United Arab Emirates PEO Services

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Working in United Arab Emirates

Boasting the world’s tallest building, the Burj Khalifa, the United Arab Emirates quite literally ‘stands tall’ as an international business hub. Although probably best known to derive its wealth from the oil and gas industries, recent years have seen the country diversify into other business sectors including transport, financial services and tourism. Made up of seven emirates — including the most populous, Dubai — the UAE could be a suitable stop in many businesses’ global expansion journeys.

Favoured for its low crime rate and relative political stability, the United Arab Emirates is known to be welcoming of (and highly popular with) expats. At the time of writing, approximately four out of every five people in the UAE are expatriates. This means employers there can benefit from tapping into a multi-lingual and culturally diverse workforce.

The creation of several free-trade zones and liberal international trading rules have also made the country a popular choice with foreign investors. It’s fair to say that this robust infrastructure and strong global connectivity has put the United Arab Emirates high up on the list of places businesses must consider when looking to expand internationally.

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Country Guidelines

Visas/work permits in the UAE

All employees working in the UAE must have an employment visa (also known as a work permit).

PEO Worldwide works with a local partner in the UAE that is a duly registered Professional Employer Organisation (on-demand labour supply) based in and constituted under the laws of the United Arab Emirates. This PEO legally employs and sponsors the employee in the United Arab Emirates.

There are two types of sponsored employment visas in the UAE: skilled and unskilled.

It’s a legal requirement for the cost of the employee’s visa to be met by the employer. If the candidate has a partner and dependants in the UAE, they will also need visas. It’s not a legal requirement for the employer to meet the costs of the dependants’ permits. However, it should be noted that employees may negotiate for this to be included in their offer.

A skilled visa classification is for employees with a degree or professions such as lawyers or doctors. When applying for a skilled visa, there are a wider set of designations (1, 2 and 3 — high designations such as director, managing director and head of sales). Unskilled visas, on the other hand, have fewer options. To apply for a skilled visa, the employee must provide us with legalised documentation.

Other provisions

Compensation

Compensation in Dubai is usually comprised of a base salary (50%), housing allowance (35%) and transportation allowance (15%). When drafting the contract, our UAE team will apportion the salary accordingly.

Clients should be aware that employees will often request for the base salary percentage to be higher. They ask for this because they’ll be entitled to receive a higher end-of-service gratuity at the end of their contract. The consequence of this is that clients will be liable to pay a higher end-of-service gratuity to the employee see below).

Repatriation flight allowance

As per UAE law (Article 131), it’s mandatory to provide a one-way air ticket to the employee’s home country at the time of visa cancellation if the employee does not join another company in the UAE.

Overtime

Actual overtime may not exceed two hours per day unless work is necessary to prevent substantial loss or serious accident (or eliminate or alleviate its effects). Friday is the normal weekly holiday for all employees (except for those working on a daily wage basis). If the employee is required to work on a Friday, they shall be granted one day off for rest or paid the basic pay for normal working hours plus a 50% supplement.

Working hours

The maximum normal working hours for adult employees are eight hours per day or 48 hours per week.

Working week

The working week in the UAE runs from Sunday to Thursday, with Friday as the main weekly day off for employees.

Probationary

The maximum probationary period allowed in the UAE is six months, and no extension is allowed beyond this. An initial three-month probationary period is permitted which can subsequently be extended up to six months. However, this would then require an amendment to the labour contract.

Medical insurance

It’s a mandatory requirement for medical health insurance to be provided to the employee in the UAE. We have a selection of packages to choose from with varying
costs. Employees will often request medical insurance coverage for their partner and dependants. Although it’s not a legal requirement for employers to cover these costs, this is considered the market norm for employees in senior job roles.

Annual holiday entitlement

Employees are entitled to 24 days for the first year of service and 30 days after the first year.

Working in United Arab Emirates
Working in United Arab Emirates

Sick leave

During the probationary period, the employee is not entitled to any paid sick leave. Once the employee has completed an additional three months of service post probationary, they’re entitled to sick leave which can be either continuous or intermittent per each year of service. This is calculated as follows:

End-of-service gratuity

An employee who has completed one year or more of service is entitled to an end-of-service gratuity. Days of absence from work without pay are not included in calculating the period of service, and the gratuity will be calculated as follows:

If an employee resigns, they’ll be entitled to this as follows:

Where an employee requests a base salary higher than 50% (or where the total compensation package is particularly high), we would need to invoice a monthly accrual to cover this. Alternatively, we can wait until the 11 th month of employment, where we would invoice a one-off amount covering the total accrued end-of-service gratuity for the year. We would then invoice a pro-rated amount monthly on an ongoing basis.

Dismissal (fixed-term contract)

If the employer has terminated an employment contract with a limited period (for reasons other than those provided for under Article 120), they become liable for payment of compensation to the employee for damages sustained by the individual. This is provided that the sum of compensation in all cases may not exceed the total payment due to the employee for a period of three months or for the remaining period of the contract (whichever is shorter) unless the terms of the contract provide otherwise.

Dismissal (permanent contract)

The employer and employee may terminate an employment contract (permanent/unlimited) for a valid reason at any time after the conclusion of the contract
by providing written notice to the other party. Our contracts provide for the following notice periods as standard:

It may be possible to terminate employment with immediate effect if an employee:

Maternity leave

A working woman is entitled to maternity leave with full pay for a period of 45 days, including the time before and after delivery, provided that her continuous period of service with the employer should not be less than a year. If a working woman has not completed the said period, the maternity leave shall be with half pay.

Paternity leave

There are no paternity leave rules in force currently in the UAE.

Statutory holidays in the UAE

Name of holiday Observations 2020 2021
Eid Al Fitr From the last day of the Islamic month of Ramadan to 3 Shawwal 24 – 26 May TBC
Arafat Day 30 July TBC
Eid Al Adha (Feast of Sacrifice) 31 July – 2 August TBC
Hijri New Year The Islamic New Year is on the first day of Muharram, the first month in the Islamic lunar calendar 23 August TBC
Prophet Mohammed’s Birthday 29 October TBC
Commemoration Day Previously known as Martyr’s Day and observed on 30 November 1 December TBC
National Day AE’s National Day marks the UAE’s formal nationalisation and the start of the Emirates’ federal unification in 1971 2 – 3 December TBC

Note: Islamic holidays are determined according to moon sighting.

Looking for a PEO in United Arab Emirates? At PEO Worldwide, we work with local experts to help you stay on the right side of UAE law.

Get in touch today to see how we can help your business with our employment solutions.

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Published date: 12 January 2021
Review date: 12 January 2022