Hire in United Arab Emirates

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Last updated at July 17, 2022

Currency

United Arab Emirates Dirham (AED)

Capital

Abu Dhabi

Time Zone

GMT+4

Key Country Facts

Introduction

The United Arab Emirates (UAE) is a federation of seven emirates (Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain) along the eastern coast of the Arabian Peninsula. Each emirate is governed by a Sheikh and, collectively, they form the Federal Supreme Council. One of the Sheikhs serves as president of the United Arab Emirates. The UAE’s economy is dominated by the petroleum produced mostly in the Abu Dhabi emirate. The emirate of Dubai serves as a commercial and financial hub for the region, leading the country toward economic diversification.

Area

The UAE is bordered by Saudi Arabia to the west and south and by Oman to the east and northeast. Together with Qatar and Iran, it has maritime borders in the Persian Gulf. Nearly the entire country is a desert, containing broad areas of sand.

Climate

The UAE’s climate is subtropical-arid with hot summers and warm winters. It is hot and humid along the coast while the interior is hot but dry. The hottest months are July and August when average maximum temperatures reach above 45°C on the coastal plain.

Culture

Emirati culture is based on Arabian culture, having been influenced by the cultures of Persia, India and East Africa. It has a diverse society, with the country’s historical population being a small tribal community that has changed with the arrival of other nationals in the mid-20th century. The country was also part of the British Empire until 1971.

Religion

Islam is the largest and the official religion of the UAE. The government follows a policy of tolerance toward other religions and rarely interferes in the religious activities of non-Muslims. More than 60% of the Emirati population is Muslims, the majority of whom are Sunni Muslims. There are also small but growing groups of Christians and Hindus in the country.

Official Language

Arabic is the national language of the UAE. Specifically, the Gulf dialect of Arabic is spoken natively by Emirati people. The area was occupied by the British until 1971 and, with many expatriates as residents, English is the primary lingua franca in the UAE. A knowledge of English is a requirement when applying for most local jobs.

UAE HR at a Glance

Employment Law

Employment is regulated at the federal level and the principal legislation governing employment is the Labor Law, accompanied by a range of Ministerial Decrees and Resolutions. The Labor Law generally applies to employment relationships throughout the UAE, excluding the public sector, domestic servants and agricultural workers.

There are more than 40 ‘free zones’ in the UAE, two of which are the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC). Free zones have entirely distinct legal systems, with their own employment legislation replacing the UAE Labor Law. The main differences in the ADGM Employment Regulations and DIFC Employment Law relate to the employment of foreign and UAE nationals, payment of wages, health, safety and the termination of contract.

The new Federal Law No. 33 of 2021 (New Labor Law) took effect on February 2nd, 2022, repealing the previous labor framework. The New Labor Law applies to employers and employees in the UAE’s private sector, companies owned in whole or in part by the federal or local government and companies incorporated in the UAE mainland and also regulated by the Ministry of Human Resources and Emiratisation (MoHRE). It also applies to companies in the free zones, except for ADGM and DIFC. 

The information in this document focuses on employment legislation applicable to the Dubai Development Authority (DDA) Free Zone.

Employment Contract

Employment contracts, and other employment-related documentation and instructions, do not have to be in Arabic. Contracts in English are widely accepted in the DDA. 

Employment contracts must, in principle, be in writing, with copies retained by the worker and the employer. 

With the new labor law that took effect in February of 2022, unlimited contracts are to be replaced by fixed-term employment contracts. All employees must be employed on fixed-term employment contracts not exceeding three years, which may be extended for the same or different period. Employers have until February 2, 2023 to transition all employees onto new contracts.

Employers are required to have internal work regulations in accordance with the New Labor Law.

All employment contracts must state:

  • Contract date
  • Employment start date
  • Type and scope of work
  • Place of work
  • Remuneration
  • Duration (for fixed term contracts)

For work permits holders and residency visas, all workers must have a standard-format written employment contract following an official template. The contract must be registered with the Ministry of Human Resources and Emiratisation (MOHRE) or the relevant free zone authority. The DDA Free Zone has its own standard employment contracts.

If the employment is to last for less than 30 days, the employee is not required to have an employment contract or the right to an itemized pay statement.

Contract Terms

There are no specific provisions regarding employee/contractor classification. The concept of a ‘contractor’ or ‘self-employed’ individual is not expressly recognized under the law. 

In some free zones, there is a special freelancer visa that individuals can obtain in order to work independently. Individuals can establish their own consultancy company, akin to a contractor, and render services within the confines and terms of their trade license. However, such arrangements are limited.

