The United Arab Emirates is a popular business-friendly destination with an impressive growth rate in various sectors. With a high quality of life, abundance of talent and a rock-solid infrastructure as the backbone, businesses find it easy to thrive in the UAE.
As with any foreign country, the hiring process in the UAE comes with its own set of challenges. These include understanding the laws, the process for approvals, various authorities and regulations to comply with and so on.
Following are the various things you should consider for a swift and effective recruitment process:
Things to Know Before Hiring in the UAE
A new set of challenges are posed when hiring in a forign land. Following are some of the key factors that influence the overall recruiting process in the UAE:
- Minimum wage
Unlike some of its neighboring countries like Qatar, the UAE has not fixed a minimum wage level based on the professional’s level of education. However, most employers adhere to the government’s guidelines to provide a minimum pay for sustenance as per the cost of living expenses in the country. Therefore, a person with a high school diploma/certificate receives a minimum of AED 400 as minimum wage per month. For a bachelor’s degree, the pay is AED 500 per month. Based on the skills required and the job role, it is advantageous to have the wage levels charted out for better internal payroll budgeting.
- Working time
Another important factor to note while recruiting in the UAE is the weekly working window. The UAE law mandates that the weekly work hour cannot exceed 48 hours for a private enterprise, which roughly translates to 9.6 hrs a day in a 5-day week or 8 hrs per day for a 6-day workweek. It is important to note that during the holy month of Ramadan, the workday timing is reduced by 2 hrs. If employees work beyond these hours, they may be eligible for an overtime payment, which can be an additional 25% of the prorated salary.
In the UAE an employee must contribute 5% of their salary and employer must contribute 12.5%, while the government will contribute 2.5%
- He completes 20 years of service
- He/She is at least 50 years of age
While there is no personal income tax in the UAE, the employees contribute 5% of their salary towards social security. Similarly, the employer too is required to contribute 12.5% of each employee’s salary to social security.
- Public Holidays
The UAE accords 16 public holidays for all working personnel in a calendar year. You can find this list on the UAE government’s web portal.
Aside from the standard government-provided holidays, each employee is allotted annual leaves of 2 days per month. This is applicable after completing 6 months of employment. After completing a year of service, the annual leave limit becomes 30 days. There is also the provision of maternity and paternity leaves which can range from 5 days to 6 months fully paid by the employer. There is also the provision of availing sick leaves, which comes into effect after completing three months of service. The total number of days for sick leaves is 90, out of which 15 are full paid leaves, another 15 are half paid leaves and the remaining 15 days can be availed as leave without pay.
- Notice Period
In the case of termination of employment, both the employer and employee need to provide a minimum of 30 days’ written notice.
- Probation Period
The hiring process in the UAE allows three months of probation period. However, it can be increased to a maximum of six months, based on the nature or technicality of the job.
The Cost of Hiring an Employee in the UAE
The cost of recruitment and selection in the UAE largely depends on the nature of business, the sector and the level of skills required in the role. Some of the standard cost elements include:
- Background Checks: You might have to partner with an agency to generate background checks on particular candidates. These checks include (but are not limited to) employment references, educational qualification, visa/work permit authenticity, legal status and any criminal or civil court cases lodged in the country of residence or work.
- Recruitment, Onboarding and Training: Recruitment in UAE depends on numerous factors, such as sourcing candidates from online portals, partnering with an agency, onboarding employees to the system, training them for specific skills and much more.
- Salaries: Naturally, the salaries you pay to your employees form the biggest chunk of expense. You also need to factor in the end-of-service gratuity amount for each employee who has completed one year of service. This amount is payable when the employee leaves the organization.
- Benefits: Apart from salaries, many employers offer tangible and intangible benefits to attract the best talent. These may include additional paid holidays, dental plans, retirals such as gratuity or pension plans and much more.
- Bonuses: While not mandatory, it is not uncommon for businesses to offer annual employee bonuses to reward and incentivize high performance. These bonuses are usually separate from the basic assured salary package.
