Over the years the United Arab Emirates (UAE) has become a dynamic hub for business and investment. With a welcoming free market economy and favorable tax there have been a raft of multi-national organisations who have expanded their business operations into the UAE. However there are many things to keep in mind when setting up business.
Labour Laws in the United Arab Emirates
Interestingly the UAE does, in fact, have no federal tax. In addition to this, whilst each emirate has its own individual tax law none have yet imposed a personal income tax. This may give the impression that doing business is encouragingly simple, however when it comes to work hours and overtime the situation gets a bit more complicated.
Employment in the public sector begins on Sundays and ends on Thursday, however in the private sector schedules are run with much greater freedom. The rate of pay tends also to vary vastly with level of education attained, a high school diploma getting a minimum of 5,000 dirhams whilst those with a bachelor’s degree can expect 12,000.
Work days may also extend to upto 48 hours at the maximum however will usually be around eight. There are however different rules depending in the industry in which one is employed. Construction works for example are not permitted to work in direct sunlight between the hours of noon and 3pm.
There is also a distinct structure for determining overtime pay. Further hours worked on top of regularly contracted mandate recompense of time and a quarter. If one finds themselves however working additional hours between 9pm and 4am overtime pay of time and a half must be awarded. This is also the case if work on a Friday is required, however as it is considered a day of rest another may be offered in lieu. Night-time work (that is, between the hours of 10pm and 7am) usually will not be undertaken by women unless the hold managerial positions or jobs in the medical, technical or service industry.
All employee wages in the UAE must be paid through the electronic salary transfer system known as the WPS (Wages Protection System). Businesses must be registered with the industry of Labour and an account must be maintained with a bank operating in the UAE.
Regulations entitle employees to vacation, holiday, maternity and sick leave. Two paid days per months are given to employees working for their employer for between six months and a year whilst those working there for at least a year are entitled to 30 days. Additionally, Labour Law currently mandates seven paid holidays. After three months of continuous services employees are entitled to fifteen sick days at full pay. Pregnant employees are also eligible for 40 days maternity leave.
There are also regulations in place to determine compensation available upon termination. Those who have completed one or more years of continuous service are permitted to 21 days pay for each of the first five years service and for each additional year of services 30 days of pay. The maximum payout package is two years. Those working less than five years receive a pro rata severance amount, this can however be forfeited where an employee is terminated for cause, fails to give proper notice when quitting or fails to complete a definite-term contract.
Whilst this is the most basic guide to compensation regulations they are not universal. Payroll can therefore be a tricky business sometimes and it can help to have help in these matters.