The contract is in English and must be in written form and signed by both parties.
The contract must include name, start date, employment duration, job description, termination conditions, details of the total monthly salary (including breakdown), details of the probationary period and notice period, and the number of annual leave days.
Employees can be hired through fixed – term and limited – term contracts. The contract term is 2 years and can be renewed for the same term. Indefinite – term contracts are not allowed.
Part – time Employees: IC Contracts: ICs need to have a valid resident visa in the UAE.
2. Overview of Local Statutory Welfare Systems
Interns: Interns need to have a valid resident visa in the UAE.
Salary Payment:
Employees are usually paid three to five working days before the end of the pay period. For workers paid annually or monthly, the pay period shall not exceed one month.
All other workers must be paid at least every two weeks. Wages must be paid on working days and the funds are deposited into their bank accounts. Payments can be made in UAE Dirhams or other currencies.
Workers shall not be required to purchase food or other goods from specific stores or buy the employer’s products.
Monthly Minimum Wage: There is no legal minimum wage for foreigners in the UAE.
Probationary Period: The probationary period is usually 3 – 6 months, and legally shall not exceed 6 months.
3. Salary Payment and Statutory Holiday Responsibilities
Employer Costs:
The estimated employer costs vary depending on the employee’s nationality. Social security (only for UAE and GCC nationals) – For UAE nationals, it is 12.5% – 15% of the employee’s monthly salary*. When the salary is below 20,000 Dirhams, the contribution is 12.5%, and when it is above 20,000 Dirhams, the contribution is 15%, with the maximum salary not exceeding 70,000 Dirhams. The costs for nationals of GCC member states may vary.
Mandatory medical insurance – The cost ranges from $300 – $8000 per year, depending on the company’s budget and the employee’s personal situation. In 2024, due to a large influx of population, the cost of commercial insurance in the UAE increased by 30 – 40. For more information on mandatory private health insurance, the medical insurance cost will vary according to the employee’s gender, age, and marital status, ranging from 1,000 Dirhams to 38,071 Dirhams per year (including issuance fees and VAT). The cost is invoiced annually. In the first invoice, this cost will be from the registration date to the next policy expiration date.
Personal Income Tax: The UAE does not tax personal income. The same principle applies to freelancers and self – employed individuals who are residents of the UAE.
Overtime Pay and Maximum Working Hours:
The standard working hours are 8 hours a day and 40 hours a week. The standard working week is from Sunday to Thursday. During Ramadan, the working hours are reduced to 6 hours a day.
Overtime pay must be paid to non – management positions. If management staff work overtime, they can take a day off. Hours outside the standard working hours are also considered overtime. Employees shall not work more than 2 hours of overtime per day and no more than 144 hours of overtime in 3 weeks. For overtime, employees will receive the following compensation: 125% of the hourly wage for general overtime; 150% of the hourly wage between 10 p.m. and 4 a.m.; 150% of the hourly wage on weekends and public holidays.
Statutory Holidays: Employees working five – day weeks in the UAE are entitled to at least 30 calendar days of leave per year. In the first year of employment, 2 days are accumulated per month, and employees can start taking annual leave after 6 months of work. Once an employee has worked for more than 12 months, 2.5 days of annual leave are accumulated per month. The annual leave policies in a few free trade zones are different. For example, in the DIFC free trade zone, employees who have served the company for less than 3 years are entitled to 20 working days of annual leave, and those who have served for more than 3 years are entitled to 25 working days. Employees can take annual leave after serving the company for 3 months.
Treatment or Conversion Logic for Unused Annual Leave at the End of the Year: During employment, the conversion is calculated as (monthly salary / 30) * number of unused annual leave days.
Statutory Public Holidays: The UAE has 15 fixed public holidays, including holidays with fixed dates and movable holidays that change annually, such as New Year’s Day (January 1st), Eid al – Fitr (4 days), Arafat Day, Eid al – Adha (4 days), Islamic New Year, Prophet Muhammad’s Birthday, Commemoration Day (December 1st), National Day (December 2nd and 3rd).
