We already mentioned briefly, that as soon as your business starts growing, you will need to employ staff. As in the case with yourself or your family, same way you need to ensure that your employees would be allowed to stay in the UAE legally. In light of this, your company would need to sponsor them and apply for their resident visas. In this specific chapter, we will discuss, what you should know, when you plan to provide a prospective employee of yours with a resident visa.
First of all, remember that all employment matters and labor relations in the UAE are governed by The Federal Law No. (8) of 1980 and it amendments. If you want to learn about types of employment contracts in the UAE, number of allowed working hours, leave, end-of-service entitlements, their calculations and more, please refer to the said document, as it is publicly available on the internet.
The process of employment resident visa application looks exactly the same, as for you as an investor. The only difference is the list of documents you need to provide at the time of application for entry permit and for employment resident visa stamping. The rest is exactly the same: you can start the process, when your prospective employee is outside of the country or is inside the UAE, first you apply for his or her Entry Permit, next the employee enters the UAE on entry permit or changes visa status, if already inside the country on a tourist, visit or on a previous employment visa, next comes medical test, biometrics capturing and application for medical insurance and finally all documents are submitted to the relevant authority for visa stamping.
However, it may also happen, that person you want to hire holds an active employment resident visa, which was issued just 2 to 3 months back. In this case, if there is no objection from the previous employer, it is very often possible to transfer such employment visa from one company-sponsor to another one. Nevertheless, it is important to state, not always visa transfers are possible. Today you can transfer employment resident visas between certain free zones and in a few more instances. As such, bear this option in mind as well, when hiring someone and enquire with the relevant authority, whether it would be possible to do the transfer.
We already mentioned it in the previous chapters, that employment resident visas, or let’s call them simply employment visas, are issued for a period of two (2) to three (3) years. If you own a local/mainland company, your employees will be entitled to a two-year visa. Some free zones in the UAE also issue two-year visas only. Nevertheless, most free zones in the UAE facilitate issuance of three-year visas even for employees. You can always confirm with relevant authorities in advance, as to the validity period of employment visas.
When hiring staff, there is another important point you need to make a note of. Depending on the position you may wish to be stated on the employee’s resident visa, there may be a requirement to submit a legalized educational certificate/ diploma at the time of application for entry permit. Some years back a legalized diploma was required for managerial positions only. However, today almost all positions require legalized educational certificate. Therefore, if you know from the start, that employee does not have a legalized diploma and would be not able to arrange for the same, opt for such position, which do not have a requirement for proof of employee’s education.
As you can also imagine, any employment is associated with signing of employment contract. Most of the time relevant authorities (be it free zones or the Ministry of Labor) provide a template for your perusal, where all major points are covered. You just insert personal details of the employee, salary, leave days and some other information. You also choose, whether you want to sign a limited or an unlimited contract with the employee. As we mentioned in this chapter, all clarifications in regards to the said aspects you can find in the The Federal Law No. (8) of 1980 and it amendments.
On a different note, before hiring someone, you need to budget all your expenses in advance, as there is a number of charges you will need to pay and certain deposits, you will need to make. For ease of perception, let’s enumerate all of them. First and foremost, you will need to pay employment visa fee, which varies from one authority to another and can be between AED 2,200 to AED 4,950. As you can see, there is a significant difference between two figures, as such, if your budget is limited, enquire about employment visa charges before you incorporate a company. In addition to visa charges, there may be a requirement for a refundable deposit for each person you hire. The amount of this deposit is also determined by each authority independently and can range between AED 2,000 and AED 3,000. This guarantee payment is called a bank guarantee deposit and can be returned to you, once resident visa of any of your employees is cancelled or your company undergoes liquidation. Not everyone is aware of guarantee deposits or bank guarantee deposits, so it comes often as a surprise. We, on our part, want you to be prepared and we suggest that you include deposit in your budget. In addition to visa charges and guarantee deposit, another significant expenditure would be medical insurance. As we already mentioned, if your company is registered in one of the northern emirates, you would not need to worry about insurance, however, if you are operating from Dubai or Abu Dhabi, medical insurance for your employees would be mandatory and it is your obligation to provide it, since you are the sponsor. The cost of insurance we also discussed in the previous chapter and now you know, that the minimum package per employee would cost you between AED 2,700 and AED 3,700. Add to visa charge, guarantee deposit and medical insurance medical fitness test, Emirates ID application, and your budget for hiring one individual shall be in the range of AED 8,000 and AED 11,000 or even AED 13,000.
This automatically raises another issue, how to ensure then that employee, who you hire, will stay with you for at least 2 or 3 years, so that your expenses are justified. And also bear in mind, that you cannot demand from employee to compensate you for the incurred visa-related expenses, if he or she decides to leave you. And as you may remember, visa charges are not reimbursed to you, if you cancel any visa prior to its expiry date.
There is a whole rage of employment issues that can be discussed but it is a separate topic on its own that shall be better addressed by the lawyers. In this chapter, we just wanted to give an overview of employment resident visa process and certain aspects related to the same. We hope you enjoyed the topic and we invite you to join us in the next chapter for further discussions.
If you want to know more about Dubai freezone company formation, feel free to get in touch with our professional consultant team and we would be delighted to assist you and help you to compare Dubai freezone company setup costs and help you to find that free zone, which would suit your business needs the most.
Disclaimer: Business Boutique UAE-Consultants.com is not affiliated with any particular government or legal entity. Business Boutique does not give professional legal advice nor any other professional advice subject to a public office in the government. This article merely sets out a simple and basic idea as to the reasons of Dubai freezone company setup and Dubai free zone company formation cost. Business Boutique in no way holds nor imposes any official governmental or legal authority and the article herein is only to be taken as a guide. All further governmental or legal issues should be addressed to the corresponding authorities.
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