How to Hire in UAE

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Hiring in the UAE - Brief Overview

The United Arab Emirates (UAE) has emerged as a powerhouse in the Middle East, attracting businesses with its investor-friendly environment and exceptional growth potential. The country boasts a stable political climate, a pro-business government, low corporate taxes, access to financing, and a strategic location. Furthermore, the UAE has invested heavily in world-class infrastructure, creating a seamless landscape for business operations and global trade.

Beyond its infrastructure, the UAE's true strength lies in its people. The country is home to a highly skilled and diverse workforce. Cities like Dubai, Abu Dhabi, and Sharjah are hubs for expats, attracting talent from over 200 nationalities. 

This multicultural environment fosters innovation and allows businesses to tap into a global pool of qualified professionals.

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Facts & Stats

Population

9.5M

Caspital City

Abu Dhabi

Languages Spoken

Arabic

Currency

UAE Dirham (AED)

GDP Per Capita

$36,285

Ease of Doing Business

16th in the world

Minimun Wage

None, but wage must cover basic needs of employees

Average Wage

25,718 AED/month

Paid Leave

12-30 days from 6 months, depending on length of employment

Labor Laws in UAE

Here's a breakdown of some key aspects:

Emiratization

The United Arab Emirates (UAE) is experiencing a significant demographic shift. While expatriates currently make up the vast majority of the workforce (nearly 89%), the government is actively aiming to change this through a program called Emiratization.

Emiratization is a strategic initiative designed to boost the number of UAE nationals (Emiratis) employed in the private sector. This ambitious plan aims to address the current imbalance and create a more sustainable future for the UAE's economy.

Private companies with 50 or more employees must achieve a 2% annual increase in Emirati hires for skilled positions. The goal is to achieve a 10% overall increase by 2026.

Companies with as few as 20-49 employees are now required to hire at least one Emirati citizen in 2024 and another by 2025.

Failure to meet Emiratization quotas comes with financial penalties. Companies that miss their targets in 2024 and 2025 can expect fines ranging from $26,000 to $30,000.

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Working Hours in the UAE

Employees typically work 8 hours per day, up to a maximum of 48 hours per week. During Ramadan, daily working hours are reduced by 2 hours. 

After five consecutive hours of work, employees are entitled to a break of at least one hour, which is not included in the total working hours.

Minimum Wage Requirements

Unlike some neighboring countries, the UAE has no fixed minimum wage. However, most employers follow government guidelines to ensure a minimum livable salary based on living costs.

Individual Income Tax

Employees pay no income tax. However, certain employees may be subject to social security contributions.

Overtime Pay & Maximum Hours

Overtime is mandatory for non-managerial positions exceeding standard working hours (8 hours/day, 40 hours/week, Monday-Friday). Overtime rates range from 125% to 150% of the base salary depending on the time worked (weekdays, weekends, or nighttime).

Navigating Employment Taxes in UAE

Here's a breakdown of the tax landscape in the UAE:

Employer Tax Contributions

5%

For employees, the estimated contribution towards social security is around 5%, applicable only to Emiratis, with expats being exempt.

Employer Tax

12.5%

Employers in the UAE typically contribute an additional 12.5% on top of the employee's salary towards social security.

Individual Tax

0% - 15%

The UAE does not levy personal income tax. However, as of January 2022, the Ministry of Finance introduced a federal corporate tax on business profits, applicable to domestic businesses across all emirates. Foreign businesses operating in Free Zones remain exempt.

Pension in UAE

The General Pension and Social Security Authority (GPSSA) in the UAE oversees pension services covering old-age retirement, disability, death, and occupational illnesses. Both employees and employers contribute to the pension scheme. Employees are required to contribute 5% of their salary, while employers contribute 12.5%. Additionally, the government contributes 2.5%. To qualify for pension benefits, an individual must have completed 20 years of service and be at least 50 years old.

Understanding Employment Termination in the UAE

Termination of employment in the UAE requires a clear understanding of local labor laws and regulations. Here’s what you need to know about ending an employment contract in the UAE:

Termination Process

In the UAE, both employers and employees can end an employment contract for valid reasons. This involves notifying each other in writing, adhering to the proper notice period, and informing the relevant authorities as necessary.

