The need to legally establish before hiring employees in the UAE

Many foreign companies do not realise that they cannot hire individuals in the UAE unless they have a local presence. Before an entity can enter into any employment arrangement it must be legally established in the UAE. In our experience this is not well understood. The following visa workarounds are sometimes considered by foreign companies, but it is important to realise that these are not in line with the laws of the UAE and come with significant risks:

  • Asking another company to act as the legal employer in order to secure a residency visa and work permit for that employee. This is not a suitable approach since an employee in the UAE should work only for his or her legal employer and not for the benefit of any other party. If they do so this is a visa violation. There has been a recent clamp down on such activities which has resulted in many companies being referred to the public prosecutor and some receiving significant penalties. Furthermore, the activities being performed by the employee must be aligned to the trade licence of the legal employer. Ultimately, adopting this approach may expose all parties to risks.
  • Base the employee outside of the UAE and require them to fly in and out of the UAE. Depending upon the passport, the holder may receive a tourist visa upon arrival into the UAE (generally 30 days). Some foreign companies use this as a means to send an employee to work in the UAE, requiring the employee to leave the UAE when the tourist visa has expired and to re-enter to obtain a new tourist visa. Again, this practice is not in line with the law as it is not legally permitted for employees to work on a tourist visa and may expose the individual as well as the foreign company to risk. Whilst short business trips are frequently overlooked, the risk profile of this activity increases if the nature of the work is high profile, high risk or will go on for some time.

Therefore if a foreign company does not have a legal presence in the UAE but wishes to offer some services there, the usual solution is to enter into a sub-contracting arrangement with a UAE company that can provide such services through its own employees. Otherwise, the foreign company should look into establishing a legal entity in the UAE in order to offer their services in the jurisdiction. This is the safest option for all parties from a legal and immigration perspective.