The land of the United Arab Emirates is a vibrant place attracting business worldwide with its magnetic charm. It makes UAE a business hub; one that seeks global attention. Businesses find themselves keen on tapping into the dynamic market of this country to win their race for expansion and development. As companies aim to progress, they opt for ways that will keep up with them in help them succeed. One of these ways is partnering with an Employer of Record (EOR) in Dubai.
If you aim to reach the highest peak of development and success, Connect Group has brought this guide that will assist you in climbing to the top. This article is meant to explain EOR in the UAE in a comprehensive way.
We dive deep into the concept of an Employer of Record Dubai, the benefits that come with choosing an EOR, its role in simplifying business operations, and the way it helps companies navigate the legal complexities of UAE’s labour laws.
We brought you this article to give valuable insights to businesses that are considering expansion in the UAE using an EOR.
Continue reading to learn more as we unfold the many aspects of EOR in the UAE.
Responsibilities of EOR in UAE (Employer of Record)
In the UAE, the Employer of Record (EOR) takes on the following responsibilities:
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- Ensure that the worker’s employment adheres to the legal framework of the UAE
- Properly control the local payroll procedure
- File required documentation and taxes that are connected to employment
Employer of Record (EOR): An Introduction to What An EOR Is
So what an EOR even is? Employer of Record or EOR is a third-party organisation. EOR hires and manages employees on behalf of a company.
An Employer of Record Dubai helps companies quickly expand their businesses in the UAE. This has great advantages for businesses that are looking to expand internationally. At the same time wish to avoid the complexities and costs associated with setting up a legal entity in a foreign country.
Purpose of Employment Of Record
Everything has a purpose and something as significant as an EOR definitely has some important ones. Some of these highly important purposes and benefits of EOR are:
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- to handle all administrative and legal aspects of employment
- Provide flexibility to scale the workforce
- Provide valuable local insights
- Help attract and retain talent
Let EOR Handle All Administrative and Legal Matters
An EOR in Dubai is responsible for handling all administrative and legal aspects of employment. These administrative and legal aspects encompass the following:
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- payroll
- administering benefits
- ensure compliance with the local labour laws in Dubai
Ideal for Businesses with Fluctuating Demand
EOR provides businesses with the flexibility to scale their workforce. For industries that have fluctuating demand or need a specific team for a shorter duration project, EOR can be an ideal answer.
Fluctuating demand means companies are not open to hiring long-term as they need resources for specific projects for a defined timeframe. On the other hand, it can also translate to companies having to bring more hands on deck to tackle a bigger project. An EOR is the perfect solution for these industries.
Make Informed Decisions with Valuable Local Insights
Those who have a greater understanding of the local labour market can surely help with some related insights. Employer of Record (EOR) in Dubai can definitely help by providing valuable local insights as they have a deep understanding of the UAE’s labour market. Their knowledge includes being up to date on the latest employment trends as well as the legal infrastructure of the UAE. This knowledge can help businesses big time in making informed decisions. It can also help in avoiding any downfall that comes with little or no knowledge of the local scenario.
Top Talent: Attract and Retain
Attract and Retain top talent with EOR. An EOR can help businesses in navigating the UAE’s labor market to find the right talent for their needs.
An EOR helps in matching ideal candidates with businesses looking to hire great talents. Employer of Record helps companies attract and retain top talent.
EOR and Employment Contracts in the UAE
Employment contracts are not an insignificant matter. They are crucial in all things involving employment. It is necessary to understand the terms mentioned in your employment contracts.
In the UAE, employment contract comprises the following:
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- Working hours
- Bonuses
- Probation period
- Termination and Severance
- Eligibility for overtime
- Public Holidays
Working hours
A Typical Work Week in the UAE
In the UAE, the working week is Sunday to Thursday and the weekend is Friday and Sunday.
Working Hours in UAE
In UAE, the maximum working hours are 8 hours per day or 48 hours per week.
An Employer of Record Dubai can help businesses navigate these unique working hours. EOR ensures that the company’s operations align with the local working culture and legal requirements. This includes:
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- Managing shift schedules
- Managing overtime
- Ensuring that employees receive adequate rest periods
An EOR Dubai can help manage changes in business hours during Ramadan as the working hours are reduced to two hours per day across all sectors for this month. Employment of Record ensures business continuity during this period.
Bonuses: A token of appreciation
In several organizations, bonuses are incentives that are integral as part of compensation for many employees. These bonuses are generally a reward for employees meant as a token of appreciation.
