Guide to hiring employees in United Arab Emirates

Employee benefits in United Arab Emirates

Mandatory benefits

In the UAE, it is compulsory to register employees with the national government pension programme and contribute to it regularly. All employees working in the UAE that come from countries that make up the Gulf Cooperation Council (Saudi Arabia, Kuwait, Qatar, Bahrain, and Oman) are entitled to pension programmes of their home countries.

The total mandatory pension contribution required by employers is 20% of the employee’s overall salary. These contributions are subject to a statutory minimum and maximum salary amount (AED 1,000 and AED 50,000, respectively), against which the pension contribution is calculated.

Supplementary benefits

When it comes to providing benefits for employees in the UAE, it’s useful to have a strong understanding of the economy and local expectations so that you can provide genuine value for your employees. Your benefits plan must address your workers’ needs as well as give you a competitive advantage in the careers market.

You can offer a variety of supplementary benefits to set your company apart, including:

• Performance awards
• Access to mental health support and counselling
• Training and development courses
• Financial advisory services
• Wellness and health events

Employee rights to be aware of in the UAE

Employees in the United Arab Emirates are entitled to certain rights and protections under the labour laws mentioned above. These rights include:

Equal treatment

Employees have the right to be treated fairly and without discrimination on the basis of race, nationality, religion, gender, or age. Discrimination in hiring, promotion, or any other employment-related decision is prohibited.

Written employment contract

Employees have the right to a written employment contract that clearly outlines the terms and conditions of employment, including job description, compensation, working hours, benefits, and other relevant details.

Wages and payment

Employees have the right to receive their wages on time, usually within a month of completing the work. Wages should be paid in the local currency (UAE Dirhams), and there are regulations in place to ensure the timely payment of wages.

Workplace safety

Employers are required to provide a safe and healthy working environment for their employees. They should adhere to safety standards and regulations to ensure the well-being of workers.

Types of leave available in the United Arab Emirates

Annual leave

• Two days' leave for every month if their service is more than six months and less than one year of continuous employment
• A minimum of 30 vacation days a year if their service exceeds one year of continuous employment

Annual leave is usually calculated on the basis of a calendar month rather than by working days.

According to the New 2022 Labour Law, employees can be required to use up all their annual leave in the applicable annual leave year, and employers are encouraged to update any policies that limit carry-over of leave.

Sick leave

If an employee is sick or has injuries that prevent them from working, they should report to their employer within a maximum of two days.

Employees in the UAE are not entitled to sick pay during their probationary period, but after a period of three months following probation, sick leave is applicable as follows:

• The full wage for the first 15 days
• Half wage for the next 30 days

Any sick leave exceeding 30 days must be taken unpaid. If the illness has been directly caused by misconduct, e.g. excessive drinking, the employee is not entitled to sick pay. Employees are required to provide evidence of their illness via an official medical certificate.

Workers can resign during their sick leave, provided that the reason for resignation is approved by a physician. In this case, employers must pay all the wages the employee is entitled to until the end of the 45-day period of sick leave entitlement.

Employers are not permitted to dismiss an employee during their sick or annual leave unless the employee has used up all of their sick leave and is unfit to return to work. In this instance, the employee should receive a full gratuity and end-of-service entitlement. They will not be entitled to wages for the days they have not reported to work after the end of their leave.

If an employee does not report back to work within seven days from the day they were due back, employers are within their rights to terminate the employment agreement.

Maternity and paternity leave

Maternity leave in the UAE is applicable for 50 calendar days. Maternity pay is as follows:

• Full pay for the first 45 days
• Half pay for the remaining 15 days

Employees are also entitled to take maternity leave if they have miscarried after six months of pregnancy or in the event of a stillbirth or death of the child following birth. This leave will be the same as is detailed above.

If an employee gives birth to an infant with an illness or disability, they are entitled to an additional 30 days of leave, which can be further extended by another 30 days of unpaid leave if necessary.

At the end of the maternity leave, employees are allowed to extend their leave for a maximum of 45 days without pay.

During the six months following the birth of a child, employees who are nursing are entitled to two daily half-hour intervals to nurse their baby. These intervals are considered working hours and should not incur a wage deduction. According to the New 2022 Labour Law, employers cannot terminate an employee because they are pregnant or taking maternity leave.

Paternity leave is not provided for under the New 2022 Labour Law.

Compassionate leave

In the UAE, compassionate leave is as follows:

• Five days in the event of the death of a spouse
• Three days in the event of the death of a parent, sibling, child, grandchild or grandparent

Study leave

Employees who have worked at a company for more than two years can take ten days of study leave per year. This leave allows them to sit examinations. They will need to be affiliated with an approved UAE educational institution to qualify for this leave.

Public holidays in the United Arab Emirates

The UAE observes the following national holidays:

• New Year’s Day
• Eid al-Fitr (celebrated on five consecutive days)
• Arafat Day
• Eid al-Adha (celebrated on three consecutive days)
• Islamic New Year
• Prophet Muhammad’s Birthday
• Commemoration Day
• National Day (celebrated on two consecutive days)
  

Attracting talent in the United Arab Emirates

The UAE’s low-tax environment, low crime rate and advanced business culture make it an excellent choice for business expansion.

However, these factors also make the UAE a competitive environment for companies looking to attract talent. To differentiate your organisation from others in the UAE, consider employee benefit programs that provide a unique experience reflective of the rewarding nature of the UAE market.

