Labor Laws in The UAE

To hire employees in the UAE, you must first understand UAE’s labor laws that help outline the acceptable ways to establish, hire in, and manage private business organizations.

Conditions of Service

• The UAE labor legislation, formally known as Federal Decree-Law No. 33 of 2021, governs the relationship between an employer and an employee. 

• This law covers all aspects of employment, such as benefits for employees, workplace safety regulations, gratuity transactions, and more. 

• This specific legislation covers laws about foreign workers as well. 

Working Hours

• The standard working hours in the UAE are nine hours per day and 45 hours per week. 

Equality

• Article 4 of the UAE labor laws addresses the issues of equality and non-discrimination in the workplace. 

• Employees shouldn't be subjected to discrimination based on their gender, socioeconomic background, ethnicity, and other factors. 

• The Article also requires equal pay for men and women in an equivalent job title. 

• Article 30 of the labor laws makes it illegal to terminate a female employee’s tenure due to pregnancy. 

Minimum Wage

• While there is no minimum wage in the UAE, Article 27 of the UAE labor laws does mention the possibility of setting a minimum wage if proposed by the Minister and concerned authorities. 

Statutory Benefits

• Statutory benefits in the UAE exist in the form of annual leaves, sick leaves, maternity leaves, end-of-service benefits, etc. 

Health and Safety

• Federal Law No. 13 of 2020 outlining matters of public health should be followed by employers to maintain the health and safety of their employees in the workplace. 

• Employers may also be required to bear the expenses of any employee’s treatment for occupational injuries and accidents.

Payroll and Taxes in The UAE

Payroll in the UAE comes under the following guidelines:

Overtime Pay

• Overtime in the UAE is capped at two hours per day. Employees are allowed to work 144 hours in the three weeks.

• For any overtime work, employees are entitled to 125% of their wage in addition to their normal salary, in case of regular overtime work.

• Overtime on holidays or weekends can be compensated by paying 150% of the normal salary or an additional day off instead of the day worked. 

13th-month Pay

• There is no mandatory 13th-month pay in the UAE.

Employer and Employee Contributions

• The General Pension and Social Security Authority in the UAE receives contributions for the nation's pension and social security payments. 

• Employees contribute 5%, employers contribute 12.5%, and the government contributes 2.5%. 

Income Tax

• As of now, there is no personal income tax in the UAE.

• However, individuals conducting business in the country should pay a 9% tax if their annual turnover crosses 1 million AED. 

Dates of Taxation

• The financial year in the UAE lasts from January 1 to December 31. 
• Hence, all corporate taxes for any financial year should be filed at the end of this period.

Employee Benefits in The UAE

Employee benefits in the UAE ensure employees are given a well-rounded and considerate work environment. 

Leave Policy in The UAE

Paid Time Off: 

• Employees in the UAE are entitled to paid annual leave as per UAE labor laws. 
• Those working for over a year should be granted 30 days of annual leave. 

• Employees working for over six months but less than a year are entitled to 2 days of paid time off monthly.

Public Holidays: 

• As per the leave policy in the UAE, employees are given paid time off on public holidays. 

• Employees are entitled to the following public holidays:

Maternity Leave: 

• Female employees get 60 days of maternity leave in the UAE. 

• Out of these 60 days, 45 days are paid in full, whereas the remaining 15 days are paid in half. 

• A female employee can start maternity leave up to 30 days before the expected delivery date, ensuring it is taken continuously.

Parental Leave:

• There is no separate paternity leave in the UAE. However, some companies give three days or more of paternity leave.
• However, both mothers and fathers have the right to five days of paid parental leave within six months after the birth of their child. 

• Parental leave could be taken in phases or all at once. 

Sick Leave: 

• Employees in the UAE get 90 days of sick leave every year. 

• The first 15 days of the leave are paid in full, whereas the next 30 days are paid in half. The remaining 45 days of sick leave is unpaid leave. 

Bereavement Leave: 

• In the case of the death of a spouse, employees are granted five days of bereavement leave. 

• In situations concerning the death of a sibling, parent, child, or grandchild, the bereavement leave duration is three days. 

Study Leave: 

• Employees working for at least two years are entitled to 10 days of study leave.
  

Compassionate Leave:

• Under UAE labor law, there is no specified number of days for compassionate leave. 
• Compassionate leaves in the UAE are determined by the employer. 

Carry Forward of Leaves:

• Employees are allowed to carry their accrued leaves to the next year. However, this is done only after the employer’s approval and company policies.
  