Bonuses are an important part of employee compensation in many organizations typically awarded as a token of appreciation for their hard work and contribution to the company’s success.
Bonuses differ as per the company’s policy and the employee’s performance since they are not declared mandatory by the government.
EOR and Bonus Structure for Businesses
An Employer of Record can help manage the bonus structure for businesses. EOR can also advise on the local market standards for bonuses ensuring that the company’s bonus structure is competitive and in line with the local practices. This can help attract and retain top talent in the UAE.
An EOR can handle the following administrative aspects of bonuses in Dubai:
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- calculating the bonus amounts
- processing the bonus payments
- ensuring compliance with tax laws of the UAE
- provide guidance on best practices for bonus structures
- help design a bonus structure that is fair, transparent, and motivates employees to perform at their best
Probation period
Duration of Probation Period
In the UAE, the probation period is six months.
Termination of Contract During Notice Period
Either the employee or the employer can terminate the employment contract without notice during the probation period.
Probation Period and EO’s role
An Employer of Record plays a crucial role during the probation period. EOR ensures that the terms of the probation are clearly defined in the employment contract. The terms of the probation include:
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- the length of the probation period
- the performance expectations
- the conditions for termination
Employer of Record is present to support both employer and employee during the probation period. Employers are guided by EOR on their performance management and legal compliance whereas employees are provided the necessary support and feedback for them to succeed in their roles.
Administrative Tasks Managed by EOR During Probation Period
An Employer of Record manages the administrative aspects of the probation period. These administrative tasks include:
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- tracking the length of the probation period
- managing performance reviews
- processing any necessary paperwork
Termination and severance
A critical and sometimes ugly side of the employment cycle is termination. The topic does not call for silence or hushing, however. It is important to address these things in an effective manner taking an approach that suits both parties.
In the UAE, the laws of the termination process are in place to ensure fairness as well as protect the rights of both the employees and employers.
Role EOR Can Play in Cases of Termination
An EOR can be a valuable support during the termination process. They can provide businesses with insights into the legal requirements, making sure that the process of termination is handled professionally and ethically. This includes:
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- providing notice
- calculating severance pay
- managing the final settlement
Role EOR Plays in Cases of Severance
Known in the UAE as end-of-service benefits or gratuity, severance pay is calculated based on the employee’s salary and length of service. An EOR in the UAE can handle the calculation and payment of severance pay ensuring compliance with UAE labor laws.
Moreover, an Employer of Record can provide support to employees during the termination process. This support is comprised of
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- providing clear communication
- managing exit interviews
- assisting with job transition
Overtime Eligibility
In the UAE, overtime is a common practice for many industries. It is a way for businesses to meet their operational needs as well as for employees to earn some sweet additional income. However, overtime is subject to specific rules and regulations of a country to ensure fair compensation and prevent exploitation.
Notice Period
Duration of Notice Period
The required notice period in the UAE is one month. EOR makes it certain that the terms of the notice period are not violated.
EOR and Managing Eligibility for Overtime
Payable Overtime Rates
An Employer of Record can help businesses manage eligibility for overtime. They can guide the UAE’s overtime laws which set forth the terms that overtime is payable at a 25% rate above the normal pay rate. The rate increases to 50% if overtime work is performed between 9 pm and 4 am.
Aspects of Overtime
Moreover, an EOR Dubai can handle these features of overtime that encompass the following:
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- tracking overtime hours
- calculating overtime pay
- ensuring that overtime payments are made following UAE labor laws
Additionally, the Employer of Record can ensure that the employees understand their rights and obligations when it comes to qualifying for overtime and that they are fairly compensated for their overtime work.
Public Holidays
Public holidays are an essential part of the rich cultural heritage of the UAE society. These holidays are times to celebrate, reflect, and rest.
UAE observes several public holidays each year, such as:
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- National Day
- New Year’s Day
- Eid Al Fitr
- Eid Al Adha
Role of EOR in Navigating Public Holidays in the UAE
An Employer of Record helps businesses navigate the public holidays in the UAE. They can guide the UAE’s public holiday laws, which clearly state that employees are entitled to paid leave on public holidays.
An EOR Dubai can help manage the administrative aspects of public holidays, such as:
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- adjusting work schedules
- managing leave requests
- ensuring that employees receive their entitled holiday pay
In addition, an Employer of Record in the UAE can help businesses navigate the complexities of holidays in the UAE. They can provide insights into the significance of these holidays, helping businesses to respect and celebrate these important cultural events.