Here are some tips on how to hire people in the UAE:

Provide opportunities for career development

A recent study by Michael Page found that 70% of UAE nationals said training and development is among their most-wanted employment benefits.

High performers are always looking for ways to learn new things and will more than likely want to join a company that provides career growth opportunities. These opportunities could take the form of professional development plans or 1-2-1 mentorship. Regardless, organisations should focus on offering potential employees clear information about potential career pathways they can take within the company.

Build policies that promote a good work-life balance

The COVID–19 pandemic introduced some significant changes in the way organisations around the world do business. Employee perspectives changed, and now workers place a high amount of value on companies that promote flexibility and employee well-being.

Interestingly, the Michael Page study found that the majority of UAE employees would prefer to work partially in the office and partially at home. Reasons for wanting to work at least partly in a non-home work environment included wanting to feel more engaged in their job, to take part in face-to-face meetings and to maintain social connections.

Where possible, organisations should offer a flexible working routine that incorporates both remote and non-remote arrangements. 

Exciting projects to work on UAE

A small local population and wealth of energy resources creates opportunities for expat expertise. Because of the huge growth potential in the region, this is even true in areas with strict local content policies. Large capital development projects on the horizon could provide jobs for locals and expats for the next two decades. Not only are they investing $40-60bn dollars to increase oil production, but the nation also plans to invest into diversified energy projects. Consider the Barakah Nuclear Plant, The Mohammed bin Rashid Al Maktoum Solar Park projects, and the showcase event, Expo2020. These three projects place sustainable energy as a key agenda focus.

Hiring best practices in the UAE

Expanding a business to the United Arab Emirates (UAE) involves a series of strategic decisions, including hiring the right talent to ensure the success of the venture. Here are some hiring best practices for companies expanding to the UAE:

Understand local labour laws

Before you start hiring, familiarise yourself with the UAE's labour laws and regulations. Seek legal counsel if needed to ensure full compliance with employment laws and visa requirements.

Local market knowledge

Leverage the knowledge of local experts or global employment outsourcing consultants who understand the UAE job market. They can help you navigate cultural nuances and employment trends specific to the region.

Competitive compensation

 Research salary benchmarks in the UAE to offer competitive compensation packages. Consider benefits such as housing allowances and healthcare, which are often part of employment packages.

Onboarding and orientation

Develop a comprehensive onboarding process that helps new hires acclimate to the company's culture and work expectations. Cultural sensitivity training may be beneficial.

Legal contracts

Ensure all employment contracts comply with local laws and clearly define the terms and conditions of employment, including benefits, termination clauses, and probationary periods.

Performance evaluation

Implement performance evaluation systems that align with local expectations and standards. Regular feedback and goal-setting can help motivate employees.

Employee benefits

Offer competitive benefits packages, including healthcare, retirement plans, and wellness programs, which can be attractive to potential hires.

Talent retention

Focus on employee retention strategies, as turnover can be costly. Provide opportunities for growth and development, as well as a positive work environment.

Market your brand

Build a strong employer brand in the UAE by showcasing your company's values, culture, and career opportunities through various marketing channels and within job postings. Strong marketing can also attract passive candidates who are not necessarily seeking work, but would be open to a career move if the right opportunity presented itself. 

Employee engagement

Engage with employees to understand their needs and concerns. Happy and engaged employees are more likely to contribute to the success of your expansion.

What should the ideal onboarding process look like in the UAE?

The onboarding process in the UAE should be a seamless blend of legal compliance, cultural awareness, and role-specific training. 

Orientation is crucial, introducing your new hires to the company's culture, values, and local business etiquette. Cultural sensitivity training is vital for fostering an inclusive work environment.

Employees should be guided through documentation and contracts, with a clear understanding of their rights and responsibilities under UAE labor laws. Role-specific training should equip them with the skills necessary for success.

Language proficiency, if needed, should be assessed and addressed to facilitate effective communication. Clarify compensation structures, benefits, and end-of-service benefits, and ensure employees understand their rights.

Safety procedures, compliance training, and company policies should be thoroughly explained. Provide ongoing support and feedback channels and foster social integration through team-building activities. Discuss opportunities for professional growth and outline the exit process.

Termination of employment in the United Arab Emirates

According to the New Labour Law, employees must be engaged through fixed-term contracts. These can last for up to a maximum of three years. As of February 2022, employers in the UAE have up to one month to transfer employees from unlimited-term contracts to limited-term contracts.

In the event of a dismissal, in addition to notice, employers must pay compensation of up to three months’ wages if the dismissal results in a valid claim to the court.

Notice period

The minimum notice periods for a fixed-term employment contract, introduced by the New Labour Law, are stipulated as follows:

• 30 days if the period of service is less than five years
• 60 days if the period of service is higher than five years
• 90 days if the period of service is higher than ten years

However, these notice periods are not applied for limited-term contracts, where employees are permitted to agree to a notice period with their employer. This period must be a minimum of 30 days and no more than 90 days.

Probationary periods

The legal probationary period in the UAE is a maximum of six months, according to Article 9 of the Federal Decree-Law No. (33) of 2021.

Severance pay

Employees are entitled to a gratuity for the severed fraction of the year. This is on the condition that they complete one year of continuous service.