Navigating the Hiring Process in the United Arab Emirates: 5 Key Insights

Hiring employees in the United Arab Emirates (UAE) presents unique considerations, primarily because the majority of recruits for local teams are expatriates, often referred to as expats. These expats necessitate visa sponsorship to reside and work within the UAE. To ensure a smooth hiring process in this region, it's crucial to acquaint yourself with the local laws pertaining to expatriate employment. 

Below are five essential insights to help you navigate the process of hiring an employee in the UAE:

1. Establishing a Legal Entity: In the UAE, establishing a legal entity and acquiring the necessary trade licenses is a prerequisite. This step typically consumes 8 to 12 weeks. During this period, a company cannot directly sponsor an employee's visa. While this process can be challenging and time-consuming, there are more straightforward approaches, which we will explore further.

2. Visa Sponsorship for Expats: Companies are obliged to sponsor work visas and residency permits for expatriate employees in the UAE. The intricacies of this process can vary depending on the geopolitical climate of the region. It's worth noting that the transfer of visa sponsorship for employees from countries like Egypt and Iran can pose challenges, requiring careful handling.

3. Diverse Compensation Structures: Compensation packages in the UAE often comprise more than just a basic salary. They are typically structured as either a flat rate (gross salary) or divided into a 60/40 split, with 60% representing the base salary and the remaining 40% encompassing housing and car allowances. It's essential to note that these figures do not encompass variable components like commissions.

4. Different Business Week: The business week in the UAE follows a unique schedule compared to Western countries. Friday serves as the weekly holiday, and the majority of professionals observe their day off on Friday and Saturday. Consequently, the business week in the UAE spans from Sunday through Thursday.

5. End of Service Gratuity: When hiring employees in the UAE, it's vital to factor in the End of Service Gratuity, which is a mandatory employer-paid benefit. Employees who complete one year or more of service are entitled to this gratuity. It equals 21 days' pay for each year of the first 5 years of service and 30 days' pay for each year thereafter. The total gratuity amount is capped at the equivalent of two years' salary.

By being mindful of these key insights, you can navigate the intricacies of hiring in the UAE more effectively and ensure a compliant and successful hiring process for expatriate employees.