United Arab Emirates

While there are different ways of engaging talent in the UAE, not all are legal or compliant. Below is an overview of the main options, along with the potential risks.

HQ country employment & payroll
What it is: While a person may physically work in the UAE, employing and paying them directly through the company’s HQ entity abroad is not compliant. UAE labour law requires that workers in the country hold a valid employment visa and contract registered with the Ministry of Human Resources and Emiratisation.
Cons: This arrangement is not legally viable. Without a UAE-issued employment contract and visa, workers are not entitled to statutory benefits such as health insurance, leave, or end-of-service gratuity. It also exposes the employer to penalties and immigration issues.

Independent contractor agreements
What it is: A company may try to engage a worker as a contractor, paying them on an invoice basis.
Cons: This option is not applicable in the UAE. Independent contracting is not recognised, and misclassifying workers is a breach of Labour Law. Employers risk fines, suspension of operations, rejection of new work permits, and employee claims for compensation. Courts may reclassify the individual as an employee, granting them full statutory rights, including leave, gratuity, and notice protections.

Direct local employer setup
What it is: The company sets up a legal entity in the UAE and employs workers directly through fixed-term employment contracts (maximum of three years, renewable). Employers must provide medical insurance, register contracts with the Ministry, and pay salaries via the Wage Protection System (WPS).
Cons: This option is administratively heavy, time-consuming, and costly. Companies must comply with strict local requirements, including visa sponsorship, health insurance, and end-of-service gratuity. Non-compliance can result in fines, blocked work permits, or suspension of operations.

Partnering with an Employer of Record (EOR) or Professional Employer Organisation (PEO)
What it is: Employment is managed through a third-party provider, acting as the legal employer in the UAE. The EOR ensures statutory compliance, manages payroll through the WPS, sponsors visas, and provides required benefits such as health insurance and gratuity, while the worker performs duties for the customer company.
Cons: Costs may be higher than direct employment. Employees may also need education on how the EOR model works, since they expect to be employed directly by the company.

Generally, the process of registering a company in the UAE can take several weeks, depending on the type of entity, required approvals, and whether the business is set up on the mainland or in a free zone. Timelines vary based on the complexity of filings and the authorities involved.

The more challenging part comes after registration. Once a company is set up, it must comply with ongoing obligations, including issuing fixed-term employment contracts (not exceeding three years), sponsoring employment visas and Emirates IDs, providing mandatory health insurance, and ensuring timely salary payments through the Wage Protection System (WPS). Employers are also required to pay end-of-service gratuity and repatriation costs when employment ends, and must adhere to labour law protections around working hours, leave entitlements, and termination. Non-compliance can result in fines, blocked work permits, or suspension of operations, making it important for employers to carefully manage both the setup and ongoing obligations.

Independent contracting is not recognised under UAE labour law. All employment contracts must be issued as fixed-term agreements of up to three years, renewable for similar or shorter periods. Attempting to engage workers as independent contractors in place of employees is considered misclassification.

If a worker is effectively functioning as an employee (working full-time, under company supervision, and dependent on the employer for income) UAE authorities may reclassify the relationship as employment regardless of contract wording. In such cases, courts can apply full statutory rights, including entitlement to leave, end-of-service gratuity, and notice protections.

Misclassification carries serious consequences. Employers risk fines, suspension of operations, rejection of new work permits, and exposure to employee claims for compensation. The Ministry of Human Resources and Emiratisation (MOHRE) may also impose administrative penalties, while courts can treat the arrangement as a valid employment contract. For this reason, independent contractor agreements are not a compliant alternative to employment in the UAE.

Read more on why hiring remote people as independent contractors is a bad idea.

When you hire employees in the UAE, you take on a wide range of obligations as an employer. HR compliance means ensuring that your contracts, policies, and practices align with UAE labour laws and regulations under the Ministry of Human Resources and Emiratisation.

In the UAE, compliance covers areas such as working hours, timely salary payments through the Wage Protection System (WPS), provision of statutory benefits like medical health insurance, end-of-service gratuity, annual leave, maternity and paternity leave, and repatriation costs. Employers must also ensure that contracts are issued as fixed-term agreements, visas and Emirates IDs are properly sponsored, and workplace conditions meet safety and non-discrimination standards.

These requirements are designed to protect employees and guarantee their rights to fair treatment, pay, benefits, and job security. For employers, compliance reduces the risk of financial penalties, suspension of company operations, blocked work permits, and legal claims from employees. In short, HR compliance in the UAE not only ensures employee rights are respected but also safeguards your business against liability and reputational damage.

