The UAE offers businesses a powerful enabling environment: stable political and macroeconomic conditions, a future-oriented government, good general infrastructure, and ICT infrastructure. Moreover, the country has made continuous and convincing improvements to its regulatory environment and is usually a top country for doing business.
From the 2018 Arab Youth Survey the UAE emerges as the top Arab country in areas like living, safety and security, economic opportunities, and starting a business, and as an example for other states to emulate.
For those who want to expand their business to Western Asia, hiring employees in UAE might be your first choice to test and start with fewer risks, but what are some must-knows to avoid risk and to reduce cost?
In this article, we introduce:
After setting up your business and acquiring your license, you need to sponsor your employees. According to Article 13 of the UAE Labour Law, companies cannot employ non-nationals without taking prior consent of the Department of Labour and obtaining a work permit.
When giving a work permit, the Ministry of Human Resources and Emiratisation considers the following:
To start a company, you can choose two ways: start a business on the mainland or start a business in a free zone
Points to understand before running a business in a free zone include:
Global PEO company, such as NNRoad enables you to hire talented professionals on your behalf. We assure the hiring of staff in full compliance with local labor laws and employ best practices to locate and onboard staff members.
By Utilizing NNRoad’s PEO services any business can launch in UAE without the requirement to put in minimum capital investments or the need of establishing a separate legal entity which is a lengthy and complex process.
According to the UAE labor law, the maximum probation period for any employee should be three to six months. According to the law, if the performance of an employee is not on par with the performance metrics, the company has the right to terminate the employee, and the employer can do that on a day’s notice, only if the probation period does not exceed the maximum 6 months limit.
An employer can terminate an employment contract without notice and deprive the employee of his end of service gratuity if the latter:
An employee can terminate an employment contract without a notice period if:
Employees are entitled to an annual leave of:
The calculation of the duration of annual leave will include official holidays specified by law or by agreement and any other leaves caused by sickness if they fall within the annual leave.
There is no minimum salary stipulated in the UAE Labour Law, however, it broadly mentions that salaries must cover the basic needs of the employees. Article 63 of the Labour Law mentions that the minimum wage and cost of living index is determined either in general or for a particular area or a particular profession by virtue of a decree and consent of the Cabinet.
UAE nationals working in government and private sectors are eligible for pensions and other retirement benefits after reaching the retirement age of 49 or after serving for 20 years minimum. GCC nationals employed in the UAE are entitled to a pension in accordance with the schemes established in their home countries. Expatriate workers are not entitled to a pension but are entitled to end-of-service benefits also known as gratuity or severance pay.
The UAE does not levy income tax on individuals. However, it levies a corporate tax on oil companies and foreign banks. Excise tax is levied on specific goods that are typically harmful to human health or the environment. Value Added Tax is levied on a majority of goods and services.
If the employee resigns of his or her own free will before completing one year, then they will not be entitled to any gratuity pay. The worker is entitled to a gratuity for the served fraction of a year, provided that he completes one year of continuous service. The end of service gratuity is calculated on basis of the last wage which the employee was entitled to, namely the basic salary. Hence, it will not include allowances such as housing, conveyance, utilities, furniture, etc. If the employee owes any money to the employer, the employer may deduct the amount from the employee’s gratuity.
NNRoad provides Professional Employment Solutions to clients, enabling you to hire employees in UAE on your behalf as we serve as the employer of record. We assure the hiring of staff in full compliance with local labor laws and employ best practices to locate and onboard staff members.
By utilizing NNRoad’s PEO services in UAE, any company can launch a business without the requirement to put in minimum capital investments or the need of establishing a separate legal entity which is a lengthy and complex process.
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