How to use an Employer of Record in the United Arab Emirates

What happens when a country levies no taxes on personal income on the millions of expats and workers based in the country?

It quickly becomes a business hub that attracts businesses, agencies, and skilled professionals from around the world— think developers, engineers, marketers, and managers. We’re talking about the United Arab Emirates (UAE).

The country has a diverse and talented workforce that businesses can easily tap into if they want to expand globally. However, hiring employees in the United Arab Emirates is no mean feat. 

You’ll have to create a local entity in the UAE, file for employment permits with the authorities, and build a team of HR staff to ensure you comply with Emirati employment laws — a process that can be expensive and time-consuming.

On the other hand, you could use an EOR. An employer of record maintains a local Emirati entity that officially hires your employees while they work for you. That way, you can scale your hiring faster without breaking some obscure employment regulation.

This article will explain how to use an employer of record in the United Arab Emirates, the benefits and costs of using an EOR, and how Remote’s global employment services can help you grow your remote team in the UAE. 

Six steps to hiring employees in the United Arab Emirates using an employer of record

There are dozens of EORs available on the market, and each offers a different suite of services. So, how do you choose the right employer of record? How do you make sure your chosen provider has the infrastructure to help you hire in the United Arab Emirates?

Follow these six steps to find the ideal EOR for your business.

Step 1: Weigh up the pros and cons of each potential partner

An employer of record should provide essential HR infrastructure that makes it simple to hire employees in the United Arab Emirates. That includes functions like:

• Payroll processing for employees and contractors alike

• Benefits management

• A simple onboarding experience

• Access to a team of legal experts that can assist you with understanding Emirati employment laws

• Intellectual property protection and data security

Depending on your company’s needs, you can use this as a checklist to measure how each potential EOR can meet your international hiring needs.

Step 2: Take the time to select the most appropriate EOR service provider

EOR providers sometimes rely on third parties to offer their services across countries. While it can help them scale their services globally, your pricing can increase overnight without any guarantee you’re getting better service in return. It’s better to stick with an EOR that owns its own local entity in the UAE as you can be more sure about security, pricing, and customer service. 

Learn more about the difference between owned-entity and partner-dependent providers to understand which model is better for your business.

Step 3: Check the reviews, testimonials, and coverage of your shortlist of providers

Reviews and testimonials will help you gauge the quality of service provided by an EOR by weighing what their past and existing customers have to say about them. Check out the company’s website for client testimonials and review third-party review sites and online press coverage to understand more about the company’s operations and how well (or not) they treat their clients.

Step 4: Ensure that the EOR solution for the United Arab Emirates will provide a best-in-class employee experience

As the EOR hires employees legally on your behalf, it serves as the face of your brand. Make sure your potential partner has the capability to provide a positive experience for your employees and treats them well. An employee-friendly experience will include making sure your workers are paid on time, answering queries, and providing detailed explanations for any deductions made from their paychecks (if needed).

Step 5: Work with your partner to make sure you always provide a fair and equitable compensation package 

An employer of record can help you figure out a compensation strategy so that you can pay your remote employees fair, competitive salaries for their skill level, experience, and local cost of living. To attract the best talent, it’s essential to offer your remote workers a modern benefits package that’s compliant with local laws. Your EOR should have the expertise to offer a range of benefits that factor in statutory requirements, as well as the individual’s experience, role, and skills.

Step 6: Make sure your partner will guard your intellectual property and maintain data security for your business

Before you sign the dotted line, make sure your EOR partner has the infrastructure in place to secure your data and any intellectual property produced by your employees.

Employer of record contracts should clearly transfer any invention rights to your company. Additionally, the EOR should have certifications like SOC 2 and GDPR that guarantee they will keep your data safe.

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What are the benefits of using an employer of record in the United Arab Emirates?

Using an employer of record saves you the time and money you’d have spent on creating a local entity yourself and maintaining compliance with Emirati employment laws. 

The benefits of using an employer of record include:

• A local entity that’s approved to hire Emiratis

• A simple and fast onboarding experience for your employees

• Support with your benefits and compensation strategy so that you can offer competitive salary and benefits packages that attract the best talent

• Legal support and compliance with Emirati employment laws and regulations

• Global payroll processing for your employees and contractors

• Data security and intellectual property protections

• Remote’s global employment solutions can help you hire, pay, and manage employees in the UAE and globally. Learn more about how Remote’s powerful platform makes it easy for you to onboard your global team in minutes.

How much does it cost to use an EOR in the United Arab Emirates?

The cost of using an EOR varies depending on the services required, the number of workers you want to hire, and where they are located.

Older EOR providers charge enterprise rates that could be as high as $2,000 per employee per month. Smaller companies may charge lower rates, but you’ll have to ensure they have all the infrastructure required for you to hire abroad compliantly. Some smaller EORs may not have strong security measures in place or may be dependent on third-party companies that can hike prices at will.

In contrast, Remote offers everything you need to build a truly global team: payroll, benefits, data security, IP protection, and world-class support from our team of global employment specialists — at an affordable, flat rate.

Learn how Remote compares to other EORs and why you should opt for an EOR that offers a comprehensive global employment solution for the best prices.

