Operating a Business

flag United Arab Emirates United Arab Emirates: Operating a Business

In this page: Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labour | Management of Human Resources

 

Legal Forms of Companies

Please note that on November 23rd, 2020 a presidential decree was passed which abolish the requirement for a local company to be owned 51% by UAE nationals. However, competent authorities in the respective Emirates can specify local ownership and board participation requirements for companies, so it may take longer before the decree actually comes into force.
Sole Proprietorship
Number of partners: One person. Can be 100% owned by non-residents.
Capital (max/min): No minimum capital.
Shareholders and liability: The individual entrepreneur is responsible for assets of the company over his personal goods.
Public Joint-Stock Company
Number of partners: Minimum ten members. Shares freely transferable, but 51% must be held by UAE nationals.
Capital (max/min): Minimum AED 10 million.
Shareholders and liability: The responsibility is limited to the contributed amount.
Private Joint-stock Company
Number of partners: Minimum three shareholders. Shares freely transferable, but 51% must be held by UAE nationals.
Capital (max/min): Minimum AED 2 million.
Shareholders and liability: The responsibility is limited to the contributed amount.
Limited Liability Company
Number of partners: Minimum 2 partners. Maximum 50 partners.
Capital (max/min): No minimum required.
Shareholders and liability: The responsibility is limited to the shares in the capital of the company.
General Partnership
Number of partners: Minimum two partners. All the partners have to be UAE nationals.
Capital (max/min): No minimum required.
Shareholders and liability: Unlimited joint liability.
Limited Partnership
Number of partners: At least, one general partner (only UAE nationals) and one limited partner.
Capital (max/min): AED 500,000.
Shareholders and liability: At least one partner must have unlimited liability. Responsibility of other partners is limited to the amount contributed.
 

Business Directories

Financial Information Directories
Dun & Bradstreet - Worldwide directory with financial information on businesses
Kompass - UAE Business Directory

To go further, check out our service Business Directories.


 

Business Setup Procedures

Setting Up a Company United Arab Emirates Middle East & North Africa
Procedures (number) 2.00 6.28
Time (days) 3.80 19.51

Source: Doing Business - Latest available data.

 
The Competent Organisation
The UAE Chambers of Commerce and the competent ministry.
For Further Information
Visit Doing Business, to find out about business registration procedures in the United Arab Emirates.
Companies listed in the Dubai Stock Exchange
 

Recovery Procedures

Principle
The insolvency of a company does not necessarily lead to liquidation.
Minimum Debt-to-Capital Ratio Triggering Liquidation
Ratios depend on the type of company. For LLCs and JSCs, the general assemly or an extraordinary assembly can demand the liquidation of the company if losses amount to half of the capital. If losses rise to 3/4 of the capital, the shareholders representing the remaining quarter can demand liquidation.
Bankruptcy Laws
Bankruptcy is regulated by federal law no. 18 of 1993 on commercial transactions.
Reorganization and Rehabilitation Laws
The Code of Commerce applies. There are no special conditions.

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The Active Population in Figures

201820192020
Labour Force 6,753,1436,834,7486,820,222

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 82.99%82.80%82.76%
Men activity rate 94.09%93.95%94.06%
Women activity rate 53.23%53.16%52.90%

Source: International Labour Organization, ILOSTAT database

 
For Further Statistics
Dubai Statistics Centre
For Further Information About the Labour Market
The National Human Resource Development & Employment Authority

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Working Conditions

Opening Hours
 
  • Legal Weekly Duration
8 hours per day, 9 hours for employees of hotels and restaurants. During the month of Ramadan, the daily work duration is reduced by two hours for Muslim employees.
  • Maximum Duration
48 hours a week.
  • Night Hours
Between 9:00 p.m. and 4:00 a.m.
Working Rest Day
Once a week on Friday. Most companies are also closed on Saturdays.
Paid Annual Vacation
Two days per month if the contract period is longer than 6 months but less than one year.

30 days per year if the contract period is more than one year.

Retirement Age
60 years, 55 years for women working in the public sector and 65 years for judges.
Child Labour and Minimum Age For Employment
Child labour is prohibited for children under the age of 15. There are special provisions for minors between 15 and 18 years of age.
Informal Labour Market
Illegal work is widespread and various forms of abuse are regularly reported especially with respect to Asian workers .

