What is the UAE’s Labor Law?
- Regulates employment terms: Covers work hours, leave, termination rights, and medical benefits.
- Supersedes employment contracts: Overrides any contract provisions less beneficial to the employee.
- Specific FTZ regulations: Free zones like DIFC and ADGM have their own labor laws.
Emiratization Requirements
- Government campaign: Aims to increase Emirati participation in the workforce, especially in the private sector, by 10% by 2026.
- Mainland application: Currently applies only to Mainland companies.
- Support mechanisms: Includes a special department, quotas, and incentives to encourage Emiratization.
Visa Requirements
- Employer obligations: Must ensure employees have an employment visa, residence permit, and Emirates ID.
- Family sponsorship: Employees can sponsor their families to reside in the UAE.
- Mission visa: Certain companies can obtain a three-month mission visa for overseas staff or visitors.
- Long-term residency: Expatriates meeting specific criteria can apply for a five- or ten-year residency visa, which covers various categories including freelancers, investors, entrepreneurs, and students.
- Termination procedures: Employers must cancel the employee’s visa and residence permit upon employment termination.
Virtual Work Program
- Dubai’s initiative: Allows eligible foreign professionals, entrepreneurs, and company owners to work remotely from Dubai for up to one year.
- Family inclusion: Participants can bring their family members and access all services in Dubai.
- Eligibility requirements: Must provide proof of employment or business ownership, a minimum salary/income of USD 5,000 per month, and the last three pay slips or company bank statements.
Personal Income Tax
- No personal income tax: There is no requirement to register for personal income tax or employment tax purposes in the UAE.
Tax Residence
- Criteria for tax residency: Determined through Cabinet Decisions post-CT implementation in March 2023.
- International treaty precedence: Definitions in international tax treaties take precedence over domestic regulations.
Social Security Payments
- GCC national contributions: Employers and employees must contribute to the General Pension and Social Security Authority based on salary.
- Public-sector employer: 15%
- Private-sector employer: 12.5% (15% in Abu Dhabi)
- Employee: 5%
- Expatriate exemption: No social security contributions required from expatriates or their employers.
Payroll Hosting
Payroll hosting in the United Arab Emirates is a very common and popular solution among international companies. By outsourcing payroll management and administrative obligations, businesses can focus on their core activities while ensuring full compliance with local regulations. This approach also allows professionals to work securely and legally in a dynamic and ever-evolving environment.
Process for Payroll hosting:
In the UAE an employer has the duty to provide his employee with:
- A work visa (renewable every 2 years)
- A health insurance (renewable every year)
- A salary (there is no minimum, nor taxation on the salary: the Net = the Gross)
- End of contract indemnities (1 to 5 years of seniority = 21 days per year worked; 5 years and more of seniority = 30 days per year worked)
- A plane ticket to return to the country of origin at the end of the contract
- To cancel the visa of the employee at the end of the contract
- A contract of 1 or 2 years renewable or not. There is no such thing as a permanent contract.
It is customary (but not mandatory) for the employer to
- Pays for the visa and health insurance of the “dependents”.
- Offer a flight ticket per year to the employee
- Divide the salary between basic and allowance, this also reduces the employee’s severance pay which is based on the basic. We generally recommend the following split (50% Basic / 25% Housing / 25% transportation and others)
From the company
We need to know:
- the salary
- Allowances
- Bonuses (and information on what triggers their payment)
- Specific clauses (non-compete?)
- Benefits
- the health insurance you wish to offer the employee
- Are dependents taken care of (visa? health insurance? plane tickets?)
- Job title
- the starting date of the employee
- Duration of the Probation period (3 to 6 months)?
- Notice period (1 to 3 months)?
- Duration of the contract: 1 or 2 years and whether it is renewable or not.
- Working Hours: between 9.00am and 5.00pm Monday to Friday
- Annual Leave: The annual leave entitlements will be thirty (30) days per calendar year to be applied as defined in the UAE labour law. is the minimum and standard in the UAE. The company can give more if they wish.
Holidays in the UAE
The United Arab Emirates (UAE) observes a number of public holidays, reflecting both its Islamic and national traditions. Here’s a list of major holidays in the UAE:
1. New Year’s Day (January 1)
– Celebrated as the first day of the Gregorian calendar.
2. Eid Al Fitr
– Marks the end of Ramadan, the Islamic holy month of fasting. The exact dates vary each year depending on the lunar calendar and moon sighting. Typically, this holiday lasts for 1-3 days.
3. Arafat Day
– The second day of the Hajj pilgrimage and the day before Eid Al Adha. The date varies according to the Islamic lunar calendar.
4. Eid Al Adha
– Also known as the “Festival of Sacrifice,” it commemorates the willingness of Ibrahim (Abraham) to sacrifice his son as an act of obedience to God. This holiday usually lasts for 1-3 days.
5. Hijri New Year (Islamic New Year)
– Marks the beginning of the Islamic lunar calendar year. The date varies each year.
6. Prophet Muhammad’s Birthday (Mawlid Al-Nabi)
– Celebrates the birth of the Prophet Muhammad. The date varies according to the Islamic lunar calendar.
7. Commemoration Day (Martyrs’ Day) (December 1)
– Honors Emirati martyrs who have sacrificed their lives for the UAE.
8. UAE National Day (December 2-3)
– Celebrates the union of the emirates in 1971. This is a two-day holiday with various festivities across the country.
Additional Notes:
– Holidays Based on the Islamic Calendar: Many of the Islamic holidays (Eid Al Fitr, Arafat Day, Eid Al Adha, Hijri New Year, and Prophet Muhammad’s Birthday) are based on the lunar Hijri calendar, so their Gregorian dates change each year.
– Government Announcements: The UAE government typically announces the exact dates for these holidays closer to the time, based on moon sightings and official decisions.
