The Dubai Chamber of Commerce and Industry has reported a 24 percent increase in newly registered companies since last year; in part due to the recent successful World Expo 2020 bid, among other positive economic forces.
As companies look to establish in the UAE, the Gulf state’s economy is expected to boom across many sectors including trade, logistics, tourism and finance, in the process creating thousands of jobs.
The following are 3 important issues to consider regarding employment in the United Arab Emirates (but expert advice should be sought in relation to these and all other employment law issues in the region):
1. Immigration. All non-UAE nationals must obtain a work permit and residency visa which enables them to live and work in the country. This is obtained through employer sponsorship (or a local sponsor), which is registered with the Ministry of Labour. If an employee is employed by an organization which is based in a Free Zone, such as the Dubai International Finance Centre (DIFC) or Jebel Ali Free Zone, the free zone authority will be the employee’s sponsor.
2. Employment Termination. Following a probationary period lasting up to 6 months, generally speaking, employees are entitled to a statutory minimum notice period of 30 days, unless they are being dismissed for one of the permitted reasons such as persistently failing to perform their duties. If there is a dispute relating to employment/termination, it should be raised with the Ministry of Labour, which can submit the matter to court if necessary. Employers may be ordered to pay compensation of up to three months’ salary if it is deemed that the employee was dismissed without fair reason.
3. Employee Benefits. Employees are entitled to 30 calendar days paid holiday after being employed for one year, fully paid sick leave for the first 15 days of sickness absence and basic health insurance. The UAE government does not collect income tax, however, with respect to UAE nationals, both the employer and employee are required to make contributions to the General Pension and Social Security Authority. Employees who have provided more than one year’s service may be entitled to an End of Service Gratuity (ESG).
Read about these and other employment considerations in the UAE in a memorandum authored by Latham & Watkins partner Stephen Brown.
Download our guide to the legal system and laws in the UAE: Doing Business in the United Arab Emirates.
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