What Employer of Record to choose in the United Arab Emirates

Last update: April 19th 2023

What Employer of Record to choose in the United Arab Emirates

Recently, the industry of Employer of record is facing several challenges all over the world whilst companies like Deel, Velocity Global, Globalization Partners, Multiplier (amongst many others) received quite large amount of fundings and are expanding to different countries all over the world to provide Employer of Record services.

In this article, we will focus in the Employer of Record that are established in the United Arab Emirates (thereafter referred as to the “UAE”) and are not legally complaint according to UAE legislation.

Firstly, we will do a go-through UAE legislation for you to be able to choose the right Employer of Record for your company, not forgetting about the implications that you may face (and this is applicable all over the world) if you do not choose right local partner.

How to choose your employer of record in the United Arab Emirates

In light of the below, the right license to check if your local partner is complaint or not in the region is: on demand labor supply (temporary employment).

The license must be issued from any Department of Economy (from one of the seven Emirates and not from a Free Zone) and the company should have a MOHRE approval (it is a PDF generated yearly stating in Arabic that the company is still active to provide its services).

Aside if you choose to choose a compliant or not on demand labor supply company (Employer of Record), we highly recommend that you study the consequences of contracting a company that is not compliant with the United Arab Emirates.

Compliance

The regulations that are regulation the Employer of Record in the UAE are the followings:

- Ministerial Resolution No. (1205) for 2013 Licensing and Regulation of Private Recruitment Agencies

- Cabinet Resolution No. (1) Of 2022 on the Implementation of Federal Decree-Law No. (33) of 2021 Regarding the Regulation of Labor Relations

- Federal Decree-Law No.9 of 2022 Concerning Domestic Workers

Ministerial Resolution No. (1283) for 2010 Licensing and Regulation of Private Recruitment Agencies

Article 2 of the aforementioned law states the companies that can employ employees to be working for third parties:

The exercise of each or some of the following activities shall be considered exercising the work of an Agency:

(b) “Temporary Employment” by using the employee for the purpose of enabling a third party (employer), whether that third party was a natural or legal person, to execute a job or service under the supervision and management of that employer. In this case, the Agency becomes an employer with a direct work relationship with the concerned employee.

In the article above, the law explains really clearly the scope where companies can sponsor employees to be working for third companies.

The following article (3) explains further, in order to avoid any discrepancy, the companies that can perform this activity.

a) It is prohibited to exercise any of the Agency activities mentioned in Article (2) of this

Resolution without acquiring written and express permission from the Ministry specifically for this purpose and in accordance with the provisions of this Resolution and the regulations and instructions pertaining thereto.

Furthermore, several companies’ setup in UAE are international and are not UAE owned companies, and this excludes them also to be compliant in the article 4:

The following conditions must be met by all those applying for a permit to practice any of the activities of an Agency:

a- Must be a fully competent Emirati national if a natural person, or that every partner in the company applying for that permit is an Emirati national.

We will not go through all the law article by article as it defines the scope of the activity for the temporary employment agencies along with their strict compliance that they have to do to the Ministries in a timely manner in order to avoid fines or suspension of the license.

Cabinet Resolution No. (1) Of 2022 on the Implementation of Federal Decree-Law No. (33) of 2021 Regarding the Regulation of Labor Relations

Article (9) The activity of Employment Agencies

Subject to the provisions of Article (6) of the Decree-Law, engaging in the activity of mediation or temporary employment and outsourcing (singly or collectively) shall be considered as engaging in the activity of employment agencies. The following definitions shall be used within the scope of work for employment agencies:

b. Temporary employment and outsourcing: Employing the worker with the intention of making him available to a third party, whereas the worker’s relationship becomes a direct one with the agency that outsourced his services to a third party (the beneficiary).

The law continues mentioning the requirements to be an employment or outsourcing agency along with the relationship that they must have with the employees (rights and obligations.

Federal Decree-Law No.9 of 2022 Concerning Domestic Workers

The Federal Decree defines temporary employment agencies as follows:

In this system, an agency hires a worker for the purpose of assigning the worker to a third party (the beneficiary), in accordance with the requirements of this law, to perform a particular category of tasks under the beneficiary’s supervision and direction

Article 4 defines the licensing of the recruitment agencies (temporary employment)

1. Domestic workers may not be hired or temporarily employed without a license from the Ministry, in accordance with the provisions of the Implementing Regulation of this Decree-Law and the decisions of the Ministry relating thereto.

2. Domestic workers may only be recruited or employed in accordance with the requirements, regulations, and procedures stipulated in this Decree- Law, its implementing its Implementing Regulation and the decisions of the Ministry relating thereto, as well as any other relevant legislation in force in the UAE, subject to compliance with any licensing requirements for each occupation, where applicable.

This law explains further the relationship between employees and employers and matters such as safety, wages, leaves, etc., that the temporary outsourcing agency must comply with.

Furthermore, the law goes a bit beyond and stablish the penalties for those companies that are hiring employees to be working for third parties (illegal EOR’s): (article 27.4.a, 27.4.b)

Those who commit the following acts are subject to imprisonment for up to (1) one year, a fine of at least 200,000 dirhams (Two Hundred Thousand Dirhams) and up to 1,000,000 dirhams (One Million Dirhams), or one of the two penalties:

Engaged in any form of mediation or temporary employment of domestic workers without obtaining a license pursuant to the provisions of this Decree-Law, it’s Implementing Regulation, and the decisions issued in implementation thereto.

Not complaint Employer of Record in the United Arab Emirates

1. Deel: Is currently setup in a Free Zone (DWTC)

2. Multiplier: Currently setup in a Free Zone (DMCC)

3. Velocity Global: currently setup in a Free Zone (DMCC)

4. Globalization Partners: currently setup in a Free Zone (DMCC)

5. Go Global: currently setup in a Free Zone (DMCC)

6. Remote.com: currently setup in a Free Zone (DMCC)

Complaint Employer of Record in the United Arab Emirates

1. ADECCO Middle East: holding on demand labor supply license with approval of Ministry of Human Resources and Emiratization.

2. Connect Resources: holding on demand labor supply license with approval of Ministry of Human Resources and Emiratization.

3. Fast Link on Demand Labors Supply Services: holding on demand labor supply license with approval of Ministry of Human Resources and Emiratization.

4. Meethaq Employment Agency: : holding on demand labor supply license with approval of Ministry of Human Resources and Emiratization.

One last piece of advice

There are more companies that are conducting the employer of record activity in the United Arab Emirates without the right license but we believe that recommend to be your company the one checking that your local partner is complaint.

Employer of Record companies in the United Arab Emirates must be owned 100% an Emirati national and hold the approval from Ministry of Human Resources and Emiratization and duly registered in an Economy Department in one of the seven Emirates.

Consulted laws:

- Ministerial Resolution No. (1205) for 2013

- Licensing and Regulation of Private Recruitment Agencies:

- https://www.mohre.gov.ae/handlers/download.ashx?YXNzZXQ9NDMzNA%3D%3D

- Cabinet Resolution No. (1) Of 2022 on the Implementation of Federal Decree-Law No. (33) of 2021 Regarding the Regulation of Labor Relations

https://www.mohre.gov.ae/handlers/download.ashx?YXNzZXQ9NjY1Nw%3D%3D

- Federal Decree-Law No.9 of 2022 Concerning Domestic Workers

https://u.ae/-/media/Mohre-resolutions/Federal-DecreeLaw-No-9-of-2022-Concerning-Domestic-Workers-1.ashx