Leave entitlements in the UAE
Annual Leave
Annual leave is an aspect of employment that contributes to a healthier work-life balance. Entitlement to Minimum of 30 Days of Annual Leave
In the UAE, employees are entitled to a minimum of 30 calendar days of annual leave after one year of service. This is in addition to public holidays, providing employees with ample time to rest and rejuvenate.
Management of Annual Leave by EOR
An Employer of Record Dubai can manage the annual leave process for businesses. They make sure that the company’s annual leave policy complies with UAE labor laws. They also handle the administrative aspects of annual leave, such as:
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- tracking leave balances
- managing leave requests
- provide support to employees during their annual leave
- ensure that employees can take their entitled leave without any disruption to pay or benefits
- help businesses manage the impact of annual leave on their operations
Provide strategies for managing workload during peak leave periods and ensuring business continuity
Parental Leave
Parental leave is a significant aspect of employment benefits, allowing parents to take time off work to care for their newborn or newly adopted child. In the UAE, the labor law provides maternity leave for female employees. However, paternity leave is not mandated by law but is granted by some companies.
Managing Parental Leave Policies
An Employer of Record Dubai can assist businesses in managing parental leave policies. They ensure that the company’s parental leave policy is per the UAE labour laws and market practices. This consists of:
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- managing leave requests
- tracking leave balances
- ensuring that employees receive their entitled benefits during their leave
An EOR in Dubai can provide support to employees during their parental leave. They support in the following ways:
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- employees can take their entitled leave without disruption to their pay or benefits
- guide transitioning back to work after parental leave.
- help businesses navigate the complexities of parental leave in the UAE
- insights into market trends and best practices
- help businesses to develop competitive and inclusive parental leave policies
Sick Leave
Sick leave is a vital employment benefit that allows employees to take time off work when they are ill.
Duration of sick leave
In the UAE, employees are entitled to sick leave of 90 days per year. This is however subject to conditions stipulated in the UAE labour law.
EOR: Providing Support to Employees During Sick Leaves
An Employer of Record Dubai can manage the sick leave process for businesses. They ensure that the company’s sick leave policy complies with UAE labor laws.
Moreover, an EOR Dubai can provide support to employees during their sick leave. They ensure that employees can take their entitled leave without disruption to their pay or benefits.
Employee onboarding with an employer of record in UAE
This process involves introducing new hires to the company’s culture, expectations, and procedures. An Employer of Record can make the onboarding process smooth for businesses expanding in Dubai, UAE.
All Onboard the Employment Ship with EOR
Firstly, an EOR Dubai can handle all the administrative aspects of onboarding.
Aspects of Onboarding Managed by EOR
The administrative aspects of onboarding include:
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- preparing employment contracts
- setting up payroll
- ensuring compliance with local labor laws.
By outsourcing these tasks, companies can spend their time sparing their attention on their business operations.
Moreover, an Employer of Record UAE can assist the new hires in the following ways:
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- provide a comprehensive introduction to the company and its culture
- organize orientation sessions
- provide training materials
- facilitate meetings with team members.
This can help new hires feel welcomed and integrated into the team from day one.
Managing the Ongoing Aspects of Onboarding
In addition, an EOR in Dubai can manage the ongoing aspects of onboarding. The ongoing aspects of onboarding are:
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- tracking the progress of new hires
- providing feedback
- addressing any issues or concerns that may arise
- provide support to managers helping them to effectively onboard and manage their new team members.
- provide valuable local insights during the ongoing onboarding process.
Employer of Record understands the local business culture and can guide how to navigate it successfully in the UAE. This can be particularly beneficial for companies new to the UAE market.
Contractors vs. Full-time Employees: What’s the difference?
Sometimes the benefits make all the difference. Weighing the benefits of contractors against full-time employees can help you better understand the main distinction between the two.
Benefits of Hiring Contractors
Hiring contractors offers several advantages for businesses, particularly those looking to expand in dynamic markets like the UAE. An Employer of Record Dubai can facilitate the process of hiring contractors, ensuring compliance with local laws and regulations.
Flexibility and Fluctuating Workloads
For example, contractors provide businesses with flexibility. They can be hired for specific projects or periods, reducing the need for long-term commitments. This is particularly beneficial for businesses with fluctuating workloads or those undertaking short-term projects in the UAE.
Embrace the Cost Effectiveness
Additionally, hiring contractors can be cost-effective. Unlike full-time employees, contractors are not entitled to certain benefits such as paid leave or health insurance.
