Employer of Record (EOR) in UAE

As one of the most vibrant business hubs in the world, UAE offers incredible opportunities for companies looking to enter the Middle East market. With its prime location, excellent infrastructure, and business-friendly environment, UAE attracts businesses globally. However, understanding and following local labor laws, tax rules, and regulations can be complicated for companies new to the region. An Employer of Record (EOR) in Dubai can simplify this process. The EOR manages essential services like payroll, tax compliance, employee benefits, and labor law adherence, allowing you to hire employees in Dubai without needing to set up a local entity.

Using an EOR service in UAE helps businesses save time and resources by handling HR, legal compliance, and payroll processing efficiently. It reduces risks associated with managing a team in a foreign market while ensuring you comply with UAE employment laws and tax regulations. This solution is perfect for businesses looking to hire staff quickly, enter the Dubai market, and scale without the complexities of local regulations.

How an Employer of Record (EOR) Works in the UAE

Expanding your business into the UAE gives you access to a strong and business-friendly market. With its easy regulations, great location, and tax benefits, the UAE is a top choice for global businesses looking to enter the Middle East. However, understanding local regulations, such as UAE labor laws, employee hiring processes, and payroll management, can be tricky. An Employer of Record (EOR) in the UAE simplifies this by acting as the official employer for your local team while you maintain full operational control. This allows your business to scale smoothly without the hassle of setting up a local entity, ensuring compliance with UAE employment laws and payroll tax management.

Compliance

An Employer of Record (EOR) in the UAE ensures your business remains fully compliant with local labor laws, particularly the UAE Federal Labor Law (Federal Law No. 8 of 1980) and its amendments. These laws define the rights and obligations of both employers and employees, covering areas like employment contracts, salary regulations, working hours, and termination procedures. The EOR takes care of all compliance matters, ensuring employment contracts align with UAE standards, such as maximum working hours (48 hours per week), overtime, and leave entitlements. By using an EOR, your business avoids penalties for non-compliance, such as fines or restrictions on employee work permits, safeguarding your operations in the UAE.

Onboarding

An Employer of Record (EOR) in the UAE simplifies the onboarding process by preparing fully compliant employment contracts for your employees, in line with UAE Labor Law. These contracts cover essential provisions such as working conditions, wage protection, and mandatory benefits like health insurance, which is required for all employees in the UAE. The EOR manages the entire hiring and onboarding process, from drafting contracts to ensuring all local regulations are met, including submitting contracts to the Ministry of Human Resources and Emiratisation (MOHRE). This streamlined approach saves your business time and resources, enabling faster expansion and growth in the UAE market.

Payroll Management

Payroll management in the UAE requires strict adherence to legal obligations, including tax compliance and mandatory social security contributions. An Employer of Record (EOR) ensures timely and accurate payroll processing, in line with UAE salary regulations. The EOR also manages essential deductions, including contributions to the General Pension and Social Security Authority (GPSSA) for UAE nationals. While there is no personal income tax in the UAE, businesses must comply with other deductions, such as housing allowance and benefits. The EOR handles these complexities and ensures full compliance with UAE payroll laws, including the Wages Protection System (WPS), which requires employers to pay employees through authorized channels to protect workers’ rights.

Employee Benefits and Leave Administration

The EOR ensures that your employees in the UAE receive the statutory benefits they are entitled to under UAE labor law. Employees are entitled to annual leave (minimum 30 days for full-time employees), sick leave, maternity leave, and public holidays. Additionally, the EOR manages health insurance, which is mandatory for all employees in the UAE, particularly in cities like Dubai and Abu Dhabi. The EOR ensures compliance with these benefit requirements, handling everything from benefit administration to leave management. This reduces the administrative burden on your business and helps maintain employee satisfaction while ensuring that all entitlements are met in accordance with UAE law.

Tax Compliance and Risk Mitigation

Though the UAE has no personal income tax, businesses must still adhere to various regulations, particularly those related to corporate taxes and social security contributions. For UAE nationals, contributions to the General Pension and Social Security Authority (GPSSA) are mandatory, and the EOR ensures these contributions are accurately calculated and remitted. Additionally, businesses operating in the UAE must ensure that VAT compliance is followed as per the Federal Tax Authority (FTA) regulations, which impose a 5% VAT on most goods and services. The EOR takes on the responsibility of filing tax returns, ensuring compliance with all relevant tax laws, including VAT and employee-related contributions, reducing your tax risks and safeguarding your business from penalties.

