How to Hire Remote Employees In

United Arab Emirates (UAE)

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The Basics

Currency
UAE Dirham (AED)
Employer Taxes
12.50%
Payroll Frequency
Monthly
Official Language
Arabic
OVERVIEW

Employment in

United Arab Emirates (UAE)

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors

  • Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
  • Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
  • Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.

Disadvantages of Hiring Independent Contractors

  • Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
  • Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
  • Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
  • Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.
EMPLOYMENT IN
United Arab Emirates (UAE)

Set up a subsidiary in

United Arab Emirates (UAE)

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in UAE can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in UAE, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for UAE.

EMPLOYMENT IN
United Arab Emirates (UAE)

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Hire with Panther

Paying Remote Employees

Paying employees in UAE is not the same as paying workers in your own country. Employees have to be paid using UAE's employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

United Arab Emirates (UAE)

 Specific Information

Working Hours

The work week in the UAE is from Sunday to Thursday with full-time employment considered 48 hours weekly and 8 hours daily.

For businesses, hotels, and cafes employees, the workday is 9 hours.

During Ramadan, working hours are reduced by 2 daily.

Overtime

Overtime pay is paid at a rate of 125% of the regular pay, however, for overtime hours worked between 9 pm and 4 am, overtime is calculated at 150% of the regular pay.

For work on Fridays, the employee is entitled to an additional paid day off and overtime pay at the rate of 150% of the regular pay.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Taxes

Payroll Tax

Employer

12.5%
- Employer Contributions

Minimum Wage

For expatriates, there is no mandatory minimum wage. For UAE nationals, minimum wage is determined by level of education: No high school certificate- 3,000 AED High school certificate- 4,000 AED College degree or higher- 5,000 AED

Payroll

Pay Cycle

If an employee has fulfilled at least one year of employment, they are entitled to 30 days of paid leave a year.  

13th Salary

Not required.

Leave

Paid Time Off (PTO)

If an employee has fulfilled at least one year of employment, they are entitled to 30 days of paid leave a year.  

Public Holidays

7 holidays totaling 14 days.

Sick Days

After 3 months of employment starting from the end of the probation period, an employee is entitled to 90 days of sick leave.  

The first 45 days of sick leave are paid as follows:  

  • First 15 days of illness- leave is paid at 100% of the regular salary  
  • 15-30 days of illness- paid at 50% of the regular salary  

From the 46th day, sick leave is not paid.    

Within the first 2 days of the sickness, the employee must give notice to their employer and produce a medical certificate from a doctor.

Maternity Leave

A woman is entitled to 45 days of fully paid maternity leave if they have completed at least 1 year of employment.

For women who work under the DIFC employment law, maternity leave is 65 days if the woman has worked for at least 1 year.  The first 33 days are paid at a rate of 100% of the normal pay and the remaining 32 days is paid at the rate of 50% of the regular pay.

Paternity Leave

Paternity leave falls under parental leave.

Parental Leave

For private-sector employees, both parents are entitled to 5 days’ paid leave.  The leave can be taken until the child reaches the age of 6 months.

Under the DIFC, pregnant employees are entitled to paid leave for prenatal care.

Termination

Termination Process

The termination of an employment agreement must be given in writing.

For expatriates, the final payment is made when the employment visa is canceled.  In addition, the employer is obligated to notify the authorities when an employee leaves the UAE.

Notice Period

A minimum of 30 days of advance notice is required by law. The employer can choose to give pay in lieu of notice if they so choose.

Under the DIFC employment law, notice period depends on the length of service:

  • 1-5 months of employment- 1 weeks’ notice
  • Up to 5 years or employment- 30 days’ notice
  • 5+ years of employment- 90 days’ notice

DIFC also allows for pay in lieu of notice.

Severance Pay

The amount of severance pay is determined by the length of employment:  

  • 1-5 years of employment – the employee is entitled to 21 days of wages for each year employed  
  • 30 days of wages for each additional year after 5 years of service.   
  • The total amount of severance cannot be more than a total of 2 years’ salary.   

If the reason for termination is not recognized by UAE law, the employee may be entitled to additional compensation totaling 3 months’ pay. 

Probation Period

The probation period can last a max of 6 months.