The New Labor Law introduced flexible contract types and working models such as part-time, temporary, flexible and freelance arrangements. For remote work, employees can do so as long as they have the approval from the employer. 

Pre-Employment Checks

An employer may ask a candidate to undergo medical tests at a clinic or hospital of the employer’s choosing and at the expense of the employer. The employer may make employment conditional on the candidate passing these medical tests. 

Pre-employment checks for drug screenings are rare. A certificate of good conduct confirming the individual does not have a criminal record in the UAE may be obtained by the prospective employer.

With regards to social media, it is common for employers to utilize professional social media sites such as LinkedIn at the recruitment and pre-employment stage. 

Probation Period / Trial Period

Probationary periods may last up to six months, during which the employer may terminate the employment contract by giving 14 days’ notice. 

The same employee may not serve more than one probationary period with the same employer. The probationary period must be considered part of the worker’s period of continuous service with the employer.

When an employee resigns during the probation period, the notice period is as follows:

  • 1 month: If the employee is joining another employer in the UAE, they must offer the employer one month’s notice. In this scenario, the new employer has to compensate the current employer for the employee’s recruitment costs.
  • 14 days: If the employee is leaving the UAE, they must offer the employer notice within 14 days. In this scenario, should the employee return to the UAE within three months, the new employer will be liable to the previous employer for recruitment costs. 

Working Hours

An employee’s normal working hours must not exceed eight hours per day and:

  • 48 hours per week over a six-day work week; or
  • 40 hours per week over a five-day work week.

Employees are entitled to take at least one day off per week. This does not have to be on a Friday. 

The daily limit is nine hours for workers in specific industries, including commerce, hotels, catering and security. Normal daily hours must be cut by two hours during Ramadan, the Islamic holy month. 

Workers’ travel time between their residence and workplace is not counted as working time. Employees must not work more than five consecutive hours without taking a break of at least one hour for rest, food and prayer. The break does not constitute a working hour.

The provisions on working hours and overtime do not apply to workers in managerial or supervisory positions. 

From June 15 through to September 15 each year, employees who perform work outdoors in the sun (e.g. on construction sites) must take a midday break from 12.30 p.m. to 3 p.m. Employers must provide employees with a shaded rest area and cold drinks. The break is not paid and the employees’ working day is split into a morning and evening shift.

As of January 2022, the work week for federal government entities is 4.5 days, with weekends starting from Friday afternoons, Saturday and Sunday. For the private sector, the only obligation is for employees to be entitled to one rest day per week and this does not have to be on a Friday.  However, many businesses are shifting their work week to align with the Government. 

Overtime

Workers may work no more than two overtime hours on any day, except where work is necessary to prevent major losses or a serious accident or to deal with the consequences of such an occurrence.

Any hours that exceed the statutory limits for normal working time are considered to be overtime, for which the worker must receive 125% the normal rate of pay; workers must be compensated at 150% the normal rate of pay if the overtime is worked between 9 p.m. and 4 a.m. 

For work performed on a Friday, which is designated as a statutory day off, an employer must offer: 

  • a compensatory day off work
  • basic salary for the hours worked plus additional compensation equal to 50% of that salary

Timesheets and Record Keeping

Employers that employ at least five workers must keep a file for each worker, stating their name, occupation, age, nationality, address, marital status, date of employment, wages, any adjustments of wages, disciplinary sanctions penalties imposed if any, occupational injuries and diseases sustained and the date of and reasons for termination of employment. The file must include a leave card, which records annual leave, sick leave and other leave taken.

Employers that employ at least 15 workers must keep at every workplace:

  • a payroll record stating for all workers the date employment started and ended, the days worked, the amount of daily, weekly or monthly wages paid, fringe benefits and any piecework or commission payments
  • a record of all occupational injuries and any diseases sustained
  • basic work regulations, approved by the public labor authorities and displayed prominently, stating the daily working hours, the weekly rest period, public holidays and the measures and precautions taken to prevent occupational injuries and fire hazards
  • disciplinary rules, approved by the public labor authorities and displayed prominently, stating the applicable disciplinary offenses and sanctions 

Employers must keep records for two years after the termination of an employment contract.

Bonus

There is no statutory requirement to pay bonuses and this is generally at the discretion of the employer unless the employment contract specifically mentions payment of bonus, as well as the basis by which it is calculated and paid.

End of Service / Termination

Under the New Labor Law, redundancy is recognized as a reason for dismissal (e.g. if employer is insolvent or going through economic restructuring). Other reasons for dismissal include the employee not having the necessary skills. When an employer initiates the termination, the employee is entitled to one day of unpaid leave per week to look for a new job. 

