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Nov 15, 2022 Danny Herbert

12 key considerations for tech companies expanding to Dubai and hiring

Dubai—the most famous of the seven United Arab Emirates—is earmarked to be the world's next global financial hub and has an economy growing at 6.3% per year. Although the emirate was built on oil, it sees its future in tech. It has recently passed legislation strengthening women's rights and has made significant changes to industrial property rights and copyright law—all designed to court foreign tech investment. 

On November 22, His Highness HH Sheikh Mohammed Bin Rashid Al Maktoum announced his ‘We the UAE 2031’ vision, outlining the government’s goals for the next decade. The vision is designed to mirror how many see the UAE as a symbol of economic opportunity in uncertain times and a truly global market.

And the UAE is looking to increase start-up investment to $1.3 billion (up from $400 million). The most sought-after companies are in artificial intelligence, software, data science, and gaming. It is seeking to become a world leader in AI and has recently successfully attracted several high-tech firms, including fast-growing cryptocurrency companies.

Here are 12 key considerations for tech companies expanding to Dubai and hiring.

1. How is the UAE trying to attract tech companies?

During the launch of the Museum of the future (in the picture above), His Highness HH Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, said: "The coming two decades are set to bring about enormous changes that will reshape our world." And the UAE plans to be firmly at the centre of these changes.  

The federation’s NextGenFDI initiative was created to “attract digitally enabled businesses from all over the world and provide them with the necessary market entry fundamentals needed to launch and scale from within the UAE”. It aims to speed up the transition towards a knowledge-driven economy centred around technology and become a global leader in business, investment, and innovation.

So how does it intend to achieve this?

According to the UAE’s Ministry of the Economy, the emirates will drive the transformation by 

  • Establishing rapid incorporation processes to speed up licensing
  • Issuing bulk or golden visas
  • Offering relocation-guidance assistance and affordable education for families
  • Accelerating banking services
  • Creating cloud infrastructure
  • Providing commercial and residential lease incentives for advanced technology companies seeking to relocate to the UAE
  • Cutting business fees to attract start-ups

The overall goal is to make it much easier and more efficient for digital companies to enter the market. However, in June 2023, the UAE will introduce a 9% corporation tax—the first ever. The idea is long-term sustainability and relying less on oil revenues.

2. What does Dubai have to offer tech companies?

Dubai’s physical and digital infrastructure is world-class, and the pro-business environment means entrepreneurs and start-ups have the perfect platform to set up and scale rapidly. 

Dubai is the start-up capital in the MENA region

It leads the region in innovation and is well-placed at the intersection of existing and emerging trade routes.

Dubai is a haven for tech investors

The city’s start-up hub offers excellent tech opportunities for investors and venture capitalists. 

Dubai attracts global talent

The city has rightly earned a reputation for attracting world-class talent. 

3. What business structure is right for a tech company?

To legally hire employees, companies expanding to Dubai traditionally had to open a branch in mainland Dubai or in a free zone. The main difference between the two options is that free zone branch offices are subject to the local authority’s registration and licensing requirements where they operate. 

Here’s a brief overview of how to open a branch in Dubai (in either the city or a free zone):

Choose the right location: Consider which taxation system your business wants to adhere to and the additional facilities you will need.

File an application with the Ministry of Economy: Remember, you may need a local representative agent to be in charge of the formalities and documents.

Draft documents, including Articles of Association and Memorandum of Association: The parent company must state its decision to open a branch in Dubai.

Apply for the correct licenses: Which ones depend on the exact nature of your business. A trading licence allows a company to conduct many activities. 

Open a bank account: If the bank your parent company uses has a branch in Dubai, you can continue to use that account. Otherwise, you will need to open an account with a local financial institution.

Register to pay taxes: Dubai was a tax haven, but from June 2023, businesses will have to pay corporation tax. 

3. Are there any visa considerations?

Companies that open branches in free zones can only apply for visas allowing employees to work in these zones, which are essentially huge office areas. While setting up a business in a free zone is relatively easy, employees of free zone companies can only work in these specific places due to visa restrictions. This arrangement might be acceptable for some companies, but not having access to the whole UAE market could be problematic for others. 

Ensuring that employees have the correct visa permissions to work in the whole UAE is the first step to success. Companies sponsoring employees must first apply for a work permit for the employee from the Ministry of Human Resources and Emiratisation. This gives the employee and employer 30 days (renewable once for another 30 days) to organise a Residence Visa, an Emirates ID, and a Labour Card from the General Directorate of Residency and Foreigners Affairs.

Any employee found to be working in Dubai without a visa, without the correct visa, or for a company that is not legally allowed to sponsor their visa, will be removed from the country. The individual, as well as the company they worked for without the correct permission, run the risk of being banned from operating in the UAE.

