The UAE remains high on the list of countries companies consider for setting up their business. It has an excellent geographical location combined with state-of-the-art facilities and a powerful economy. Recently, however, the government made some changes to its employment and regulation laws. If you want to set up or expand your business here, understanding all the new laws will be one of your key tasks. The employment aspects affected by this change will include recruitment procedures, staffing budgeting, and day-to-day management.
Once you know which areas were affected and to what extent, you will not only avoid serious consequences like fines but also be able to organize your operations more efficiently with a team that is stable and successful.
The major policy change in UAE employment law is regarding recruitment of UAE nationals to work with their employer. Authorities have introduced a strict quota system to encourage private companies, especially the ones who can afford it, to hire local citizens. This initiative is known as Nafis, and it makes emiratisation hiring a top priority for private businesses.
This law used to be applicable only for businesses with at least 50 employees. Reith 20 to 49: Recently, the regulations were updated and extended to all small companies' workers in some sectors only. So, if your business is a match with this condition, the minimum requirement is one locally hired employee per year. For companies above 50 workers, the percentage of UAE citizens that have to be on board continues to grow by 2% each year.
A failure to comply with such targets can lead to a significant financial penalty. The government will levy a monthly fine for each worker you were supposed to employ but did not. Therefore, when you go through your plans to extend your operations here, it is advised to integrate the local hiring targets into your HR plans and financial budgets early.
Lately, it was decided to change the different kinds of employment contracts a person or company can use. The ones that allowed no limits of time for employees have been taken out of the picture by the government through the revision. A fixed-term contract should be used by each employee. It is possible to work on this type of contract for a period of three years maximum, and still, it is possible to renew it many a time as long as you, the employer, and your employee find the situation agreeable.
Laws today are the reflection of the flexible and modern types of employment that many industries and workers adopt. You will be able to find someone for a part-time job, for example, or someone who will work for you temporarily, or who can do work with your company and also a different employer at the same time without conflict with their other obligations or your own job requirements.
It should provide the companies that grow well with a great number of opportunities, as it gives you more flexibility in working. It is not the usual practice to start with hiring full-time employees at every stage.
Among the main purposes of the new labor policy is the protection of employees' rights. For instance, a very important change happened recently to the regulation of the Wage Protection System (WPS).
Private companies are now required through the new system to pay their workers using this electronic mode of transfer as the only way to show that they are not only being paid the whole salary but also that this payment takes place on time, which is why any delayed payment will result in the blocking (suspending) of a work license (permit) that was granted and, in the case of the company, being fined a substantial amount.
The government has also launched, or made available from the top, a job-loss insurance that is required for anyone who works in the country. Workers from home and those working under a permit will all be registered as members of the program. In the case that their work is terminated, they are entitled to the program through financial assistance.
The main thing to remember is that even though the new policies change your financial priorities, they still require you to invest in the business if you want it to be successful.
You will probably face different sorts of financial pressures, such as:
To balance these costs, many expanding companies use professional recruitment services in UAE. Getting a local agency to assist the recruitment efforts enables you to quickly have the right people but also avoid expensive human resource mistakes.
Here are a number of simple, yet effective, steps on how to expand your business smoothly, without running into issues with the updated laws:
Begin with a thorough examination of your recruitment strategy. Analyze your business, its size, the industry you belong to, and the precise way in which the mandatory employment quotas will affect you. Don't take it as a challenge until the last day of the year because, when seeking out locals, it is hard to find candidates given the level of demand for skilled locals. Avoid using outdated contract models by reviewing them thoroughly. Besides that, you should have the newest versions of staff protection laws included in all employment agreements.
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Your company may face heavy monthly fines for each job slot unoccupied by a local. The government may even stop issuing new work permits or business licenses to your company until the fines are settled and the issues are addressed.
Of course, there is the option of hiring foreign workers. The country actively invites global talent, but you must also make sure that alongside your foreign hires, your company is also hitting local talent targets.
In general, much of the protection on employment is the same for the whole country. Nevertheless, specific local talent targets essentially pertain to Mainland companies. Free zone companies, however, should contact their particular zone authority, as regulations vary often.
Employment contracts have to be fixed-term and may be for a maximum period of three years. However, the end of one period allows the same or a shorter period to be renewed by the same contract.
Agencies know exactly what the local laws are. They can take over your payroll processing on the official systems to ensure your records are correct, identify suitable local talents that can fill up your quotas, and manage the visas so that you can concentrate totally on developing your business.