Before you plan to expand your business in the United Arab Emirates and choose your preferred Employer of record solution, here are a few things that you need to consider.
01. Compliance with UAE Labor Laws
Ensure the EOR provider has in-depth knowledge of UAE labor laws, including Federal Law No. 33 of 2021, which governs employment contracts, gratuity, and visa processes.
The EOR must comply with both mainland and free zone regulations, as these differ in terms of worker rights, employment contracts, and benefits.
02. Experience in UAE Market
Verify that the EOR provider has prior experience managing employment in the UAE. The complexities of the UAE’s multi-tiered regulatory environment (mainland vs. free zones) require local expertise.
For example, free zones like Dubai International Financial Centre (DIFC) have independent employment laws. Proven experience in both mainland and free zones is essential.
03. Visa and Immigration Management
Visa sponsorship and work permits are critical for foreign workers. The UAE has strict rules, including specific visa quotas, which vary depending on the business sector.
The EOR must be proficient in handling Emiratisation requirements, which aim to increase the employment of UAE nationals.
04. End-of-Service Gratuity Management
The UAE mandates end-of-service gratuity for employees based on years of service. This is regulated under Article 51 of the UAE Labour Law, where employees receive up to 21 days of pay for each year of service. The EOR should manage gratuity accurately to avoid disputes during employee exits.
05. Cost Transparency
Pricing structures for EOR services in the UAE can vary widely. Evaluate whether the EOR provider offers transparent pricing that covers all services, including payroll, work permits, visas, and compliance.
Hidden costs, especially related to visa renewals and government fees, can impact long-term budgeting.
06. Understanding of Cultural and Business Etiquette
The UAE has a unique work culture, influenced by local customs and Islamic traditions. The EOR provider must be aware of local holidays (like Eid), prayer breaks, and culturally appropriate working hours during Ramadan. Mismanagement of these nuances can lead to non-compliance or employee dissatisfaction.
07. Payroll in Dirhams (AED) Given that AED is pegged to the US dollar
(1 USD = 3.67 AED), fluctuations in other currencies don’t affect payments in the UAE. Ensure the EOR has a solid payroll management system that disburses salaries in AED, in compliance with the Wages Protection System (WPS), which mandates electronic salary payments.
08. Local Benefits and Compensation Packages
Compensation in the UAE is highly competitive, with many employees receiving additional benefits such as housing allowances, health insurance, and education allowances.
The EOR must be able to manage these benefits in line with local expectations and legal requirements, ensuring competitive offerings to attract talent.
09. Government Relations
The UAE has a complex bureaucracy, especially with the Ministry of Human Resources and Emiratisation (MOHRE) and immigration authorities. The EOR must have established relationships with these entities to handle work permits, visa applications, and renewals smoothly.
10. Track Record and Client Reviews
Always request case studies or client testimonials specific to the UAE market. The EOR’s ability to adapt to rapid regulatory changes, such as recent reforms under Vision 2021, demonstrates their competence in managing evolving requirements in the region.