Employers may not terminate a female employee during pregnancy or when on maternity leave. 

All final payments due to employees have to be administered within 14 days of the termination date. 

Notice Period

An employer and an employee can come to a mutual agreement on a notice period but it must be a minimum of 30 days and no more than 90 days. 

During the probation period, the employer must give 14 days of notice and the employee must give 1 month of notice. 

Notice must be given in writing. During a notice period, the worker must be compensated for their full wages and must continue to perform their job unless the employer does not require this. The employer or worker may pay the other party in lieu of all or part of the notice period, at the worker’s normal wage rate.

End of Service Gratuity / Severance

Workers who have at least one year’s service, excluding any days of unpaid absence, are entitled to a statutory “end-of-service gratuity” upon termination. 

The gratuity is calculated as:

  • 21 days’ wages – for employment up to 5 years of service
  • 30 days’ wages – for employment above 6 years of service, capped at two years’ wages

The wages on which the gratuity is calculated exclude all bonuses and allowances, overtime pay and payments in kind.

For unlawful termination (i.e. employee filing a serious complaint or successful claim against the employer), a severance payment up to 3 months’ salary in addition to all other contractual and statutory entitlements may be owed. The total compensation takes into account the employee’s length of service, work responsibilities and damage sustained by the employee. 

Post-Termination Restraints / Restrictive Covenants

Employers may include restrictive covenants in their employment contracts, preventing an employee from certain acts such as joining a competitor for a period. However, these can be enforced only to the extent necessary to safeguard the employer’s lawful interest. The clauses must be limited in duration, geographical scope and to the specific nature of the business itself.

The market practice is to limit non-competes for six to 12 months. 

Other Termination Formalities

The UAE Labor Law places an obligation on employers in the UAE, upon the termination of employment, to provide a certificate to an employee setting out specific information if the employee requests the employer to do so. The information includes:

  • the period of the employment
  • the nature of the work performed by the employee during the employment 
  • details of the employee’s remuneration package

Data Protection

There is no specific legislation on data protection under the Labor Law. However, the Penal Code states that employers can collect and use personal data only with the consent of the worker or job applicant concerned.

Tax and Social Security

Personal Income Tax

The UAE does not levy a tax on an individual’s income. The same principle also applies to freelancers and self-employed individuals who are residents of the UAE.

Social Security

Employees in the UAE who are UAE or Gulf Cooperation Council (GCC) nationals are required to make contributions to the General Pension and Social Security Authority (GPSSA). The employer pays approximately 12.5% and the employee pays approximately 5%, depending on if they are UAE or GCC nationals. This is deducted from the monthly paycheck. 

Social security obligations also apply to any employees of companies and branches registered within a free trade zone (FTZ). Residents of other GCC nations may be subject to a different social security contribution scheme relative to their home country. Non-GCC nationals are not subject to social security contributions in the United Arab Emirates.

Apart from pension contributions for UAE/GCC nationals, employers in some free zones (DMCC, JAFZ, RAKEZ) must contribute to a private insurance scheme to provide employee compensation for occupational accidents and diseases.

In DIFC, the DIFC Employee Workplace Savings Scheme (DEWS) was implemented in February 2020. Under this scheme, employers are required to make monthly contributions of 5.83% or 8.33% of an employee’s basic salary, depending on the employee’s length of service.  

UAE nationals who hold a UAE family book (documenting the lineage of the family) are entitled to a monthly pension contribution from their employers. Employers make these payments to the designated emirate’s pensions authority, depending on which emirate the worker is employed in. The worker must also make monthly contributions.

The above rates serve as a broad guideline. Actual rates charged by GoGlobal will differ.

Employees

Salary Payment

In the UAE, it is common practice for employers to pay employees three to five working days before the end of the pay period. The pay period must not exceed one month for workers whose pay is calculated on an annual or monthly basis. All other workers must be paid at least once a fortnight.

Wages must be paid on a working day, with funds deposited into their bank accounts. Payment can be in UAE Dirhams or other currency. 

Workers must not be required to purchase food or other goods from specific shops or to purchase the employer’s products. 

Payslip

Employees must be provided with an itemized pay statement, stating the amount of remuneration and the amount and purpose of any variable or fixed deductions. Electronic access to pay statements that can be printed are accepted.

Annual Leave

Workers are entitled to 30 days of paid annual leave after one year’s service is completed. During the first year of service, employees are only entitled to annual leave after they have completed six months’ service; thereafter, they are entitled to two calendar days of paid annual leave per month until they complete one year’s service. 

Leave must be taken in the year when the worker accrues the entitlement. However, employers have the discretion to implement a leave carry-over policy.