Things to Consider When Choosing an EOR in Dubai

Choosing the right Employer of Record (EOR) in Dubai is crucial for smooth business operations and compliance with local labor laws. With Dubai’s complex tax regulations and employment requirements, an EOR helps manage payroll, benefits, and legal compliance efficiently. When selecting an EOR provider, ensure they offer transparent services, legal expertise, and cost-effective solutions to meet your business needs. Here are the key factors to consider before making your choice.

Research and Compare EOR Providers

When selecting an Employer of Record (EOR) in Dubai, it is vital to research providers with expertise in the local labor laws, employee benefits, and tax compliance. A reliable EOR should offer services like payroll management, tax reporting, and legal support, ensuring your business adheres to the UAE’s stringent regulations. Look for providers with a proven track record in compliance and transparent pricing with no hidden fees. Furthermore, check the level of customer service, ensuring 24/7 support and dedicated account managers. By choosing the right EOR, you guarantee smooth business operations while ensuring full legal compliance in the UAE.

Legal Compliance

A key consideration when selecting an EOR in Dubai is their knowledge of local labor laws and regulations. The UAE Labor Law, as well as specific regulations regarding working hours, leave entitlements, and end-of-service benefits, must be followed precisely. The UAE also has specific laws concerning employee benefits, such as health insurance and pension schemes for certain nationalities. Ensuring that your EOR provider complies with the UAE’s legal framework, including the Federal Decree-Law No. 33 of 2021 on Labor Relations, will minimize the legal risks and penalties for your business.

Transparent Pricing

When choosing an Employer of Record (EOR) in Dubai, it’s important to focus on clear, upfront pricing with no hidden fees. Look for an EOR provider that includes all essential services like visa processing, work permits, employee benefits, and health insurance in their pricing. Ensure they account for mandatory contributions, such as end-of-service gratuity, to stay compliant with Dubai’s labor laws. Transparent pricing helps businesses plan their budget and avoid unexpected costs while ensuring high-quality HR and compliance services. Always check that any additional charges for extra services are clearly explained.

Service Offerings

When selecting an Employer of Record (EOR) in Dubai, it’s important to evaluate the range of services offered, including payroll management, recruitment, employee benefits, work permits, and full HR compliance. A trusted EOR will manage essential tasks like onboarding, payroll processing, visa support, and legal compliance with UAE labor laws. Choose an EOR that offers tailored solutions, ensuring your business stays compliant while efficiently managing your workforce. Additionally, a top-tier EOR in Dubai should provide scalability, enabling smooth team expansion as your business grows in the UAE.

Technology Platform

When working with an Employer of Record (EOR) in Dubai, having a strong technology platform is key for smooth HR management and compliance. Choose an EOR that offers an easy-to-use, cloud-based platform that makes payroll, employee management, and tracking compliance simple. Look for features like real-time access, automatic payroll calculations, and integration with accounting and HR tools to improve efficiency. It’s also important to have a secure platform to protect employee data and ensure that payroll processes stay accurate and follow Dubai’s labor laws.

References and Reviews

Before selecting an EOR in Dubai, take the time to review client feedback and testimonials. Look for providers with a proven ability to handle local compliance issues, payroll, and employee benefits. Case studies and reviews will give you insights into how well an EOR can support your business and manage the nuances of labor regulations in Dubai. Verify the reputation of the provider through independent sources to ensure they can deliver on their promises of compliance and high-quality service.

Understanding Employment Laws and Regulations in Dubai

Dubai’s employment laws ensure that both employees and employers are protected while maintaining a flexible working environment. Key regulations include:

• Employment Contracts: In Dubai, it is mandatory for employers to issue a written employment contract, which should outline the job role, salary, benefits, working hours, and other essential terms. Contracts can be either limited-term (temporary) or unlimited-term, with the latter offering more stability for employees. Both contracts should comply with the UAE Labor Law, Federal Decree-Law No. 33 of 2021.
• Working Hours and Overtime Pay: The standard workweek in Dubai is 48 hours, typically divided into eight-hour workdays, six days a week. Employees working beyond this limit are entitled to overtime pay, which must be compensated at a higher rate, typically 1.25 times their regular hourly wage. Labor laws ensure workers are also entitled to a rest period of at least one hour for every five continuous hours of work.
• Termination of Employment: When terminating an employee, Dubai employers must adhere to specific procedures, including providing a notice period that varies depending on the length of the contract. For indefinite-term contracts, a notice period ranging from 30 days to 90 days must be provided. Employers must also compensate employees for unused annual leave and any end-of-service benefits.
• End-of-Service Benefits: Under the UAE Labor Law, employees who complete at least one year of service are entitled to end-of-service benefits, which are calculated based on their length of employment and last salary. These benefits are intended to provide financial support to employees when their employment ends, whether through resignation or dismissal.