End of Service Gratuity

• Full-time employees are entitled to end-of-service gratuity in the UAE at the following rate:

• 21 days of wage for each year spanning the first five years of employment

• 30 days of wage for each year exceeding the above period

Healthcare

• Employers are required by law to provide minimum healthcare coverage to their employees. 

• The premium for said healthcare plans cannot be deducted from the employees’ salaries. 

Pension

• The Sharjah Social Security Fund, the Abu Dhabi Pension Fund, and the General Pensions and Social Security Authority handle pension payments.

• Pensions are available to those eligible when they retire or have worked for at least 20 years.

Probation Period

• The probation period in the UAE should not exceed six months as per Article 9 of UAE labor laws. 
• If terminated during probation, employees have to serve a minimum of 14 days of notice period. 

Notice Period

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

Cost of Hiring an Employee in The UAE

The cost of hiring in the UAE is influenced by factors such as:

• Job posting
• Training
• Salary
• Benefits
• Taxes
• Overtime pay
• Statutory contributions

Establishing a Subsidiary vs. Employer of Record (EOR) in The UAE

Top Job Listing Sites in The UAE

The following are the top job listing sites to hire in the UAE:

1. Dubizzle: If you are interested in a user-friendly website for hiring employees in the UAE, then Dubizzle is the right match for you. You will be able to post your job requirements with ease and also shortlist candidates using various filters. 

2. Indeed: Indeed has a huge candidate database, making it a top favorite among recruiters. You can also view CVs, shortlist candidates, and schedule interviews on one platform. 

3. Gulftalent: This job posting website allows you to post job vacancies remaining on the website for 60 days. Furthermore, you can mass-email all your shortlisted candidates and even auto-screen candidates based on your requirements. 

4. Bayt: With over 49,000,000 candidates, Bayt offers a huge candidate pool and AI tools to filter out applicants based on your criteria. Their website also allows you to collaborate with your co-workers during hiring. 
5. ‍Oliv: You can use Oliv for free job postings and filter candidates using their powerful AI tools. Furthermore, every candidate on Oliv goes through a screening process and hence, this website provides a reliable candidate pool.

Compliance Risks of Hiring Employees in The UAE

When hiring in the UAE, businesses must follow UAE labor rules. It might negatively impact the business's image, and potentially suspend business licenses. 

The penalty amounts in UAE are:

• AED 50,000 to 200,000 for employing an individual without any work to provide

• AED 20,000 to 100,000 for providing false information to hire a candidate

• AED 5,000 to 1,000,000 for any non-compliance with the UAE labor laws

How to Hire Talent in The UAE

To hire in the UAE, one of the following ways can be adopted:

Option 1: Establishing a Subsidiary

• Companies can open a subsidiary in the UAE by following the relevant national and local laws.

• However, opening a subsidiary can give rise to compliance risks, higher resource spending, expenses, and so on.

Option 2: Hiring On A Contractual Basis

• Contractual hirings are ideal for short-term projects that require flexibility.

• Companies should ensure all contracts are created to adhere to labor laws to avoid hefty penalties. 

Option 3: Hire an Employer of Record (EOR)- Skuad

• Partnering with an EOR like Skuad is the perfect solution for companies to hire and manage employees in the UAE without risking compliance and excess expenditures. 

• Skuad will also help you manage payrolls, taxes, employee benefits, etc. 

Hiring Trends in The UAE  in 2023

The following hiring trends are currently dominating the job markets in the UAE:

• Most companies based in the UAE are opting for hybrid work systems to enhance employee satisfaction. In fact, a recent survey has shown that 70% of the young population in the UAE prefer hybrid work and hence, companies are aiming to boost productivity by providing a hybrid and flexible working environment.

• Businesses now prioritize teaching skills and mentoring existing employees to better equip them to face workplace challenges. 

• Employers are working towards improving work culture to help employees maintain work-life balance, a healthy mindset, and motivation to get things done. 

• Day by day, companies are becoming more reliant on AI to carry out HR tasks such as keeping track of employee retention, talent gaps, and so on. 

Hiring in The UAE Made Simple with Skuad

The UAE is a melting pot of success, attracting investors and businesses worldwide to its epicenter. It’s important to thoroughly understand labor laws in the UAE amongst other nuances before you start hiring employees there. While this might seem to be a daunting task, Skuad has got you covered!

Skuad enables companies to hire, pay and manage the finest talent in the UAE compliantly, without opening a local legal entity. Book a demo today!

FAQs

1. What is the Labor law for employees and employers in UAE?‍

The Federal Decree-Law No. 33 of 2021 is the UAE labor law that governs all aspects of employer-employee relations. 

2. How can I hire an employee in the UAE?‍

You can use various job posting sites to shortlist, interview, and hire employees in the UAE.