Other Holidays:
Maternity Leave: Pregnant employees are entitled to 45 days of paid leave. During this period, the employer must pay the employee 100% of the salary.
Childcare Leave: Eligible employees are entitled to 5 working days of paid leave within the first 6 months after the child’s birth. After that, they are entitled to 45 days of unpaid leave. Employees must provide a medical certificate when applying for leave.
Sick Leave: After the probationary period, employees are entitled to 15 days of full – pay sick leave, 45 days of half – pay sick leave, and 45 days of unpaid sick leave per year.
Calculation Logic for Incomplete – Attendance Salaries (including Absence or Unpaid Leave): (Monthly salary / number of natural days in the month) * number of absent days.
Local Minimum Wage Required for Split Payroll Work Visas of Expatriate Employees: There is no minimum salary requirement, and the monthly salary of white – collar workers generally needs to be above 2,500 Dirhams.
4. Dismissal Rules and Compensation Arrangements
Whether Local Social Welfare Can Be Withdrawn (e.g., Provident Fund): No.
Dismissal (Legal Requirements and Best Practices):
Notice Period: The notice period during the probationary period is 14 days. After the probationary period, the shortest notice period is 30 days and the longest is 3 months.
Voluntary Resignation: Employees can resign at any time according to the employment agreement. Severance pay includes salary and benefits during the notice period (30 days unless the contract notice period is longer) or payment in lieu of notice, salary for accumulated but unused annual leave days, service termination gratuity if the employee has served for more than one year, repatriation flight/ticket expenses, and any payable bonuses or commissions in the contract.
Dismissal during Probationary Period: Employers are allowed to terminate the employment relationship at any time during the probationary period. Reasons include poor performance, bad behavior, etc. Employers must be prepared to explain the reasons for dismissal, must not discriminate, the probationary period shall not exceed 6 months or be extended for another period, the legal notice period is at least 14 days, and some types of dismissals do not require a notice period by law.
Dismissal by Agreement: Employers and employees are allowed to mutually agree to terminate the employment relationship at any time. Common reasons include potential disputes or lawsuits involving employees. There is no legal requirement for compliance, but it should comply with UAE labor laws and the employment agreement. The legal notice period is 30 days or as stipulated in the employment agreement. Severance pay must be higher than the legally required amount, including salary and benefits during the notice period or payment in lieu of notice, salary for accumulated but unused annual leave days, service termination gratuity if the employee has served for more than one year, and any payable bonuses or commissions in the contract.
Dismissal for Just Cause: Employers are allowed to dismiss employees for willful misconduct. Reasons include serious misconduct, repeated violations of company policies, etc. Employers must conduct an appropriate investigation into the alleged misconduct and hold a disciplinary hearing to allow employees to respond to the allegations or defend themselves. The legal notice period is at least 30 days and at most 90 days. Payment in lieu of notice is allowed. Severance pay includes salary and benefits during the notice period or payment in lieu of notice, salary for accumulated but unused annual leave days, service termination gratuity if the employee has served for more than one year, and any payable bonuses or commissions in the contract.
Conversion of Annual Leave for Departing Employees: When leaving the company, the conversion is calculated as (monthly basic salary / 30) * number of unused annual leave days.
5. Analysis of Local Government Incentive Measures and Policies for Local Company Establishment and Local Employment
Local Employment Protection Policy: Companies with more than 20 employees need to hire local people.
Quota Ratio of Work Permits for Foreign Employees:
Since 2024, companies with 20 – 49 employees need to hire 1 local person. The proportion of local people needs to reach 6%, and the proportion increases by 1% in January and July each year until it reaches 10%.
If the requirement is not met, the company needs to pay AED6,000 per month for the shortfall in the local proportion, and the amount increases by AED1,000 each year.