Employee Benefits and Compensation in Dubai

UAE labor laws provide workers with benefits like annual leave, public holidays, end-of-service gratuity, and health insurance, ensuring their work-life balance and financial security. Employers in Dubai must comply with these regulations to avoid penalties and promote employee satisfaction.

• Annual Leave: Employees in Dubai are entitled to 30 calendar days of paid annual leave after completing one year of service. Employers must provide compensation for unused leave if the employment ends. For employees working less than a year, the leave entitlement is calculated on a pro-rata basis.
• Sick Leave: Sick leave in Dubai is governed by UAE law, allowing employees to take up to 90 days of sick leave in total. The first 15 days are paid in full, the next 30 days are paid at half salary, and any sick leave beyond this is unpaid.
• Parental Leave: Maternity leave in Dubai is provided for a maximum of 60 days. The first 45 days are paid at full salary, and the remaining 15 days are paid at half salary. Paternity leave is granted for five days, which is paid, but it may vary depending on the employer’s policies.
• Public Holidays: Employees in Dubai are entitled to paid leave on public holidays as per the official UAE government list. These include national holidays such as New Year’s Day, Eid al-Fitr, Eid al-Adha, and National Day.
• Health Insurance: Dubai mandates that employers provide health insurance to their employees, covering a range of medical services. This requirement ensures that all workers have access to necessary healthcare services, including treatments and medical emergencies.

Termination and Offboarding in the UAE

In the UAE, terminating an employment contract must comply with strict labor laws to ensure fairness and avoid legal complications. Employers need to adhere to the prescribed notice periods, severance pay, and redundancy procedures to ensure smooth offboarding processes. Failure to follow the correct procedures can result in legal risks and affect the employer’s reputation in the UAE labor market.

Notice Period Guidelines for Employment Termination: The notice period for terminating an employee’s contract depends on the duration of employment, as defined by the UAE Labor Law. If an employment contract specifies a longer notice period than the law requires, the contract’s terms will take precedence. Employers also have the option to offer payment in lieu of notice if both parties agree, as long as this provision is clearly stated in the employment contract. Below are the general notice periods for termination:

• 1 month notice for employees with less than 5 years of service.
• 2 months notice for employees with 5 or more years of service.

Severance Pay: In case of termination, employees in the UAE are entitled to severance pay, which is governed by the UAE Labor Law. Employees are also entitled to any outstanding salary and accrued vacation days upon termination. It’s essential for employers to ensure that severance pay is calculated correctly to comply with the law.  Severance pay is calculated based on the length of service:

• 21 days’ wages for each year of service for the first five years.
• 30 days’ wages for each additional year of service beyond five years.

Redundancy Procedures and Legal Compliance: If a company needs to make an employee redundant, UAE labor laws require employers to follow proper procedures. This includes providing appropriate notice and ensuring redundancy is handled in compliance with the law. Employers may also need to submit notification to the Ministry of Human Resources and Emiratisation (MOHRE), especially if the redundancy impacts a large number of employees.

Employers can opt for severance pay in lieu of notice if mutually agreed upon, but the arrangement should be clearly documented in the employee’s contract. For international companies unfamiliar with the UAE’s complex labor laws, working with an Employer of Record (EOR) in the UAE can simplify the termination and offboarding process. An EOR ensures full compliance with UAE labor laws, helping businesses avoid legal issues and focus on growth.

Payroll and Tax Compliance in the UAE

Handling payroll and taxes in the UAE requires careful attention to the country’s labor laws and tax obligations. Partnering with an Employer of Record (EOR) simplifies payroll management, ensuring compliance while efficiently managing employee benefits, taxes, and statutory deductions.

• Monthly Payroll Management: Employees in the UAE are entitled to monthly wages, and businesses must ensure that salary payments are made on time, in accordance with the employee’s contract. An EOR ensures that all statutory deductions, such as social security contributions and other applicable allowances, are accurately calculated and paid on time. The EOR also ensures compliance with the UAE Labor Law’s wage protection system, which requires all salaries to be processed through a government-approved system.
• Tax Compliance and Reporting: Unlike many other countries, the UAE does not impose income tax on employees, making tax reporting more straightforward. However, businesses must ensure compliance with VAT regulations and other indirect taxes that may apply. An EOR in UAE handles all relevant tax calculations and ensures that the business is compliant with the latest tax regulations.
• Employee Benefits Management: The UAE mandates specific employee benefits, including end-of-service gratuity, health insurance, and paid leave. An EOR ensures that these benefits are properly administered and employees receive their entitled benefits in accordance with UAE labor law. Additionally, any changes in regulations regarding employee benefits will be handled by the EOR to maintain compliance.
• Payslip Compliance: Under UAE labor law, employers must provide employees with pay slips that reflect their earnings, deductions, and net pay. An EOR guarantees that pay slips are issued in compliance with UAE regulations, showing accurate details such as wages, allowances, and deductions, ensuring businesses meet legal obligations.