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The Cost of Labour

Pay

Minimum Wage
There was no minimum salary stipulated in the previous UAE Labour Law, however it broadly mentions that salaries must cover basic needs of the employees. A new Labour Law came into force in Fevruary 2022, which will set a minimum wage for employees in the private sector.
Average Wage
The average wage varies a lot depending on Emirates and even within them. A person working in United Arab Emirates typically earns around 19,600 AED per month (Salary Explorer, 2022).
Other Forms of Pay
  • Pay For Overtime
Overtime is paid 25% in addition to the normal salary of the employee.
  • Pay For Rest Days Worked
50% in addition to the normal salary of the employee. It is not possible for the same employee to work on two consecutive Fridays unless working for a daily newpaper.
  • Pay For Night Hours
There is no special allowance for working at night.
  • Pay For Overtime at Night
For overtime between 9:00 p.m. and 4:00 a.m. in the morning, the employer should pay the employee a 50% markup on the normal salary.
 

Social Security Costs

The Areas Covered
Pension insurance (for nationals only)
Contributions
Contributions Paid By the Employer: Please note that social security contributions are applicable in the UAE only for UAE nationals, and nationals of the GCC. If UAE/ GCC nationals are employed, then both the employer and the employee will be required to make social security contributions to the General Pension and Social Security Authority (GPSSA). A payment of 12.5% by the employer (15% if the employer is a public entity). Emirati nationals have free access to healthcare.
Contributions Paid By the Employee: Employees who are UAE nationals pay a 5% contribution which is deducted from their salary. Emirati nationals have free access to healthcare. Foreign employees are recommended to subscribe to an additional insurance.
Competent Organization
General Authority for Pensions and Social Security
Abu Dhabi Retirement Pensions and Benefits Fund

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Management of Human Resources

 

Recruitment

Method of Recruitment
Recruitment is mostly done on the internet since the active population mainly consists of expatriates. The next step commonly undertaken is an interview.
Recruitment Agencies
There is a governmental agency for hiring nationals The National Human Resource Development & Employment Authority.
Recruitment Websites
Online job offers
Gulf Talent
Search engine for jobs in the Emirates
 

The Contract

Type of Contract
Work contracts are framed by the law and if desired by individual negotiation.
Labour contract formalities are extremely rigid. Procedures for hiring and dismissals are easy. Contract duration should not exceed 4 years, and is renewable by mutual consent.

Breach of Contracts

  • Retirement
The legal retirement age is 60 years. It is however possible for expatriates to work till 65 years. In this case, they can obtain an agreement of Under-Secretary of the Ministry of Labour. The work permit must then be renewed every year. Those who want to work beyond 65 years should obtain an authorisation of the Under-Secretary in the Ministry of Labour and his assistant. In order to do so, one must belong to a list of 11 professions, such as engineers or doctors. There are no retirement pensions for expatriates. They only receive end-of-service allowances. For Emirati nationals, the retirement pension is calculated at 60% of their salary for those who have 15 years and more of contributions.
  • Dismissals
For unlimited contracts no allowance will be given if the working period is less than one year. Calculated on the net salary, the allowance is 21 days for the first five years, and 30 days beyond five years. For limited contracts, if the dismissal is based on reasons other than legitimate motives and real and serious causes, it is mandatory to pay an allowance corresponding to the lower sum of either the remaining salary to be paid till the end of the contract or a three months allowance.
Penalties can be expected for wrongful termination of the contract. These penalties envisage damages for an amount which will not exceed the amount due for the remaining period of the contract.
  • Other Possible Methods
- resignation
- disciplinary action
Labour Laws
Consult the 1980 Labour Law
Consult Doing Business Website, to obtain a summary of the labour regulations that apply to local entreprises.
 

Dispute Settlement

 

Conciliation Process

Cases of Dispute
Figures of labour law related disputes are confidential and as a result it is difficult to give an estimate. It must however be known that courts are very favourable to locals. Moreover, a number of foreign employees do not dare to start proceedings against their employers as these are their sponsors and their guarantor to remain in the country. Attacking one's sponsor puts one at risk of losing one's title for residence.
  • Legal Framework
The law which regulates the relations between employers/employees is the Federal Law no.8 of 1980, amended in 1981, 1985 and 1986. There are some special laws applicable to certain free zones like Jebel Ali.
  • Procedure
If a dispute arises, a document should be filed with the department in the emirate in question (in which the employee is registered). The complaint should be submitted to the Claims Department of the ministry with a summary of the facts, calculation of the sums due from the employer and a copy of the work/labour contract. The registration costs for filling a document at the Ministry is AED 100. The Ministry of Labour will make the recommendations within two weeks from the filing of the document. If the parties cannot reach an agreement following the recommendations of the Ministry, the dispute is submitted to a court.
 
 

Judicial Structures

  • Legal Framework
The Law of 1980 and its amendments.
  • Competent Legal Body
The federal or local courts are competent for disputes related to employment law.
 

Social Partners

Social Dialogue and Involvement of Social Partners
Trade unions are banned in the UAE.
Unions
Ministry of Human Resources and Emiratisation
Regulation Bodies
Ministry of Human Resources and Emiratisation
 
 

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Latest Update: November 2022