6. Local Human Resources Analysis and Employment Suggestions
Unemployment Rate: The official unemployment rate as of 2019 was 0.5%. In 2023, the media reported an unemployment rate of 2.95%. [https://www.dsc.gov.ae/en – us/Pages/default.aspx](https://www.dsc.gov.ae/en – us/Pages/default.aspx)
Average Salary Trend: The market salary for fresh – graduate local university students with no experience starts from 13,000 – 15,000 Dirhams.
Employment Suggestions:
Hire appropriately according to different nationalities. Talents of certain nationalities are generally suitable for market development and customer relationship maintenance, while technicians of certain nationalities are stronger.
Pay attention to the diversification of the nationality of self – employed employees, which helps improve the company’s rating at the labor bureau and reduce work permit fees.
Salary payment should be made through WPS for compliance.
7. Local Cultural Adaptation
Language: The official language is Arabic, and English is commonly used. English is widely used in the business field. In addition, there are Urdu and Persian. The former is used by Indians and Pakistanis, and the latter is used by Iranians.
Religious Customs:
Religion: Islam is the state religion. Most residents believe in Islam, with the majority (80%) being Sunnis. Shias are in the majority in Dubai.
Customs: Locals’ traditional clothing features men wearing white robes and white headscarves, and women wearing black robes, black headscarves, and some wearing black veils. In public transportation, some restaurants and other public places, the activity areas for men and women are separated. Muslims must perform five prayers a day and the Jumu’ah prayer on Friday afternoons. Most Arab families still eat on the floor and use their right hands to eat. Emiratis are rough, enthusiastic, and hospitable. They are used to entertaining guests with tea and coffee and especially love desserts. After guests are seated, in addition to tea and coffee, there will also be desserts, chocolates, or dates.
Taboos: According to the religious beliefs of Muslims, the main taboos of UAE residents are as follows: Muslims believe in Allah, and no one should despise Allah’s commands; Muslims believe that all Muslims in the world are brothers and sisters and a family. Usury, gambling, breaking agreements, seizing others’ property, and participating in non – Muslim religious activities are prohibited; Adultery, slandering others’ reputations, sowing discord, and spreading rumors are prohibited. Everyone must follow the teachings in the Quran and use them to guide daily activities; Pork, horses, donkeys, dogs, snakes, turkeys, carrion, floating fish, and the blood of all animals are forbidden. Drug use and alcohol consumption are prohibited; During Ramadan, try to avoid eating in public places, outdoors, or on the streets, except for special groups such as children, pregnant women, and patients; Do not enter the mosque wearing pajamas, clothes with images, or inappropriate words.
Business Culture:
When doing business with UAE merchants, important matters must be followed up.
Arabs are used to greeting each other more than ten times before getting down to business when meeting. Unless they are very close friends, one should only greet their family and not their wives. Banquets are usually held in outside restaurants. If a banquet is held at home, the hostess often does not appear.
When entertaining guests with coffee, usually a half – small cup of boiling coffee is poured from a thermos. After drinking, the waiter will continue to refill unless the guest shakes the small cup with the thumb and middle finger to indicate that it is enough.
Most Arab families still eat on the floor and use their hands to eat. It is best to follow local customs when being a guest.
The UAE is the hottest in July and August every year, sometimes reaching up to 50°C. Especially in August, most local government department and enterprise leaders go abroad on vacation, so it is not advisable to arrange visits during this period.
Respect local religious beliefs. Try not to discuss religious topics with foreign employees to avoid arguments. Provide convenience for employees with religious beliefs and actively offer congratulations on holidays.
When interacting with locals, it is not advisable to actively ask about a man’s wife. When interacting with women, one can only greet them briefly, cannot talk to them alone or for a long time, cannot stare at their clothes out of curiosity, and cannot take pictures of them. Men are not allowed to enter areas where women are active.
There are many holidays in the UAE, and there is also a one – month – long Ramadan. Although people work half – days in the morning during Ramadan, it is actually difficult to get things done. Therefore, when visiting, doing business, or holding exhibitions in the UAE from other countries, one should avoid local holidays and Ramadan.
