What is a Professional Employer Organization (PEO)?

A professional employer organization (PEO) leases workers to a business, with the parties sharing obligations and liabilities. With the PEO handling essential HR tasks like hiring, onboarding, and payroll, this arrangement is especially advantageous when hiring remote workers in another nation.

Hiring remote workers in the UAE through an EOR service designed specifically for the country is a great way for companies to handle their payroll and HR requirements. This strategic partnership ensures that recruiting and recruitment, payroll and compensation management, benefit administration, and compliance with UAE labor rules are all done in a more efficient manner.

Selecting EOR Services is a wise and useful move, particularly for small enterprises. It not only increases operational effectiveness but also gives managers more freedom to concentrate on increasing revenue and expanding the company as a whole. With this all-inclusive support, businesses can join international marketplaces without having to establish a physical presence in every nation.

Now is the ideal moment to get in touch with an EOR Services representative if you’re wondering if EOR Services in the UAE suit the needs of your business. Discover how our specialized EOR Services can help you enter the UAE market smoothly and launch your business quickly and successfully.

What are the benefits of using a PEO in the UAE?

Utilizing the services of a Professional Employer Organization (PEO) in the United Arab Emirates offers numerous advantages, encompassing:

1. Efficient Streamlining of Payroll Processing.
2. Assurance of Adherence to Local Labor Laws.
3. Expert Management of Tax Withholding and Payments.
4. Effective Mitigation of Specific Business Risks.
5. Provision of Competitive Compensation Packages.

Engaging with a PEO not only addresses concerns but also facilitates the expansion of your business. This enables you to attract top-tier global talent and access benefits typically reserved for larger organizations. Establishing a reliable HR partnership is attainable without the necessity of establishing an entire in-country human resources department.

Further benefits of collaborating with a PEO in the UAE include:

1. Local Legal Expertise:
   • Access to legal experts well-versed in local regulations.
   • Facilitates global expansion without incurring expenses associated with hiring local legal representation.

2. Trusted Compliance Management:
   • Oversight of compliance matters by the PEO.
   • Cost savings for the organization while reducing risks.
   • Enhances process improvement and operational efficiency.
   • Positions the PEO as a strategic partner in supporting the scaling and growth of your company.

What are the differences between an EOR and a PEO?

In contrast to an Employer of Record (EOR) arrangement in the UAE:

1. In the case of a Professional Employer Organization (PEO), both the PEO and the client organization serve as co-employers.
2. With an EOR, the client company assumes the role of the legal employer.
3. PEOs collaborate in sharing Human Resources (HR) responsibilities.
4. EORs take charge of the majority of HR responsibilities, including tasks such as hiring and onboarding.
5. Unlike EORs, PEOs do not take on the responsibility of drafting employee contracts.
6. The client company holds the responsibility of drafting all legal contracts for employees when partnering with a PEO.

Hiring in the UAE with a PEO

When embarking on recruitment efforts spanning diverse nations, it becomes crucial to grasp the nuances of the local culture. This involves being attentive to specific religious and secular national holidays that are commonly observed, with certain leaves mandated by law to accommodate employees in their observance.

Here are succinct insights into the United Arab Emirates (UAE):

1. The UAE functions as an elective monarchy, comprising seven emirates.
2. An emirate denotes the jurisdiction governed by an emir.
3. Abu Dhabi serves as the capital.
4. Arabic is the official language.
5. The official currency is the UAE dirham (AED).
6. The population includes a majority of Muslims (approximately 3/5), alongside significant minorities of Hindu, Christian, and Buddhist communities.

Before commencing the hiring process in the UAE, it is essential to consider the following factors:

1. Drafting contracts in compliance with local regulations.
2. Understanding the UAE tax rate, corporate tax implications, and income tax policies.
3. Grasping labor laws governing employment practices.
4. Navigating the procedures associated with UAE company registration.

This comprehensive understanding of cultural subtleties and legal complexities empowers businesses to navigate the hiring landscape in the UAE effectively, fostering a workplace environment that is not only compliant but also attuned to the diverse cultural fabric of the region.

