General

The United Arab Emirates, with modern architectural wonders such as the city of Dubai, have established a reputation for luxury and elegance, and is slowly emerging as the technological hub of the Middle East, and a challenge to technology powerhouse, Israel. In fact, after signing the Abraham Accords in 2020, cooperation between the two states is likely to attract even more venture capital to the UAE in the coming years.

After suffering a significant contraction in the economy in 2020 as much of the world remained in a state of lockdown, dramatically limiting the need for UAE’s biggest resource – oil – the economy has bounced back powerfully in 2021, growing at a rate of 2.5%, including a growth of  3.6% in the non-oil sector. Economic forecasts call for a full recovery by 2022, with overall growth expected to reach a robust 3.5%.

In fact, the future is looking brighter than ever. The country is celebrating the 50th year since its founding in 1971, launching country-wide celebrations starting in April and expected to last throughout the year. The Dubai Expo, a major event that is expected to draw enormous crowds, is set to begin in October and run for half a year. In addition, Dubai will host one of the world’s premier sporting events, the World Cup soccer tournament, drawing attention from much of the world.

In short, it’s likely that the UAE will be a fixture on the news over the next year and half, and the attention will focus on aspects of the country many people may not know. That means the UAE is back on track as a primary destination for investment and employment.

It may still be possible to get in early before the biggest wave of growth and attention hits the Gulf state, but before launching an initiative it’s worth a deeper look at the benefits and ramifications of hiring in the UAE.

A Paradise of Foreign Workers

The United Arab Emirates can justly be referred to as a paradise of foreign workers. It has one of the world’s largest populations of expatriates, who make up the vast majority of the labor force in the country. 

Because so much of the workforce in the country comes from abroad, it’s essential to open an entity or work with a reputable Employer of Record (EoR) in the country before hiring. An employment permit will only be issued to candidates with a job offer from a company that is incorporated in the UAE. The company must sponsor the employee for the visa and work permit to be processed.

Opening an entity can be a complex and lengthy process in the UAE. If a business wants to get off the ground in the shortest amount of time, working with an EoR can be an effective stop-gap measure, allowing the company to start the hiring process and launch operations while applying for an entity.

Employers pay social security taxes at a low rate, and only for Emiratis, and employees benefit from the fact that there is no income tax for anyone, including foreign workers. For Emiratis who work for an employer, the social security tax is only 5%.  Foreign workers do not pay that tax either.

Some of the costs that businesses in UAE typically absorb that are not paid by businesses in other countries include the price of bringing the employees to the Emirates, the price of all the necessary visas and work and residency permits, and charges from recruitment companies. With the expected explosion in attention the UAE is expected to gain during the World Cup tournament, recruiting may be easier though the costs are not expected to drop. 

The Sanctity of Employment Contracts

An employment contract, and even a document indicating a job offer, is taken with utmost seriousness in the UAE. The job offer documents are legally binding, meaning that if an offer is accepted by an employee, the company is bound by terms of the offer. That job offer is essential to the process of acquiring the visas and permits the new employee needs.

While there is no enforced minimum wage for foreign employees, the wake scale must be clearly indicated in the contract. Labor laws must be followed, including a standard 8-hour work day and a maximum of 48 hours per week, with overtime paid at a rate of 25% above the standard hourly rate.

One of the more dramatic changes in labor law in recent years has been the addition of paternity leave for new fathers, who are entitled to take five days of paid leave within the first six months of the birth of a child. The law came into force in 2020 and marks the first time an Arab country has granted paternity leave to new fathers.

Terminating a contract also places obligations on the employer. An employee is expected to be paid for at least 21 days of work for each year employed by the company, up to five years. After that, the employee is expected to receive 30 days for each year of service. The employer is also responsible for paying for the employee’s return flight to their home country.

Resources on Employment in the UAE

When considering expanding to the UAE, it’s good to consult a few informative, and most importantly updated, sources.

For basic information about the UAE economy, it’s worth a visit to the country’s own portal for economic development and data. The site contains a wealth of information, including fact sheets about the country, links to governmental services, and ongoing news updates that focus on economic matters.

Those who want to plan their employment strategy and forecast costs effectively can turn to the UAE Countrypedia resource guide below on employment law and tax information.

People who want an informed outsider’s view of the UAE can check out the US CIA's factbook on all of the countries in the world, with a section on the UAE. The site includes a wealth of photos of the country, updates on geography, security, and the environment.

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