UAE Short Term Working: Overcoming the Challenges

Employment & Incentives / UAE

It is common in many jurisdictions for businesses to offer informal internships or need a significant number of short-term staff for one-off sports fixtures and events.Contents

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Law Update: Issue 362 - Sports and Event Management

UAE Short Term Working: Overcoming the Challenges

Emily Daly
Associate,
Employment & Incentives

It is common in many jurisdictions for businesses to offer informal internships or need a significant number of short-term staff for one-off sports fixtures and events. In the UAE, such arrangements are more challenging given that expatriates need their residency to be sponsored in order to live in the country. Sponsorship may be provided through either an individual or a corporate entity. In addition to the visa requirement, expatriate employees require additional permission to work for any given employer, evidenced by a work permit. The number of visas and work permits an entity may obtain is limited, usually by reference to the office space that is leased. The relationship between the employment status of an expatriate and their ability to stay in the country is therefore, direct and governed by a strict immigration framework meaning that informal and last-minute engagements are challenging. This does not usually cause a problem, as it is common for both employers and employees globally to want the safety of an indefinite employment agreement for job security and business continuity respectively. The benefit for employers in the UAE in attracting and keeping talent long-term is particularly heightened given that the administrative and monetary costs associated with recruiting and employing an individual are increased as a result of the visa requirements. Sometimes however, despite the usual benefits of long-term employment, that type of engagement doesn’t serve the parties’ intentions. Options available to employers How then, do employers in the region navigate this situation lawfully and efficiently? Employers seeking shorter-term arrangements will usually take one of the following approaches: Consulting agreement: As with any business providing services, an individual may register their own business in the UAE and provide services to clients through that entity, as its employee. Such a business may also grow to employ other individuals to provide those services to clients on its behalf. The terms of consulting agreements between businesses can be more flexible than those governing an individual’s employment and, importantly, fees are often based on time spent or the deliverables being met, while the consultancy is obliged to apply for and maintain the individual’s visa. Many individuals providing a service for a defined period, including event planners and caterers, will be engaged pursuant to this type of agreement. Freelance work permit: Expatriate individuals offering their services as a consultant onshore may also choose to be authorised to work pursuant to a freelance work permit which does not require an employment contract or sponsorship by the business they are providing services to. They will however, need to be sponsored to reside in the UAE, as above. That may be through the obtainment of a golden visa, a freelance visa or otherwise.Short-term employment contract: All employment contracts in jurisdictions subject to the Labour Law (Federal Decree Law No. 33 of 2021 and its Executive Regulations (Cabinet Resolution No. 1 of 2022)) must be of a fixed duration, but there is generally no minimum length of time the contract must last for. Businesses may therefore, choose to employ individuals on a short-term basis, although they will still be required to comply with all employer obligations, including the visa and work permit administration mentioned above, and the individuals engaged pursuant to such arrangements will accrue employment benefits. It is, therefore, advisable to ensure that appropriately robust termination provisions are included. Internship or temporary engagement: Some authorities recognise the importance of the flexibility a shorter-term commitment provides and offer methods of engagement designed to accommodate that. Engagements on those terms, however, often have stringent conditions attached meaning few individuals can benefit from the arrangement. This frequently means that, depending on the need of the business and its willingness to sponsor a residency visa for short term work, this option is only viable where the individual already has permission to reside in the UAE. Are there other risks and how can employers protect themselves? A new corporate tax regime is in operation in the UAE and so, depending on the location of the individual and/ or any corporate entity providing services to a business, tax exposure is possible. In each instance, we advise that specialist tax advice is sought. In all cases, as is required in the case of employees pursuant to the Labour Law, it is strongly advisable to have a written agreement in place so the risk of a dispute about the payment terms and otherwise is reduced. Such agreement should make clear on the face of it which party will have responsibility for the visa arrangement of any individual providing services and whether the individual is an employee or engaged pursuant to another form of arrangement.

For further information,
please contact Gordon Barr or Emily Daly.

^{Published in October 2023}