Legitimate reasons for termination include:

  • Performance or behavioral issues
  • Bankruptcy
  • Insolvency
  • Worker's failure to renew a work permit

Notice Period 

Both employers and employees must provide a minimum of 30 days' written notice for termination.

The notice period should not be less than 30 days or more than 90 days.

Probation Period

Probation periods are mandatory in the UAE. The maximum probation period is typically 3-6 months.

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Severance Pay

Employees are entitled to severance pay after one year of service.  It's calculated as 21 days' wage for each year within the first five years and 30 days' wage for each year after that. For foreign employees, severance pay is capped at two years' wage.

Leaves and Company Policies in UAE

Here's an overview of the various types of leaves and their corresponding regulations:

Annual Leave

Employees in the UAE are entitled to 30 days of annual leave after one year of service. For those who have worked for more than six months but less than a year, they are entitled to two days of paid time off monthly. 

Employees may carry accrued leave to the next year, but this is subject to employer approval and company policies.

Public Holidays

Employees in the UAE are given paid time off on public holidays, which are separate from annual leave entitlements.

Maternity Leave

Female employees are entitled to 60 days of maternity leave, with 45 days paid in full and the remaining 15 days at half pay. This leave can be taken up to 30 days before the expected delivery date and applies in cases of miscarriage after six months, stillbirth, or the death of the child. 

Paternity Leave

Although not mandated by law, some companies in the UAE offer paternity leave of three days or more.

Parental Leave

Both mothers and fathers are entitled to five days of paid parental leave within six months after the birth of a child. This leave can be taken either all at once or in phases

Sick Leave

Employees are entitled to 90 days of sick leave per year. The first 15 days are paid in full, the next 30 days are paid at half, and the remaining 45 days are unpaid. 

This entitlement is applicable after three months following the probation period and must be supported by an official medical certificate. If an employee is sick or has injuries that prevent them from working, they must report to their employer within a maximum of two days.

Bereavement Leave

In the event of the death of a spouse, employees are granted five days of bereavement leave. For the death of a sibling, parent, child, or grandchild, the bereavement leave duration is three days.

Study Leave

Employees who have worked at a company for at least two years are entitled to 10 days of study leave per year. This leave allows them to sit for examinations and is available to those affiliated with an approved UAE educational institution.

Paid Time Off

Employees in the UAE who work five days per week are entitled to a minimum of 30 calendar days of vacation per year, accruing at a rate of 2.5 days per month. 

Employees can only take vacation days after six months of employment at a rate of 2 days per month during the rest of their first year.

Frequently asked questions

What makes Iris unique for hiring in the UAE?

Iris offers an advanced AI talent intelligence platform that includes features like an AI job description generator, AI video interviews, and an advanced applicant tracking system (ATS). Additionally, Iris supports personalized outreach and payroll management, making it a comprehensive solution for hiring skilled professionals in the UAE.

Why is Emiratization important for employers in the UAE?

Emiratization is a government initiative aimed at increasing the employment of UAE nationals in the private sector. It's important for employers because meeting Emiratization quotas is mandatory, and failure to comply can result in financial penalties. The initiative also helps create a more sustainable and balanced workforce in the UAE.

What are the key labor laws employers should be aware of in the UAE?

Employers should be aware of several key labor laws in the UAE, including regulations on working hours, minimum wage guidelines, overtime pay, and social security contributions. It's also essential to understand the requirements for employee termination, severance pay, and the mandatory probation period.

How does termination of employment work in the UAE?

Termination in the UAE involves providing written notice, adhering to a notice period of 30 to 90 days, and notifying the relevant authorities. Valid reasons for termination can include performance issues, bankruptcy, insolvency, or failure to renew a work permit. Employees are entitled to severance pay based on their length of service.

What are the leave policies and entitlements in the UAE?

Employees in the UAE are entitled to 30 days of annual leave after one year of service, with accruals starting after six months. Public holidays are provided in addition to annual leave. Maternity leave is 60 days, with 45 days paid in full and the remaining 15 days at half pay. Both parents can take five days of paid parental leave within six months of their child's birth. Sick leave entitlements include 90 days per year, with varying pay rates.

How can I get started with Iris for hiring in the UAE?

To get started with Iris for hiring in the UAE, you can book a demo or sign up directly through the platform. Iris offers a range of benefits to help you streamline the hiring process. From job description generation to payroll management, Iris makes it easier to build a team of skilled professionals in the UAE.