4. What should an employment contract contain?

For private sector jobs in Dubai, UAE Labour Law No. 8 of 1980 specifies two types of employment contracts: limited and unlimited contracts. The former is for a specific employment period, generally lasting for up to three years. It may be renewed, and it must include a notice for termination. The latter is open-ended, but to terminate the contract, either the employer or the employee must give between one to three months' notice; otherwise, the wronged party can start legal action. For further information on termination rules, see point 12 below.

Employees must have an employment contract to apply for the right visa successfully. All legal documents in the UAE must be written in Arabic; however, in most cases, employers will have to provide an English translation for employees. A strong contract that details the employee's model of work, probation period, benefits, salary, termination requirements, and non-competition restrictions is highly recommended. 

Offer letters and employment contracts must always state the salary in United Arab Emirates Dirham (AED) and not in a foreign currency. 

5. What are the working hours in Dubai?

Employees can work a maximum of 48 hours per week (eight hours a day). Public employees generally work from 7:30 am to 2:30 pm; however, hours worked in private companies vary and should be stipulated in employment contracts. An important consideration is that during Ramadan, which lasts 29 or 30 days, laws in the UAE stipulate that working hours be reduced by two hours a day.

Until January 1, 2022, the working week was considered to run from Sunday to Thursday; however, it now runs from Monday to Friday.

6. How do holiday entitlements work in Dubai?

Employees are entitled to a minimum annual leave of two days per month during the first year of employment and 30 days of holiday after the second year of employment. However, employees are sometimes given more holidays, depending on how long they have been with the company.

In addition to annual leave, employees are entitled to public holidays off on full pay. The exact dates often vary as the Islamic calendar differs from the Georgian calendar. In 2022, the following days are public holidays. 

Date

Number of days

Holiday

January 1

1

New Year's Day

May 1

4

Eid Al Fitr

July 8

1

Arafat Day

July 9

3

Eid Al Adha

July 31

1

Islamic New Year

October 8

1

The Prophet's Birthday

December 1

1

Commemoration Day

December 2

2

UAE National Day

 

8. Are employees entitled to sick pay in Dubai?

After the probation period (the exact period varies and should be established in the employment contract) and three months of continuous employment, employees are entitled to sick pay. An employee is entitled to no more than 90 days per year of sick leave.

  • First 15 days: full wage
  • Next 30 days: half wage
  • Additionnal time: no wage

9. What are the maternity and paternity rights in Dubai?

Female workers are entitled to 60 days of basic maternity leave.

  • 45 days: full wage
  • 15 days: half wage 

In addition to the above, female workers are entitled to take an additional 45 days' leave without pay if they suffer ill health resulting from pregnancy or childbirth. When the mother returns to work, she is entitled to several breaks a day that last no longer than an hour. These breaks are fully paid and can last up to six months after the baby is born.

New fathers working in the private sector are allowed paid paternity leave of five working days to be taken in the six months after the birth.

10. Do employers have to provide health insurance in Dubai?

In the UAE, healthcare coverage for employers and their dependents is determined by several factors, including the employee's salary.

In Dubai, employers are required to provide health insurance coverage for their employees. And the sponsored individual is required to purchase insurance cover for their resident dependents. However, it is customary for most employers of non-Emirati nationals to provide healthcare coverage for their employees and their dependents.

11. What additional benefits packages must be offered in Dubai?

  • In UAE employment law, employees are permitted to take one-off, unpaid pilgrimage leave of 30 days. 
  • All employees are entitled to compassionate leave if a family member dies.
  • Employees may be paid in currencies other than AED if their employer agrees.
  • Employers with more than 50 employees must establish a grievances policy and a disciplinary sanctions policy. Additional policies are at the company’s discretion.

12. What are the termination of employment rules in Dubai?

UAE law stipulates that both the employer and employee can terminate employment as long as they present a written notice to the other party of between 30 to 90 days.

If the employer wants to terminate employment without notice, they must previously conduct a formal written investigation of the worker. The dismissal notice must be in writing, justified, and presented to the employee.

If an employee has worked at the company for a year and their employment is terminated, they are entitled to severance pay. Generally, an employee is given 21 days' wages for their first five years and 30 days' wages for each additional year.

Would you benefit from an expansion partner with Dubai expertise? 

For tech firms expanding overseas, Dubai is an excellent option. It is business-friendly and doing its utmost to attract firms. However, administrative overheads have a habit of seriously hampering global expansion. Finding out where to set up a branch, ensuring you contact the right ministry, applying for the right visas, and complying with all the necessary employment laws can detract from what you need and want to be doing—growing your business. At the beginning of their expansion journey, firms may crack under the legal and administrative weight of the task.

A locally licenced employment solution with an office in Dubai can help you expand your business without the hassle by opening a virtual subsidiary for you. The right partner will ensure that you are legally compliant and incubate and support your employees until the time comes for you to open your own entity. 

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Published by Danny Herbert November 15, 2022
Danny Herbert

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