Employer of Record in United Arab Emirates

General Information

• Currency: UAE Dirham (AED)
• Employer Taxes: 12.50%
• Payroll Frequency: Monthly
• Employee Costs: 5%
• Capital: Abu Dhabi
• Fiscal Year: 1 January – 31 December

Main Aspects of the Labour Code

Minimum Wage

General: The UAE Labour Law does not specify a minimum salary, but it requires that salaries must cover employees’ basic needs. Employers registered with the Ministry of Human Resources and Emiratisation (MoHRE) are required to use the Wages Protection System (WPS) to pay employee wages on time.

Under this system, salaries are transferred to employees’ bank accounts at financial institutions authorized by the Central Bank of the UAE.

Payroll

Payroll Cycle: In the UAE, the payroll cycle is typically monthly, with payments made on the last working day of the month.

13th Salary

In the United Arab Emirates, there is no statutory requirement for a 13th-month salary payment.

Working Hours

General: In the UAE, the standard working hours are 8 hours per day, up to 48 hours per week, Monday to Friday. During Ramadan, working hours are reduced by 2 hours daily.

For public sector employees, the working week has been adjusted to four and a half days, with the weekend from Friday afternoon to Sunday. Schools and universities follow a Monday to Friday schedule with a four and a half day working week.

As of 2022, Friday is no longer a mandatory weekly rest day, and many public and private sector companies have adopted a Monday to Friday work week. Employees who need to attend Friday congregational prayers are generally given flexibility, such as remote work options or extended breaks.

Typical business hours are from 08:00 to 13:00, with a break and resumption from 16:00 to 19:00. During Ramadan, work hours may be further reduced, and Free Zones may have different schedules.

Overtime: All work exceeding the standard weekly hours is classified as overtime and regulated by employment contracts or collective agreements. Typically, overtime rates are:

• Nighttime overtime (9 pm to 4 am): 150% of the regular salary rate.
• Overtime at other times: 125% of the regular salary rate.

For work performed on Fridays, employees are entitled to an additional paid day off and overtime pay at 150% of their regular rate.

Leave

Annual Leave (Vacation):

Workers are entitled to a minimum of 30 calendar days of paid leave annually, following one year of service. For employees who have worked between 6 months and 1 year, leave accrues at a rate of 2 days per month. The employer is required to pay the employee’s salary before the start of the annual leave.

Annual leave should be utilized within the designated year unless the company has a policy allowing carryover of unused leave.

Public Holidays

The local government determines each year whether holidays falling on weekends are lost or moved to a working day in lieu.

Religious holidays are based on the lunar cycle and are initially marked as “Tentative” until they are confirmed closer to the date of the holiday.

Sick Days

Employees who have completed three months of service are entitled to paid sick leave up to a maximum of 90 days per year, provided they submit a medical certificate within 48 hours of the first day of sickness.

For the initial 15 days of sick leave, employees receive 100% of their regular salary. For the following 30 days, the pay is reduced to 50%. Any additional sick leave beyond these 45 days in a year is unpaid, totaling a maximum of 90 days per year.

Maternity Leave

Female employees are entitled to maternity leave under the Labor Code, regardless of whether it is specified in their employment contracts.

All female employees receive 60 days of maternity leave. The first 45 days are paid at 100% of their regular salary, while the remaining 15 days are paid at 50% of their regular salary. Maternity leave can be taken before or after the due date.

Additionally, employees can take up to 45 days of unpaid leave for medical conditions related to pregnancy or delivery, provided they present a professional medical certificate.

Upon returning from maternity leave and for up to 6 months post-delivery, female employees are entitled to one or two rest periods per day for breastfeeding, each not exceeding one hour.

Employment cannot be terminated due to pregnancy or maternity leave.

Paternity Leave

There is no additional paternity leave in UAE.

Parental Leave

Private sector employees are entitled to 5 days of paid parental leave. This leave can be taken until the child is 6 months old. Employees must provide proof of the child’s birth when requesting this leave.

Other Leave

Under the labor law, employees are entitled to the following types of leave:

Bereavement Leave:

• 5 days in the event of the death of the employee’s spouse.
• 3 days in the event of the death of the employee’s mother, father, son, brother, sister, grandson, or grandparent.

Study Leave:

• Employees who are affiliated with or studying at an approved UAE educational institution are entitled to 10 days of study leave after completing 2 years of service.

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