- Insurance: Health insurance is another factor you should consider while hiring staff in the UAE. If your business is in Abu Dhabi or Dubai, it is mandatory to provide health insurance to your employees. While this is not mandatory for the other five emirates, it is a widely accepted perk.
What Does a Company Need to Hire Employees in the UAE?
Before beginning the recruitment process in the UAE, it is advisable to acclimate yourself to the country’s laws concerning businesses and employees. Some of the key steps include:
- Establishment of a Legal Entity: This can take anywhere from 2-3 months and involves having a proper legal entity with a valid trade license. There are several types of entities that you can incorporate, all with their own set of requirements and procedures. Partnering with an Employer of Record (EOR) will help eliminate numerous hassles associated with registering local entities.
- Hiring UAE Nationals: You have to publish job postings in online classifieds and job portals, screen the resumes, set up interviews and go through the selection and shortlisting process. Subsequently, you have to present formal offer letters with a clear breakup of the various salary components and the benefits for the employee. You must remember that the benefits should align with the overall Labor Law guidelines and for UAW residents will need to include pension and other retirals. Once both parties have agreed the terms, a formal work contract will be issued for the employee.
- Employee Work Visas: If you are engaging foreign employees to work for you, then you will need to sponsor their visas. While the process for this is standardized, the duration can vary based on the geo-political conditions prevailing at the money. This needs to be carefully thought out and factored in your timelines while hiring staff in the UAE.
- Compliance Management: The UAE is a place of strict rules and regulations and expects all businesses to comply with their laws. Whether you are getting approvals, licenses, employee paperwork, or setting up your payroll system, you must adhere to all aspects of the law. Failure to do so can land you in trouble with the authorities.
Various Options for Hiring Employees in the UAE
The typical modes in which you can hire employees in the UAE are:
- Limited Contract: This contractual employment includes a stipulated period and a clear termination clause. The duration is a maximum of three years, renewable by mutual consent of both parties.
- Partial / Part Time / Flexible Contract: This is the most common form of contract as it does not tie either of the parties for the long term. It can be easily terminated with 30 days of prior written notice.
The Steps To Hiring In The UAE
- Job advertising
Advertising for the job is the first step you must take to build a list of interested individuals. This advertisement must feature the job description as well as your criteria for selection, like education qualification or skill set. You should also incorporate important points in this ad such as whether it’s a work from home opportunity or office based.
- Candidate screening
You have to articulate your requirements in a job description and source applications from various candidates. Furthermore, you should interview the candidate to check if they align with the company’s goals and ethics.
- Cross-checking the employee’s legal status
It is imperative that you check if the candidate is permitted to legally work in the country
- Approvals and Permits
If they legally check out, you need to secure a Labor Card and Immigration Card to hire employees in the UAE. You have to contact the Ministry of Labor for such approvals.
- Job Offer
A formal job offer is important for both parties, as it lists all the intricate details of the role.
- Work Permit
Expatriates coming into the UAE afresh will need to apply for a work permit from the relevant authorities. There are several steps involved in this that include getting medical tests done in accordance to the Ministry guidelines, filling out the documentation and application, going for biometrics verification etc.
- Final Contract
Within 14 days of arrival in the UAE, the final employment contract needs to be formally submitted to the Ministry of Human Resources & Emiratisation (MoHRE).
- Retirement Benefits
For hiring UAE nationals, you also need to consider incorporating a pension plan and other retirement benefits as laid down by the UAE Labor Law. While a pension is not applicable in the case of expat employees, it is mandated by the law for local citizens.
Let Multiplier be Your EOR Platform in the UAE
Hiring in the UAE presents numerous time-taking challenges and requires expert assistance. Without professional help, you might risk compliance issues, leading to hefty penalties. A smarter alternative is to partner with an EOR in UAE and seamlessly set up an international team.
Multiplier’s online platform helps you hire, onboard, and manage employees across 150+ countries. Our services assist you in establishing global teams as per local and international laws. Furthermore, we help you draft contracts, allot mandatory employee benefits, release payments in local currencies and much more, so you can set up your global teams without hassle.