiring procedure
1. Find talent to hire in the UAE
Businesses should explore a variety of channels to find talent to hire in the UAE, emphasizing both local and global platforms to maximize reach. LinkedIn remains an essential tool for talent acquisition in the UAE, especially for professional and managerial roles.
Job posting websites like Bayt.com, GulfTalent, and Naukrigulf are popular local job portals in the UAE. These platforms offer avenues for employers to advertise openings and are widely used by job seekers in the region. Employers can post their candidate requirements on these portals, allowing applicants to access them remotely.
Specialized recruitment agencies can provide tailored solutions for industries requiring specific expertise in finance, technology, and engineering. These agencies manage the complexities of sourcing and vetting candidates, significantly easing companies’ hiring processes.
Local job boards and regional networks can be advantageous for businesses hiring within specific industries or for particular roles. The UAE’s diverse economy offers a wide range of talent across various sectors, with major cities like Dubai and Abu Dhabi particularly notable for their talent pools.
It’s important to note that in the UAE, the hiring process often begins with drafting a detailed job description, followed by screening, shortlisting, interviews, and selection. Some roles may require candidates to provide additional documentation, such as educational certificates and professional qualifications, which the relevant authorities must attest.
2. Compare using an EOR to setting up a legal entity in the UAE
When working with employees in the UAE, you need to consider working with an EOR versus setting up your own legal entity. Here’s a comparison of the two options:
| Factor | Employer of Record | Setting Up Legal Entity | Shared Attributes |
|---|---|---|---|
| Setup Time | Quick, often within days | Can take several months | Both require compliance with UAE regulations |
| Initial Cost | Lower upfront costs | Higher, includes registration fees and setup costs | Both involve some level of investment |
| Ongoing Cost | May become costlier with more employees | More cost-effective for larger teams | Both have ongoing operational costs |
| Complexity | Simpler, EOR handles most administrative tasks | Both require an understanding of UAE labor laws | The company is responsible for all compliance |
| Control over Operations | Limited control, EOR is the legal employer | Full control over all aspects of employment | Both allow management of day-to-day activities |
| Compliance Management | Handled by EOR | Significant local expertise is needed | Both must adhere to UAE labor regulations |
| Scalability | Easier to scale up or down quickly | Requires more time and resources to scale | Both can support business growth |
| Local Expertise Required | Minimal, provided by EOR | Higher, the company bears all legal risks | Both benefit from local market knowledge |
| Suitable for | Testing markets, small teams, short-term projects | Long-term expansion, large teams | Both support business operations in the UAE |
| Risk | Lower, EOR assumes legal liability | The company must handle directly | Both involve some level of business risk |
| Customization of Employment Terms | Limited flexibility | Full flexibility to tailor policies | Both must comply with UAE labor standards |
| Termination Process | Managed by EOR | Company must handle directly | Both must follow UAE termination regulations |
| Intellectual Property Protection | Managed by EOR, may require additional agreements | Directly controlled by the company | Both must protect company IP rights |
An Employer of Record offers a quicker, less complex route to hiring local staff, bypassing the need for a formal company presence. This approach suits companies looking to test the UAE market or expand quickly without significant upfront investment.
On the other hand, setting up a legal entity in the UAE offers greater control and the ability to customize business operations and policies. However, establishing a legal entity involves complex registration processes, significant upfront fees, and a deeper understanding of local laws and tax regulations.
In comparison, using an EOR is generally less expensive. It involves less risk, making it a suitable option for small to medium-sized businesses or those in the initial stages of market exploration. It eliminates the need for a local expert or dedicated legal and tax teams, as the EOR handles these aspects.
3. Get the information needed from your talent
To hire employees in the UAE, you’ll need to collect essential personal information and employment details. This typically includes:
- Employee’s full name
- Date of birth
- Nationality
- Passport number and expiry date
- Educational qualifications (attested)
- Professional certifications (if applicable)
- UAE residence visa details (if already in the UAE)
- Emirates ID number (if applicable)
- Bank account details for salary payments
- Comprehensive job description, including title, duties, and place of work
Employment contracts in the UAE must be in writing and should detail the terms of employment, such as:
- Type of contract (limited or unlimited term)
- Job title and description
- Start date
- Probation period (if applicable)
- Salary and benefits
- Working hours and days
- Annual leave entitlement
- The notice period for termination
It’s important to note that in the UAE, collecting this data before the employee starts working is crucial for compliance with local labor laws and regulations, including visa processing and work permit applications.
The UAE Labor Law requires employers to register employees with the Ministry of Human Resources and Emiratisation (MoHRE) and provide them with a standard employment contract. This contract must be in Arabic, with an English translation if necessary.