Specialized Skills and Expertise
Moreover, contractors often bring specialized skills and expertise to the table. They can provide businesses with access to a diverse range of talents and competencies, which can be particularly beneficial in a competitive market like Dubai.
Benefits of Hiring Full-time Employees
Hiring full-time employees offers several advantages for businesses, particularly those looking to establish a long-term presence in markets like the UAE. An Employer of Record Dubai can facilitate the process of hiring full-time employees, ensuring compliance with local laws and regulations.
Appreciate Stability
Initially, full-time employees can provide stability and continuity to a business. They are more invested in the company’s success and stay for a longer period. This can result in lower turnover rates and higher employee loyalty.
Performance and Productivity
Besides, full-time employees often have a deeper understanding of the company and its culture. They are immersed in the company’s operations and are more likely to understand its values, goals, and processes. This can lead to improved performance and productivity.
Strong team culture and Cohesive work environments
Moreover, hiring full-time employees allows businesses to build a strong team culture. Full-time employees can contribute to a positive and cohesive work environment, which can boost morale and productivity.
In addition, an Employer of Record Dubai can handle the administrative aspects of hiring full-time employees. This includes:
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- drafting employment contracts
- managing benefits
- ensuring compliance with local labor laws
Taxes and social security in the UAE
Tax thresholds
Understanding tax thresholds is crucial for businesses operating in any country. In the UAE, one of the key attractions for businesses and individuals alike is the absence of personal income tax. This means that employees do not have to pay tax on their income, which can be a significant advantage when attracting international talent.
Role of EOR in tax planning and compliance
An Employer of Record Dubai can provide valuable guidance on the UAE’s tax laws. They can ensure that businesses are aware of their tax obligations and help them navigate the complexities of the UAE’s tax system. This includes providing advice on tax planning and compliance, and managing tax filings and payments.
Furthermore, an Employer of Record Dubai can handle the administrative aspects of tax compliance, including:
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- preparing and filing tax returns
- managing tax payments
- dealing with tax authorities
This can save businesses significant time and resources, allowing them to focus on their core operations. Besides, an Employer of Record in the UAE can provide businesses with up-to-date information on any changes to the UAE’s tax laws.
Health insurance
Health insurance is a critical aspect of employment benefits. In the UAE, employers are required to cover health insurance for the employees. This is a significant advantage for employees and can make the UAE an attractive location for international talent.
Managing Health Insurance Processes for Businesses
An Employer of Record Dubai can manage the health insurance process for businesses. They can guide the UAE’s health insurance laws and market practices. This includes selecting a suitable health insurance plan, managing the enrollment process, and ensuring that employees understand their health insurance benefits.
Moreover, an Employer of Record Dubai can handle the administrative aspects of health insurance, including:
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- managing premium payments
- handling claims
- liaising with health insurance providers
This can save businesses significant resources, allowing them to focus on their core operations. In addition, an Employer of Record UAE can support to employees regarding their health insurance. EOR can provide support in the following ways:
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- help employees understand their health insurance coverage
- guiding how to access their benefits
- guide dealing with health insurance claims
- resolving any issues that may arise
Pensions
Pensions are a significant aspect of employee benefits, providing financial security for employees after retirement. In the UAE, there is a government-mandated pension scheme for UAE nationals. However, expatriate employees are entitled to an end-of-service gratuity instead of a pension.
Managing the Pension Process
An Employer of Record Dubai can manage the pension process for businesses. They can guide the UAE’s pension laws and ensure that businesses fulfill their pension obligations. It consists of:
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- calculating pension contributions
- managing pension payments
- ensuring compliance with local pension laws
- provide support to employees regarding their retirement
- ensure that employees understand their pension benefits and how to access them
- provide guidance on planning for retirement and managing pension funds.
Conclusion
Employer of Record is ideal for businesses that are expanding in the UAE. EOR handles a long list of responsibilities ranging from managing employment contracts to ensuring compliance with the labour laws of the UAE.
Employer of Record (EOR) provides local insights and expertise to businesses in the UAE as they understand the business culture of the country. EOR helps in guiding businesses with the complexities of operating in the UAE.
EOR also manages the aspects of working hours, handling bonuses, and dealing with the complex natures of probations, terminations, and notice periods.
EOR is an important partner for many businesses in the UAE that aim to expand. EOR, in conclusion, offers a wide range of solutions to businesses. Their approach is smooth and legally compliant which contributes to making the businesses a success in the markets of UAE.
If you are interested in finding out more about the benefits of EOR, do not hesitate to reach out to us!