As with every country, there are statutory costs associated with employing a worker in the UAE that go beyond the gross salary. Employers are responsible for providing certain benefits and contributions in addition to wages.

Key employer costs include:

• Medical health insurance: Employers must provide comprehensive medical insurance for employees. Coverage includes hospitals, clinics, and pharmacies, with details depending on the plan selected.
• Employment visa & Emirates ID: Employers are responsible for the cost of securing a two-year employment visa and Emirates ID for each employee.
• End of service gratuity: Employees are entitled to 3 weeks of basic salary for each year of continuous service. After 5 years, this increases to 1 month of basic salary per year. The gratuity is paid as a lump sum at the end of employment.
• Repatriation costs: At the end of employment, the employer must cover the cost of the employee’s return ticket to their home country, unless the individual transfers to another employer.

In short, the true cost of employment in the UAE extends beyond salary, as employers must budget for visa sponsorship, health insurance, statutory leave entitlements, and end-of-service benefits.

It means that Boundless is the legal employer of the individual, as far as the UAE government, tax, and employment authorities are concerned.

We are responsible for:

• informing you about any pre-employment requirements
• ensuring employment is compliant with UAE labour law
• informing you about entitlements such as maternity and paternity leave, public holidays, health insurance, end-of-service gratuity, and repatriation costs
• providing a locally compliant fixed-term employment contract
• sponsoring employment visas and Emirates IDs
• processing local payroll in line with the Wage Protection System (WPS)
• issuing payslips to employees
• distributing salary payments through compliant channels

Customers who work with an Employer of Record in the UAE are responsible for:

• sourcing and recruiting their own workers
• managing the employee’s day-to-day workload
• contributing to the personal and professional development of the employee through their work
• following any guidance we give on employment and HR best practices or legal obligations in the UAE, such as working hours, leave, maternity and paternity benefits, notice periods, and termination rules
• ensuring that payroll funds relating to their team are paid to Boundless before the cut-off point in each pay cycle

If you employ workers in the UAE through an Employer of Record (EOR), the EOR takes on responsibility for compliance with UAE labour law and statutory obligations, such as sponsoring employment visas, providing compliant contracts, paying salaries via the Wage Protection System (WPS), and managing statutory entitlements.

In the UAE, there is no personal income tax for employees, so employees do not make tax contributions. Employers are, however, required to provide mandatory benefits such as medical health insurance, end-of-service gratuity, repatriation costs, and paid statutory leave.

We carefully choose employment partners and advisers in the UAE to ensure all contracts and processes comply with local labour law and regulations. This includes managing fixed-term employment contracts, visa sponsorship, health insurance, and the Wage Protection System (WPS) requirements.

We also work closely with local experts to stay aligned on specific rules covering working hours, overtime pay, maternity and paternity leave, annual leave, end-of-service gratuity, and termination procedures. Whenever a potentially sensitive issue arises (for example, around notice periods, unfair dismissal, or repatriation obligations), our internal team engages with the relevant local specialists to resolve it promptly and compliantly.

By managing these obligations, Boundless ensures that employment in the UAE is fully compliant, reducing risk for employers while safeguarding employee rights.

The company remains responsible for the day-to-day management of employees hired through Boundless, including supervision, workload, performance, and disciplinary matters.

Boundless, as the Employer of Record, ensures compliance with UAE-specific labour laws and procedures. This includes issuing compliant employment contracts, sponsoring visas and Emirates IDs, providing statutory benefits such as medical insurance and end-of-service gratuity, and ensuring salaries are paid correctly through the Wage Protection System (WPS).

By dividing responsibilities this way, employers can focus on managing their teams and business goals while Boundless handles all regulatory, contractual, and payroll obligations in the UAE.

Yes. Any employee who is locally employed through an Employer of Record in the UAE receives the same rights and statutory benefits as if they were hired directly. They are issued a locally compliant fixed-term employment contract, sponsored for an employment visa and Emirates ID, and enrolled in mandatory health insurance.

Employees also receive statutory entitlements such as 30 days of annual leave, sick leave, maternity and paternity leave, public holidays, end-of-service gratuity, and repatriation costs. Salaries are paid monthly via the Wage Protection System (WPS), ensuring full and timely payment.

In short, employment through an EOR guarantees compliance with UAE labour law while ensuring employees get their full rights and benefits.