United Arab Emirates: Operating a Business

Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labor | Management of Human Resources

Legal Forms of Companies

Types of Companies and Capital (Max/Min)	Number of Partners/Shareholders and Liability
Sole Proprietorship is an individual company. No minimum capital.	1 person. The individual entrepreneur is responsible for assets of the company over his personal goods.
Public Joint-stock Company Minimum AED 10 million	Shares freely transferable but 51%must be held by UAE nationals. Their responsibility is limited to the amount of contributions.
Private Joint-stock Company Minimum AED 2 million	Minimum 3 partners. Their responsibility is limited to the amount of contributions.
Limited Liability Company Minimum: AED 150,000 - 300,000	Minimum 2 partners. maximum 50 partners. Their responsibility is limited to the amount of contributions.
General Partnership None	Minimum: 2. All the partners have to be UAE nationals. Unlimited
Limited Partnership None	At least, 1 general partner (only UAE nationals) and 1 limited partner. At least one partner must have unlimited liability. Responsibility of other partners is limited to the amount contributed.

Enterprises Federation: Directory of Associations of foreign companies in partnership with the local companies in the field of trade.

Business Setup Procedures

Setting Up a Company	United Arab Emirates	Middle East & North Africa
Procedures (number)	8.00	8.10
Time (days)	15.00	20.00

Source: Doing Business.

For Further Information: Consult Doing Business Website, to know about procedures to start a Business in United Arab Emirates.
Trade Register
The Competent Organization: The UAE Chamber of Commerce for establishment and the competent ministry.

Recovery Procedures

Principle: The insolvency of a company does not necessarily lead to liquidation.
Minimum Debt-to-Capital Ratio Triggering Liquidation: Here the ratios depend on the type of company. For LLC and JSC, if the losses reach half the capital, then the general assembly or the extraordinary assembly can demand liquidation of the company. If the losses rise to 3/4 of the capital then the shareholders representing the remaining quarter can demand liquidation.
Bankruptcy Laws: The bankruptcy is governed by the federal law no. 18 of 1993 on commercial transactions.
Reorganization and Rehabilitation Laws: It is the Code of Commerce which is applicable. There are no special conditions.

The Active Population in Figures

	2010
Labor Force	3,908,000

Source: CIA - The world factbook

	2009	2010
Total activity rate	-	77.60%
Men activity rate	92.10%	-
Women activity rate	41.90%	-

Source: UN - United Nations

Employed Persons, by Occupation (% of Total Labor Force)	2007
Agriculture, fishing and forest activities	7.2%
Mines	1.3%
Oil and gas activities	1.1%
Quarries	0.2%
Workers of industry	12.6%
Employees of water, gas, and electricity companies	1.1%
Construction and buildings	20.1%
Distribution and maintenance	18.8%
Hotel and restaurant trade	4.2%
Real estate and services to companies	2.7%
Transport, storage and communication	6.2%
Public and private services	4.3%
Financial sector employees	1.2%
Civil servants	10.7%
Home employed	8.3%

Source: Report of Central Bank of the UAE

For Further Statistics: Dubai Statistics Center
For Further Information About the Labor Market: The National Human Resource Development & Employment Authority

Working Conditions

Opening Hours
Legal Weekly Duration: 8 hours per day, 9 hours for employees of hotels and restaurant. During Ramadan month, the daily work duration is reduced by two hours for Muslim employees.
Maximum Duration: 48 hours a week.
Night Hours: Between 2100 hrs and 0400 hrs.

Working Rest Day: Once a week: on Thursday. Infact majority of companies also closed on Saturdays.
Paid Annual Vacation: 2 days per month if the contract period is greater 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 public sector and 65 years for judges.
Child Labor and Minimum Age For Employment: Labour by children below fifteen years is prohibited. The labor code is planning special provisions for children betwween 15 to 18 years.
Informal Labor Market: Illegal labour is widespread and various abuses are regularly reported especially with respect to Asian workers .

The Cost of Labor

Pay

Minimum Wage: There is no legal minimum salary.
Average Wage: The average annual salary is USD 25,000.
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 it is a daily newpaper.
Pay For Night Hours: There is no special allowance for working at night.
Pay For Overtime at Night: For overtime between 2100 hrs and 0400 hrs in the morning, the employer should pay 50% in addition to his salary to the employee.

Social Security Costs

The Areas Covered: None
Contributions: Contributions Paid By the Employer: There is no social security system for non-national employees. The only obligation of the employer is to provide a health card to his employees, costing 300 AED. Since 2005, the Abu Dhabi Emirate has formulated the "Health Insurance Law" which imposes the obligation on companies based in this Emirate to subscribe to a social insurance for all its foreign employees and their families (spouses and minors).
The nationals belonging to them have a free access to healthcare.
Contributions Paid By the Employee: Foreign employees are recommended to subscribe to an additional insurance.
Competent Organization: The General Authority for Pensions and Social Security.
Abu Dhabi Retirement Pensions and Benefits Fund

Management of Human Resources

Recruitment

Method of Recruitment: Recruitment is mostly done on the internet since the active population mainly consists of expatriates. Then, it is normal to go ahead with an interview.
Recruitment Agencies: There is a governmental agency for hiring nationals The National Human Resource Development & Employment Authority.
Recruitment Websites: Portal of job offers on internet
Offers on Interet
Jof offers in all Emirates
Search engine for jobs in the Emirates

The Contract

Type of Contract: The work contract is framed by the law and if desired by individual negotiation.
The formalism of the labour contract is extremely rigid. The prcedures for hiring and dismissals are easy.The contract duration should not exceed 4 years. It is renewable by mutual consent.

Breach of Contracts
Retirement: The legal retirement age is 60 years. It is however possible for the expatriates to work till 65 years. In this case here, they can obtain an agreement of Under-Secretary of the Ministry of Labour. Then they should renew their work permits 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, they should belong to a list of 11 professions such as engineers or doctors. There are no retirement pensions for the expatriates. They only have the agreement for allowances at the end of service. For the locals of UAE, the retirement pension is calculated at 60% of their salary for those who have 15 years and more of contributions.
Dismissals: For the undetermined contracts no allowance will be given if the working period is less than one year. Calculated on the net salary, the allowance is for 21 days for the first five years and 30 days beyond five years. For determined contracts, if the dismissal has taken place reasons other than legitimate motives, real and serious causes, it is obligatory to pay an allowance corresponding to the lower sum between the remaining salary to be paid till the end of the contract and three months allowance.
Penalties can be expected for improper breach 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
Labor Laws: Consult the law of 1980 of the labour code (in English).

Dispute Settlement

Conciliation Process

Cases of Dispute: The figures of the disputes related to the application of the labour law are highly confidential and as a result it is difficult to give an estimate. It must however be known that courts are very favourable to the locals. Moreover, a number of foreign employees do not dare start proceedings against their employers as these are their sponsors and they are their guarantor to remain in the country. Attacking his sponsor puts him at the risk of losing his title for residence.
Legal Framework: It is the Federal Law no.8 of 1980 amended in 1981, 1985 and 1986 which regulates the relations between employers/employees. 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 concerned Emirates Department (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 100 AED. The Labour Ministry makes the recommendations within two weeks from the preparation of the document. If the parties cannot reach an agreement by following the recommendations of the Ministry, the dispute is submitted to a court.

Judicial Structures

Legal Framework: The Law 1980 and its amendments.
Competent Legal Body: The federal or local courts are competent for disputed related to labour rights.

Social Partners

Social Dialogue and Involvement of Social Partners: Employees' Unions are banned in the UAE.
Unions: Ministry of Labour
Regulation Bodies: Ministry of Labour

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