4. Choose an EOR provider with expertise in the UAE
When choosing an EOR provider to work within the UAE, selecting one with deep expertise in the UAE market and a strong understanding of local labor laws to ensure compliance and smooth business operations is crucial.
Evaluate the provider’s experience managing employee onboarding, payroll, and legal compliance in the UAE. Look for a provider with a proven track record of working successfully with companies similar to yours, and check their reputation through client case studies or reviews.
Assess the range of services offered to see if they align with your needs, such as work permit and visa support, employee benefits management, and payroll processing. It is important to choose a provider that offers comprehensive employment services and is flexible enough to adapt to changes in UAE labor laws.
Consider the provider’s technology and platforms, ensuring they offer secure, user-friendly systems with strong data protection measures. This is particularly important in the UAE, where various federal and emirate-level laws govern data protection.
Evaluate their pricing models, looking for transparency in fees, whether they charge a fixed monthly fee or a percentage of the employee’s salary, and assess the cost-effectiveness for your business.
Finally, choose an EOR provider that demonstrates a commitment to staying up-to-date with UAE employment laws and can provide proper guidance and support to ensure your business remains compliant while operating in the UAE.
What are the best EOR providers to use in the UAE?
| EOR Provider | Why Selected |
|---|---|
| Deel | Offers comprehensive global hiring solutions with strong presence in the UAE |
| Remote | Known for user-friendly platform and competitive pricing for UAE market |
| Multiplier | Provides tailored EOR services with expertise in UAE labor laws and regulations |
| Rippling | Offers integrated HR, IT, and Finance solutions suitable for UAE operations |
5. Communicate your hiring needs to the EOR
It’s important to communicate your hiring needs to the EOR to ensure the process aligns with company goals and legal requirements. Provide a detailed job description, including title, responsibilities, required qualifications, and skills.
Specify the job’s expected start date, location, and whether it’s remote or onsite. Outline the proposed salary, bonuses, commission structures, and other compensation benefits. Clarify the contract length, whether it’s a limited or unlimited term, and detail the working hours, including any flexibility or shift requirements.
Discuss the company culture, growth plans, and how the position fits into future expansion. Specify equipment needs and onboarding procedures. By accurately representing these aspects, the EOR can find the right talent and ensure legal and administrative compliance.
Additionally, communicate any specific requirements related to UAE labor laws, such as the need for visa sponsorship or any industry-specific regulations that may apply to your business. It’s also important to discuss any specific benefits you want to offer, as the EOR can help you design a competitive package that complies with local norms and regulations.
Be sure to mention any language requirements. While Arabic is the official language, English is widely used in business in the UAE, especially in sectors like finance and technology.
6. Have the EOR set up the contracts and hiring procedure
Once you have chosen which provider to work with and communicated your hiring needs, the EOR will set up the contracts and hiring procedure, ensuring compliance with local labor laws and employment practices.
The EOR will draft employment contracts that comply with UAE labor laws, including specific terms regarding job details, working hours, and termination procedures. They’ll also manage the necessary documentation for visa applications, work permits, and payroll setup, adhering to mandatory withholdings and reporting requirements.
The EOR also registers employment with relevant UAE authorities, such as the Ministry of Human Resources and Emiratisation (MoHRE), to ensure the company is properly licensed and authorized to operate and hire employees in the UAE.
They’ll ensure your company complies with local regulations, including working hours, minimum wage (if applicable), and leave entitlements. Additionally, the EOR administers benefits and handles formal onboarding, including the introduction to company systems and culture.
The EOR will also ensure that all necessary paperwork is completed, including the employee’s registration for social security purposes if applicable. They will handle the setup of payroll systems to ensure timely and accurate payment of salaries and statutory contributions.
What help does an EOR provide in the UAE’s payroll, taxes, and benefits administration?
The EOR will support all UAE’s payroll, taxes, and benefits administration, ensuring compliance with complex local laws. It calculates and processes employee salaries, withholds the correct tax amounts (if applicable), and handles social security contributions.
The EOR manages payslips that reflect mandatory withholdings and contributions, adhering to UAE regulations. While no personal income tax exists in the UAE, the EOR ensures compliance with applicable corporate tax regulations and manages any required reporting to local authorities.
For benefits, the EOR ensures compliance with statutory requirements, such as annual, sick, and maternity leave. It can also administer additional benefits common in the UAE, such as health insurance and annual flight tickets for expatriate employees.
Specific tasks include:
- Calculating and processing salaries in UAE Dirhams (AED)
- Managing contributions to the General Pension and Social Security Authority (GPSSA) for UAE nationals
- Handling end-of-service gratuity calculations for expatriate employees
- Ensuring compliance with the Wage Protection System (WPS) for salary payments
- Administering mandatory health insurance coverage in emirates where it’s required (e.g., Dubai and Abu Dhabi)
- Managing annual leave entitlements and other statutory leave types
- Handling overtime calculations and payments according to UAE labor law
What labor laws do you need to consider when hiring in the UAE?