Challenges and Risks of Using an EOR in Dubai

While an Employer of Record (EOR) in the UAE helps manage compliance, businesses may face challenges such as navigating visa regulations, understanding payroll complexities, and ensuring alignment with local labor laws. It’s crucial to choose an EOR that offers transparency and expertise in handling these hurdles effectively.

• Dependence on Third Parties: Relying on an Employer of Record (EOR) in Dubai means outsourcing critical HR functions, such as payroll and compliance management. This dependency can pose risks if the provider fails to meet service standards, affecting business operations. To minimize these risks, businesses must ensure they regularly monitor and audit the EOR’s performance to maintain smooth operations.
• Compliance Risks: Choosing an EOR without local expertise or experience in Dubai’s labor laws can lead to costly compliance issues. Non-compliance with Dubai’s labor laws, such as those related to wages, employee benefits, and working conditions, can result in fines or penalties. It’s crucial to select a reputable EOR provider with a deep understanding of local regulations to avoid these risks.
• Data Security and Privacy Concerns: Outsourcing HR functions to an EOR involves sharing sensitive employee data, raising concerns about data privacy and security. A breach or mishandling of this data can lead to legal consequences and reputational damage. Ensuring the EOR uses secure, compliant systems and practices is essential to protect both employee and business data.
• Communication and Control Challenges: When you outsource HR processes, maintaining clear communication with the EOR is critical. Lack of transparency or delayed responses can lead to operational inefficiencies and misunderstandings, particularly in areas like payroll and benefits administration. Establishing strong communication channels and clear expectations with the EOR is key to ensuring smooth cooperation and business growth.

Get Started with HRBS EOR Services

Looking to expand your business in Dubai without the hassle of setting up a local entity? HRBS offers the best Employer of Record (EOR) services in Dubai, enabling you to hire employees quickly and efficiently while staying fully compliant with Dubai labor laws. Our comprehensive services cover payroll management, employee benefits, health insurance, and more, ensuring that all HR processes are handled seamlessly. With HRBS, you’ll receive expert support with everything from onboarding to contracts, allowing you to focus on scaling your business.

Our EOR services ensure timely payments, smooth employee management, and compliance with UAE regulations. Avoid legal risks and penalties—trust HRBS for a seamless, compliant expansion into Dubai. Contact us today to streamline your HR and payroll operations and grow your business effortlessly in Dubai!

FAQs About Employer of Record in Dubai

What is an Employer of Record (EOR) in Dubai?
An Employer of Record (EOR) in Dubai is a third-party service provider that helps businesses hire employees and manage payroll, tax compliance, benefits, and legal requirements. It enables businesses to expand into Dubai quickly without the need to set up a local legal entity. With an EOR, companies can easily manage employment contracts and comply with local UAE labor laws.

Is using an EOR legal in Dubai?
Yes, using an EOR in Dubai is completely legal. EOR services are fully compliant with UAE labor laws, which allow international businesses to hire employees in Dubai while maintaining legal compliance. It’s a safe and effective way to expand operations without needing a local entity.

Can an EOR assist with hiring foreign workers in Dubai?
Yes, an EOR in Dubai can assist in hiring foreign workers by managing visa applications, work permits, and ensuring compliance with Dubai immigration laws. This makes the hiring process smoother and ensures all legal requirements are met when employing foreign nationals.

How much does an EOR in Dubai cost?
The cost of using an EOR in Dubai depends on the size of your workforce and the specific services required. While the pricing varies, leveraging an EOR is generally more cost-effective than establishing a local legal entity in Dubai, saving both time and resources.

How can an EOR help with payroll and tax compliance in Dubai?
An EOR ensures that your business complies with payroll regulations, including tax compliance, social security contributions, and employee benefits under UAE labor law. The EOR manages all aspects of payroll, ensuring timely payments, accurate deductions, and adherence to Dubai’s Wages Protection System (WPS).

Why should I choose an EOR in Dubai instead of setting up a local entity?
Choosing an EOR in Dubai allows you to quickly establish a presence in the UAE without the lengthy and costly process of setting up a local entity. It streamlines the hiring process, reduces legal risks, and ensures compliance with local regulations, enabling you to focus on growing your business in the region.