Hiring in Dubai

Private employment in the United Arab Emirates is regulated by several statutes, such as the :

• Federal Law No. 33 of 2022, i.e., the New Labor Law

• Law No. 8 of 1980 Regulating Labor Relations, as amended by Federal Laws No. 24 of 1981, No. 15 of 1985, No. 12 of 1986, No. 8 of 2007 and No. 6 of 2019 (Labor Law)

The Emirati New Labor Law applies to corporate employees across the UAE, except those employed by corporations with a presence in the Dubai International Financial Center and Abu Dhabi Global Market (ADGM).

Employment contracts and agreements in the United Arab Emirates

According to Article 36 of the Emirati Labor Law, employment contracts must specify terms of employment, such as:

• Contract duration

• Date of commencement

• Date of contract termination (or specify if it’s an indefinite contract)

• Nature of employment and designated workplace, and

• Salary

Labor compliance in the United Arab Emirates

Emirati law prohibits discriminatory and inhumane employment practices. If you don’t adhere to the employment standards designed to maintain workers’ rights and provide a hospitable working environment, you might find yourself on the wrong end of the law.

In general, employers are required to:

• Protect employees from discrimination due to their age, sex, political affiliation, national origin, race, color, religion, or disability. Employers who’re found guilty of discriminating against employees are liable to serve not less than five years in prison with fines of up to one million dirhams ($272,249) imposed.

• Provide their workers with suitable protection against injuries and dangers that may arise while dispensing their duties.

• Clearly outline employment terms and conditions in writing, as unwritten contracts are generally unenforceable except in a few situations.

• Limit working hours to eight hours daily and 48 hours per week, with an overtime premium (between 25 to 50%) for any work done beyond the normal working hours.

Payroll and payroll taxes in the United Arab Emirates

Both employers (12.5%, capped at AED50,000) and employees (5%) are required to pay a social security contribution, which in the case of employees is to be withheld by their employer.

Employment benefits and compensation in the United Arab Emirates

Emirati law provides for several statutory benefits and perks that employers are required to provide to their employees.

Maternity and paternity leave

Expectant mothers are entitled to 45 days of fully paid maternity leave unless they’ve been employed for less than a year, in which case they’ll be entitled to just half of their normal maternity entitlements.

Paternity leave

Fathers are entitled to five days of paid paternity leave within six months of their child’s delivery.

Healthcare

The United Arab Emirates offers universal health coverage for Emirati citizens. Remote can help you roll out a private health insurance program for any of your non-Emirati employees that may be based in the UAE.

Other benefits Remote can help you roll out

Remote is built on a simple philosophy: empower businesses to hire anyone from anywhere in the world. A crucial part of that experience is in paying remote talent well and providing unbeatable benefits for your global team.

Remote can help you roll out compliant benefit packages that will help you delight your employees in the UAE and promote better work-life balance for your employees.

Remote can help you achieve that by rolling out benefits such as:

• Medical insurance, covering dental and vision

• 401K retirement accounts

• Life insurance

• Paid time off 

Learn more about our range of global benefits that can be tailored to your remote team, no matter where in the world they live.

Severance pay and employee terminations in the United Arab Emirates

Emirati employees can generally be terminated at will as long as they’re paid severance benefits.

Severance payments are equal to 21 days’ pay for every year, up to five years, and 30 days’ pay for each year of service following the first five years.

What are the risks of employee misclassification in the United Arab Emirates?

Depending on your legal jurisdiction, misclassifying employees to avoid providing benefits can attract fines, penalties, and legal sanctions to pay any outstanding benefits not provided until that point.

Emirati employment law doesn’t specify any outstanding penalties for misclassifying employees, but the law is always subject to change. It’s important to always lways make sure your employees and contractors are classified correctly to avoid potential legal liability.

The best way to avoid misclassification risks is to work with a trusted employer of record who can help you classify your workers in the UAE correctly. Remote’s team of employment experts have in-depth knowledge of local laws and can ensure compliance with Emirati laws on worker classification.

Get started with an employer of record for the United Arab Emirates

Hiring remote employees in the UAE doesn’t have to be complicated — when you’re using Remote, that is.

Instead of spending a significant amount of time and resources to set up a local entity, provide compliant benefits, and figure out how to pay your workers in the UAE — use Remote to simplify global hiring. 

Remote manages all the admin work that goes into onboarding, paying, and providing the best employee experience to your global workforce so that you can focus on growing your business. That includes:

• A simple, yet intuitive global HR platform that allows you to manage all your global employees in one place

• Efficient onboarding and offboarding procedures

• Global payroll processes that can help you pay your employees and contractors quickly, and in the local currency

• Intellectual property protection and data security backed by SOC 2 and GDPR

• Assistance with dismissing employees without breaking Emirati labor laws

• A customizable benefits solution for health care, pensions, and paid time off

• Reliable pricing that helps you save as you scale your team

• Support from our team of global employment experts to help you define your remote hiring strategy.

With Remote, global expansion becomes fast, safe, and easy. If you’re ready to hire workers in the UAE, get started with Remote and start onboarding your team right away!

Your guide to switching EOR providers

Use this guide to learn how easy it is to switch from a different EOR provider and start employing your global team with Remote. We walk you through the key steps so you understand what’s involved.

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