When hiring in the UAE, there are several key labor laws to consider. The UAE’s approach to labor laws generally protects employees, offering extensive employee protections while maintaining a business-friendly environment.
Employment contracts
Employment contracts in the UAE must be in writing and should specify job details, including position, duties, working hours, salary, and termination conditions. There are two main types of employment contracts:
- Limited-term contracts: For a specified period, usually up to three years
- Unlimited-term contracts: Open-ended duration
Working hours and paid holidays
The standard work week in the UAE is 48 hours, typically six days. During Ramadan, working hours for Muslim employees are reduced by 2 hours per day. Employees are entitled to one day of rest per week, usually Friday.
After completing one year of service, employees are entitled to a minimum of 30 calendar days of paid annual leave. There are also several paid public holidays throughout the year.
Taxes
There is no personal income tax in the UAE. However, employers should be aware of the newly introduced corporate tax, which may affect certain business operations.
Severance pay
Employees in the UAE are entitled to end-of-service gratuity after completing at least one year of continuous service. The gratuity is calculated based on the employee’s basic salary and length of service.
Emiratization
The UAE government has implemented Emiratization policies to increase the participation of UAE nationals in the private sector workforce. Employers should be aware of any Emiratization quotas that may apply to their industry.
Probationary period
The UAE labor law allows for a probationary period of up to six months. During this period, either party can terminate the employment contract with minimal notice.
Maternity and paternity leave
Female employees are entitled to 60 calendar days of maternity leave, while male employees are entitled to 5 working days of paternity leave.
| Labor Law | Key Points |
|---|---|
| Employment Contracts | Must be written, specifying job details and conditions |
| Working Hours | 48-hour standard work week, reduced during Ramadan |
| Paid Holidays | Minimum 30 calendar days annual leave, plus public holidays |
| Taxes | No personal income tax, new corporate tax introduced |
| Severance Pay | End-of-service gratuity based on length of service |
| Emiratization | 60 days for mothers, five days for fathers |
| Probationary Period | Up to six months allowed |
| Maternity/Paternity Leave | 60 days for mothers, 5 days for fathers |
How does the hiring process work in the UAE?
When hiring staff in the UAE, employers typically follow these steps:
- Identify the vacancy and create a detailed job description
- Advertise the position through various channels, including local job portals and recruitment agencies
- Review applications and shortlist candidates
- Conduct interviews and assessments, which may include skill tests or presentations for some roles
- Select the preferred candidate and make a job offer
- Negotiate and finalize the employment terms
- Prepare and sign the employment contract
- Apply for necessary work permits and visas (for expatriate employees)
- Register the employee with relevant authorities (e.g., MoHRE)
- Conduct pre-employment medical tests as required
- Onboard the new employee
Employers must ensure compliance with UAE’s labor laws and regulations throughout this process, including anti-discrimination legislation and data privacy requirements. It’s also important to be aware of cultural nuances in the UAE hiring process, such as the importance of personal relationships and the need for formal, attested qualifications.
Employers should also be prepared to discuss benefits beyond the statutory requirements. UAE employees often expect additional perks such as health insurance, annual flight tickets (for expatriates), and housing allowances.
Is the UAE a relatively easy country to hire employees remotely through an EOR?
Yes, the UAE is generally considered a relatively easy country to hire employees remotely through an Employer of Record. The country’s business-friendly environment, modern infrastructure, and diverse workforce make it an attractive destination for international hiring.
Pros and Cons of hiring employees in UAE
Pros
Cons
While protective of employees, the UAE’s labor laws are clear and well-established, making compliance manageable with the help of an experienced EOR. The country’s advanced digital infrastructure facilitates remote work arrangements, especially in major business hubs like Dubai and Abu Dhabi.
However, it’s important to note that while hiring through an EOR in the UAE is relatively straightforward, employers must still be mindful of local labor laws and cultural nuances. An experienced EOR can navigate these requirements effectively, ensuring compliance while simplifying the hiring process for foreign companies.
The UAE government has been actively promoting the country as a hub for remote work, introducing initiatives like the one-year virtual working program. This program allows professionals to live in the UAE while working for companies abroad, further enhancing the UAE’s attractiveness for remote hiring arrangements.
In conclusion, the UAE’s combination of a skilled workforce, favorable business environment, and established legal framework makes it a viable option for companies hiring remote employees through an EOR. The country’s ongoing efforts to attract global talent and businesses and its strategic location and world-class infrastructure position it as an increasingly popular destination for international employment. By partnering with a knowledgeable and experienced EOR provider, companies can effectively navigate the UAE’s employment landscape and tap into its diverse talent pool.
