[UAE] A brief guide to labour regulations in the United Arab Emirates

With its economic dynamism, expatriate-friendly environment and great quality of life, it is no surprise that the United Arab Emirates (UAE) plays a central role in the strategies of many employers keen to hire international talent in the Middle East.

Over the last two decades, the country has emerged as one of the region’s leading business hubs following enhancements to its infrastructure, business policies and international connectivity, which have all helped foster a large, diverse and vibrant labour market.

But it is worth noting that the UAE’s strengths as a place to live and work can lead some employers to lose sight of the complexities involved in recruiting and retaining talent. Although the market is in many respects international and transparent, it is also home to unique labour regulations and practices that, if not managed carefully, can have serious consequences. Here are some examples of things it is important to bear in mind:

Work visas

The process to secure work visas for expats in the UAE can be more difficult and time-consuming than employers expect, partly due to the number of different government departments involved - between six or seven in total. These range from immigration and health for medical tests to the police department for criminal background checks.

While overarching laws are generally consistent nationwide, each of the UAE’s seven emirates and 40 free zones also have their own rules and regulations too. This means that visa and labour regulations may vary from place to place - even within the same emirate.

On top of this, many other factors, such as employee nationality and place of birth, age and level of education, also have an impact. As a result, visa processing times can vary from between a week and several months.

Payroll considerations

In many ways, the lack of both company and individual taxes in the UAE simplifies the payroll process, but different jurisdictions have different regulations.

Companies that are either onshore or in certain free zones must pay salaries through the Wage Protection System, an online mechanism that enables labour authorities to monitor corporate and employee bank accounts for payroll and visa discrepancies. Real or perceived delays or irregularities here can carry heavy penalties, including high fines for the company itself, and even possible jail time for local managers who may be held personally liable.   

Unwritten employment practices

Employers are sometimes surprised to discover that some standard employment practices are not explicitly referenced in either labour law or employment contracts. For example, it is fairly common for local courts to take a company handbook or country policy into consideration in a dispute case, which means such documents can have legal implications.

Furthermore, corporate practices, such as the granting of certain benefits to a majority but not all employees can become the basis for claims and unfavourable court decisions if they are not applied consistently throughout the organisation. Typical examples here include providing individuals with a higher than average number of paid holiday days or an annual flight ticket home.

Swift pace of regulatory change

In line with the country’s speedy development, the UAE authorities have shown a continued determination to make it easier to employ foreign talent. But improvements in one area are often accompanied by new, or updated, regulations in another, which can leave employers struggling to keep up.

New rules may also be introduced with little warning, and the exact manner in which they must be applied in practice is not always clear. For instance, the sudden introduction in 2017 of penalties for the late filing of financial audit reports ultimately led to the suspension of government services, which severely affected visa-processing activities.

Another example was the introduction of good conduct certificates as a visa requirement in early 2018. This situation led to a number of delays, as some countries were unable to issue such certificates within a reasonable timeframe. Therefore, the regulation was abandoned a few weeks later.

Nonetheless, despite this fast pace of regulatory change, hiring and payroll processes typically run smoothly in the UAE and tend to have little impact on the country’s attractiveness as a destination for employers and top talent.

Gabriela Meyer  

Gabriela Meyer is head of corporate secretarial, legal and HR services at TMF Group in Dubai. Her role includes handling company incorporations, annual compliance and governance, immigration processes, employment contracts and handbooks. Gabriela has more than 20 years’ experience in HR, finance and account management roles working with a broad range of companies.