Employment laws of the UAE

Work hours	In the UAE, the workweek runs from Sunday to Thursday. It’s Friday and Saturday this weekend. Labor laws stipulate that Fridays are required off days. Employees who are required to work on Fridays must be given 150% of their regular pay or be granted an additional day off. Some businesses only employ six days a week. There is a 48-hour workweek maximum, with a maximum of eight hours each day. It may be mandatory by municipal legislation for employees to work two hours fewer during the month of Ramadan.
Overtime	Overtime equal to 125% of the regular pay rate is payable for hours worked beyond the standard working hours, up to a maximum of two extra hours each day. Worked overtime from 10 p.m. to 4 a.m. is entitled to 150% of regular salary.
Minimum wage	There isn’t a minimum wage in the United Arab Emirates, but new rules might alter that. This emphasizes how crucial it is to maintain labor law compliance.
Social security	Both employers and employees are required to pay social security. Social security benefits have a 1,000 AED minimum and a 50,000 AED maximum income requirement. Employers are responsible for paying 12.5% of an employee’s monthly social security benefits. Workers’ social security is paid at a rate of 5%.
Paid time off in the UAE	Employees are entitled to a maximum of 30 days of annual leave, in addition to the paid national holidays. The duration of the annual leave is contingent on the length of an individual’s employment with the organization: Employees who have worked for less than six months are not eligible for any leave entitlement. Those who have completed six to 12 months of employment are entitled to two days of leave per month. Employees with more than a year of service at the company are eligible for 30 days of annual leave. Furthermore, any unused leave can either be carried over into the following year or be paid out in lieu of taking vacation. The designated public holidays in the UAE include: New Year’s Day Eid Al Fitr Arafat day Eid Al Adha Islamic New Year The Prophet’s birthday Commemoration Day National Day
Sick leave	Workers who have worked for a corporation for three months or longer are eligible for ninety days of sick leave annually. For the first fifteen days, this is paid at full salary; the following thirty days, it is paid at half salary; the next fifteen days are paid at no pay.
Maternity leave	Employees who have worked for a firm for at least a year are eligible for a 45-day paid maternity leave. Employees who have worked for the firm for less than a year are entitled to a 50% salary maternity leave. If an illness has occurred, a 10-day extension may be given without any salary payment, either continuous or non-continuous. Nursing staff members are allowed to two breaks, totaling thirty minutes per day, for breastfeeding during the first eighteen months after childbirth. Leave for paternity is not required.
Termination in the UAE	Gratuity, also recognized as severance pay, becomes due to employees upon the conclusion of their tenure with a company. The quantum of severance pay is contingent upon the duration of employment with the organization. For terminated employees: Individuals who worked between one and five years are entitled to 21 days’ worth of salary. For every year served beyond five years, terminated employees are owed 30 days’ worth of salary. For employees who resign: Those employed for one to three years are eligible for 1/3 of the salary equivalent to 21 days. Employees with three to five years of service are entitled to 2/3 of the salary equivalent to 21 days. Individuals who have dedicated over five years to the company are owed the full salary equivalent to 21 days. This structure ensures a fair and calculated approach to severance pay based on the varying lengths of employment, both for terminated and resigning employees.

Payroll in the UAE is challenging. It’s easy when you use a PEO.

Payroll processing requires a significant amount of time and work, yet it is an essential function for any firm. A business managing its own payroll may find it intimidating to analyze every aspect of pay arrangements. Parts of an employee’s income include pay stubs, allowances, deductions, bonuses, and net and gross salary. Some components are subject to taxes, while others are not. A few elements are required by law, including gifts, severance pay, and certain benefits.

Sustaining compliance could prove to be challenging. For instance, there isn’t a minimum wage in the United Arab Emirates at the moment, but new laws might soon change that. Staying up to date with these kinds of labor law developments is essential. Get in touch with our experts right now to learn how EOR Services can manage your payroll.

What a PEO in the UAE can and cannot do

A Professional Employer Organization (PEO) does not have the authority to:

1. Assume complete control over your organization.
2. Function as the exclusive legal employer.
3. Solely dictate hiring and termination decisions for your workforce.

In contrast, a PEO can fulfill the following roles:

1. Assist in the hiring process.
2. Facilitate the onboarding of new employees.
3. Provide valuable support in maintaining compliance to mitigate risks.
4. Contribute to cost reduction related to employment.
5. Ensure the accurate processing of payroll.
6. Handle the proper withholding and remittance of taxes.

By recognizing these distinctions, organizations can capitalize on the beneficial aspects of a PEO while retaining essential elements of control and decision-making within their operations.

Businesses big and small can find value in partnering with a PEO in the UAE.

Starting a business in the United Arab Emirates has its share of difficulties and costs, especially when it comes to managing the employment process and making sure local rules and regulations are followed. A strategic cooperation with EOR Services proves to be crucial in resolving these issues, providing a time- and money-saving solution through the launch of PEO services in the UAE. Explore the pricing structure of EOR Services and discover how each bundle may greatly help your business. Our pricing page has all the details you need to know.

EOR Services offers feasible alternatives for growing your company in the United Arab Emirates without having to create a formal entity—a costly undertaking that might be beyond your existing means. In more than 110 countries, EOR Services ensures local rules are followed while protecting the privacy of your data using our secure systems. Working together with EOR Services can be the spark your company needs to take off and grow.

Are you prepared to start your PEO adventure in the UAE with EOR Services? Reach out to us right now. Are you curious to know more? Make an appointment for a demo to see how our platform works for yourself, and talk to a member of our team about how EOR Services may improve your business’s performance with a PEO in the UAE.