As the UAE’s outsourcing market nears US$6.8 billion in 2023, it is imperative that local businesses choose a compliant Employer of Record, with strong knowledge of labour laws.
United Arab Emirates, July 2023 – When hiring outsourced staff in the UAE, it is vital that you choose an Employer of Record who is well versed in compliance and local labour law, says Liam Doherty, Enterprise Director of Connect Resources.
According to a recent report by Boston Consulting Group (BCG), the UAE’s outsourcing services market is set to hit US $6.8 billion in 2023, representing a compound annual growth rate (CAGR) of 7%. The report identified customer support, finance and accounting, human resources, hospitality, leisure, telecommunications and KPO roles as the major areas of growth.
Since all employees in the UAE must possess a current work permit in order to engage in any employment-related activity, it is crucial that employees and outsourced staff are classified correctly in accordance with the latest labour laws.
With this in mind, it is crucial for local businesses to confirm that their Employer of Record is entirely compliant with the activity they are performing and that they have a valid license to perform outsourcing activities in the UAE – failure to do so could result in employment violations against the business and the outsourcing company.
The perils of misclassification:
In a recent article posted by the US Department of Labor, we see what ‘may be’ the largest misclassification case in its history. The US Department of Labor has asked a federal court to force a Florida-based customer service provider for major national brands, including Barnes & Noble, Comcast, Disney and Walgreens, to pay back wages and liquidated damages to more than 22,000 workers after investigators found the employer misclassified employees as independent contractors and denied them their legally required minimum wage and overtime pay.
In the release, the US Department stated that, “The division found the employer often recruited workers with promises they would ‘be their own bosses’ and that they could generate income by providing customer support services to Fortune 500 clients.”
This is a clear exploitation of employees’ rights to employment benefits and a violation of the labor laws in that nation. As the world continues to shift towards more Employer of Record and remote worker solutions, these cases will become more common.
Choosing the right Employer of Record:
The UAE has strong and well-defined employment rules, and at Connect Resources, we maintain tight relationships with the government and our legal counsel to make sure that our clients are informed of any changes to the legislation.
Before choosing an Employer of Record provider in the UAE, consider these legal aspects to ensure you are fully compliant:
- Request a copy of the Trade License from an outsourcing or EOR company to verify they are compliant and properly registered to carry out these operations. Compliant organizations should have an ‘On-Demand Labor Supply’ License from the DED (Department of Economic Development)
- Require the EOR to share its MOHRE license and it needs to be updated and renewed in a yearly basis.
- Ensure the provider and the employee, as well as the client, have a mutual understanding of the role and its legal requirements.
- In the UAE, hiring contractors is not a legal employment solution. Before working for any company in the UAE, all employees must get a work visa from the UAE. No employee may work in the UAE while on a tourist or resident visa without first applying for an employment visa.
As one of the country’s leading resourcing, outsourcing and talent acquisition organisations, Connect Resources are experts at navigating the UAE labour law. Connect Resources offers flexible EOR (Employer of Record) services, allowing companies to bolster their workforce with outsourced roles and hire employees. Connect Resources can arrange all employee work permits, visas, insurance, and payroll so they can legally work, live, and get paid in the UAE, providing peace of mind for both employees and the business.
Connect Resources is approved by the Ministry of Human Resources and Emiratization (MOHRE), formerly the Ministry of Labor, to provide these services across the UAE.
About Connect Group:
Connect Group is a human resource business reinventing the way companies succeed. Launched in 2016, Connect Group brings decades of knowledge to every facet of business in the Middle East from talent acquisition, and smooth and rapid expansion to staff outsourcing, cloud HR, PRO outsourcing and payroll software, as well as furnishing office spaces.
The company entered the UAE market as Connect Resources, providing workforce services including Visa & Payroll Service, Talent Acquisition, PRO Services, Human Resource Management, PRO Outsourcing, and Staff Outsourcing Solutions. Success quickly followed, with clients seeking Connect’s expertise across the region.