Sick Leave

Workers are entitled to sick leave if they have completed three months’ service with their employer. Paid sick leave does not accrue during the probationary period. The statutory entitlement is up to 90 calendar days of sick leave each year. The worker is entitled to:

  • Full pay for the first 15 days of sick leave per year 
  • Half pay for the 16th to 45th days

There is no statutory requirement for employers to provide sick pay during the remainder of the annual sick leave quota. 

Once a worker has been absent on grounds of sickness for more than 90 days, the employer is entitled to dismiss them if they do not return to work. In such cases, the worker is entitled to an end-of-service gratuity if they meet the eligibility requirements..

Pilgrimage Leave

Workers are entitled (under the Labor Law) on one occasion to take a special unpaid leave of up to 30 days to undertake the Hajj pilgrimage.

For ADGM, it is 30 days and for DIFC, it is 21 days. In both, employees must have at least one years’ service. 

Maternity & Parental Leave

Pregnant workers are entitled to 60 days of maternity leave, where the employee will receive full pay for the first 45 days and half pay for the remaining 15 days. This entitlement is available to all pregnant female employees regardless of time of service with the employer.

The law does not stipulate when the leave should start but it should be taken around the time of the birth. 

Female employees who miscarry after six months of pregnancy (or experience stillbirth or death of a child following birth) are also entitled to maternity leave benefits. 

If a female employee gives birth to a disabled or ill infant, she is entitled to an additional 30 calendar days of maternity leave, which can be extended by an additional 30 unpaid days of leave. 

Nursing mothers are entitled to two paid half-hour breaks during working hours for six months upon returning to work. 

Pregnant employees are able to take 45 days of maternity-related sick leave. This can be taken consecutively or as needed. 

Employees who become fathers are entitled to take five working days of paid paternity leave. 

Compassionate Leave

In the event of death of a close family member, compassionate leave is offered:

  • Employee’s spouse: five days
  • Employee’s immediate family: three days

Study Leave

Employees are entitled to 10 days of study leave per year for taking examinations if they have had two years of service or more with an employer and are enrolled in an approved UAE education institution.

Public Holidays

Workers are entitled to a paid day off on official public holidays. The Government currently provides for the following public holidays to be observed:

  • 1 January (Gregorian New Year’s Day)
  • Eid al-Fitr — four days
  • Eid al-Adha and Arafat Day — four days
  • Islamic New Year’s Day (Al-Hijra)
  • The Prophet Mohammed’s birthday
  • 1 December (Commemoration Day)
  • 2–3 December (National Day) — two days.

Benefits to the Employee in UAE

Statutory Benefits

The state retirement pension scheme, which also applies in the DIFC and ADGM, covers UAE nationals only.

Employers in the UAE must provide employees who are foreign nationals with private health insurance. This is a prerequisite for obtaining a work visa. Insurance for the employee’s spouse and dependents is often provided, but this is at the discretion of the employer.

Visas and Foreign Workers

General Information

All workers are required to hold a work permit for employment in the UAE. The Ministry of Human Resources and Emiratisation (MOHRE) issues the work permit (sometimes also known as a labor card) on application by the employer. In the UAE free zones, the authorities issue a similar document. This is generally referred to as an ID card.

For nationals of the UAE and other Gulf Cooperation Council (GCC) countries (Bahrain, Kuwait, Oman, Saudi Arabia), the granting of a work permit (or free zone equivalent) is generally sufficient to enable the individual concerned to be employed.

For other non-UAE nationals, an entry permit and residency visa are also required. Outside the free zones, the procedure for obtaining the relevant visas and permits requires the employer to offer the prospective foreign worker a standard-format job offer letter containing details of the employment plus an annex setting out the main provisions of the Labor Law. 

The employer must submit a copy of the employment contract to the DDA Free Zone in order for the visa to be processed.

Employers, in order to cover their potential liability for pay and benefits owed to workers, must do either of the following:

  • deposit a bank guarantee (currently around AED 3000 per worker)
  • contribute to a special insurance scheme for this purpose (at a current annual rate of AED 60 per worker).

Public Holidays in 2022

S.No Occasion Date
1. New Year’s Day January 1st
2. Eid Al Fitr (commemorates the end of the fasting month of Ramadan) 30th April -3rd May
3. Arafat Day 8th July
4. Eid Al Adha (Festival of Sacrifice) 9th – 11th July
5. Islamic New Year 30th July
6. Prophet Mohammed’s Birthday 8th October
7. Commemoration Day 1st December
8. UAE National Day 2nd – 3rd December

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