Explore our EOR & PEO services in UAE

As your EOR in UAE, we’d help you expand by hiring employees and running their payroll without establishing a local branch office or subsidiary.

Your candidate is hired by a PEO in UAE provider in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. Shortly after, your new employee will be working for you, just like any other member of your team.

Middle Eastern Pearl

Country Overview

The United Arab Emirates (UAE) is a federal absolute monarchy located in the southeast of the Arabian Peninsula. It is bordered by Saudi Arabia to the west and Oman to the east. The UAE comprises seven emirates, each with its own ruler: Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah. Abu Dhabi is the capital and largest emirate, and Dubai is the most populous and a global commercial hub. The UAE has a diversified economy with a large focus on oil and natural gas production, but also a growing tourism and services sector. It is one of the wealthiest countries in the Middle East and has a high standard of living, with a well-developed infrastructure and a large expat population.

General Information

Population: ~10.000.000

Capital City:Â Abu Dhabi (population: ~1.500.000)

GDP:Â ~$779 billions

GDP per capita:Â ~$78.000

Currency: Dirham (AED)

Unemployment:Â ~3.36%

Employer Taxes: 12.50%

Employee Taxes:Â 0%

UAE EOR SPECIFICS

Employment Contracts in the UAE

Employment contracts are an important aspect of the country’s labor law and it is regulated by the UAE Labor Law, also known as Federal Law No. 8 of 1980. The law establishes the rights and obligations of both the employer and employee, and sets out the terms and conditions of employment. Employment contracts in the UAE must be in writing and must include certain information, such as the employee’s job title, salary, working hours, and the length of the contract. The contract may be for a fixed or an indefinite term. A fixed-term contract is for a specific period, usually for a year or more, and an indefinite contract does not have a set end date, it will last until either party terminates it. Employment contracts in the UAE can be renewed or extended, but only after the initial contract has ended. Once the contract has expired, employers and employees have to renew it if they wish to continue working together.

Probation Period in the UAE

The maximum duration of the probation period is not specified in the UAE labor law, but it is typically between 3 to 6 months, during which both employer and employee have the right to terminate the contract without notice. The probation period can be extended by mutual agreement between the employer and employee, but the total duration of the probation period, including any extensions, should not exceed 6 months. During the probation period, the employee is considered to be on a probationary basis and is not entitled to some of the benefits provided by the employer such as annual leave or end-of-service gratuity. However, they are protected by laws and regulations against discrimination, harassment, and exploitation during their probation period.

Working Hours in the UAE

The standard working hours for employees in the UAE are 8 hours per day or 48 hours per week. The working hours should be organized such that the employee is not made to work more than 6 consecutive hours without a rest of not less than half an hour. Also, employees are entitled to an unpaid prayer break of around 15 minutes, which should not be counted as part of the working hours. Employers provide their employees with a minimum of 30 calendar days of annual leave each year. They should also respect the local and national holidays, which are usually around 15 days, and these days are not considered as part of the working hours. Employees who work additional hours are entitled to overtime pay, which is calculated at a rate of not less than 25% of the employee’s basic wage for the first two hours and not less than 50% of the employee’s basic wage for each additional hour.

Vacation Days in the UAE

The law provides for a minimum of 30 calendar days of annual leave each year for all employees, regardless of their length of service.

The annual leave should be taken at a time agreed upon by the employer and employee, and it should be in a continuous period of not less than 5 working days. Employers must pay their employees their full wages during the annual leave period, and it should be included in the employment contract.

Employees who have completed one year of continuous service with their employer are entitled to an additional two days of annual leave for each additional year of service up to a maximum of 30 days.

Sick Leave in the UAE

The law provides for a minimum of 30 days of sick leave each year for all employees, with full pay.

Employees are entitled to sick leave if they are unable to perform their duties due to illness or injury. In order to qualify for sick leave, the employee must provide the employer with a medical certificate from a licensed physician stating that the employee is unable to continue working.

There is additional sick leave, if the medical certificate states that the employee is unable to perform their duties for more than 30 days. In such cases, the employee will be considered on long-term sick leave, and the employer should follow the procedures outlined in the labor law.

Wages and Salary Payment in the UAE

Wages and salary payment in the United Arab Emirates (UAE) is governed by the UAE Labor Law, which outlines the rights and obligations of both employers and employees. According to the law, employers are required to pay their employees at least once a month, and the payment must be made directly to the employee or through a bank account designated by the employee.

The minimum wage in the UAE is currently set at AED 3,000 per month for private sector employees, while there is no set minimum wage for public sector employees. However, many companies pay their employees more than the minimum wage, and salaries can vary depending on factors such as job type, experience, and qualifications. According to a report by Bayt.com, a leading job site in the Middle East, the average salary for a professional in the UAE is around AED 14,632 per month.

Public Holidays in the UAE

Gregorian New Year: 1 January
Eid Al Fitr: From 29 Ramadan to 3 Shawwal (4 days)
Arafah day and Eid Al Adha (Feast of Sacrifice): From 9 to 12 Dhu al Hijjah (4 days)
Hijri New Year (Islamic New Year): 1 Muharram – 12 August in 2021 and on 30 July in 2022
Prophet Mohammed’s birthday: 21 October in 2021 and on 8 October in 2022
Commemoration Day: 1 December (previously known as Martyr’s Day and was observed on 30 November)
National Day: 2 and 3 December (2 days)

Note: The specific dates of religious holidays are determined by the sighting of the moon and may vary from year to year.

Employer Taxes in the UAE

Social Security contributions are only required for Emiratis and not for expatriates
The Social Security contribution rate is 12.5%

Employee Taxes in the UAE

The United Arab Emirates does not have personal income tax
As a result, individuals do not have to register or report their income to the government
Social Security contributions are only required for Emiratis and not for expatriates
The Social Security contribution rate is 5%

Notice Period in the UAE

As per the UAE Labor Law, the notice period depends on the length of the employment and it ranges from 30 days to 3 months. For employees who have been employed for more than five years, the notice period is three months. Those employed for between one and five years, the notice is two months. Less than one year – one month. Employers are also required to give a notice period to their employees before terminating the contract. In most cases, the notice period should be equal to the employee’s notice period. This can vary based on the terms and conditions in the employment contract. It’s worth noting that, if the employee commits a serious breach of the contract, the employer can terminate the contract immediately, without providing notice. Also, if the employee resigns, the employer can waive the notice period, but employee shall not be entitled for end of service gratuity for the notice period.

Termination / Severance in the UAE

One of the most common types of termination is the mutual one, which occurs when both the employer and employee agree to terminate the contract. In this case, the employer must pay the employee their end of service benefits, including any unused annual leave and end of service gratuity.

Another type of termination which can be done for a number of reasons including employee’s violation of contract, redundancy or termination due to employee’s incapability to continue working. In this case, the employer must provide a notice period before termination, and the notice period will depend on the length of the employee’s service and the terms of the contract. In addition, if the employer terminates the contract without a valid reason, the employee may be entitled to compensation.

Termination by the employee can also happen due to a valid reason such as a violation by the employer of the contract or not providing safe working conditions. The employee shall give notice period as per the contract and UAE Labor Law, also the employee may be entitled to end of service gratuity for the notice period.

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