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Tailored Employment Solutions by Experts – Don’t Leave It to Chance
Correctly structured agreements not only ensure regulatory compliance but also provide clarity and security for both employers and employees, contributing to a harmonious and efficient workplace.
Failure to comply with labor laws and supporting regulations can lead to severe consequences such as:
01
Fines – from AED 5,000 to 1,000,000 depending on the violation.
02
Freezing of bank accounts.
03
Suspension of the company’s activities related to employment such as suspension of work permits, inability to retain new employees and other consequences.
04
Legal disputes and / or criminal prosecution.
Employing a foreigner without a valid work permit or closing a business without resolving matters related to sponsored employees could result in a penalty of AED 50,000. Repeat offenses could lead to imprisonment and an additional AED 50,000 penalty.
Depending on the place of incorporation additional requirements may apply, such as mandatory participation in employee benefit programs like DEWS (DIFC Employee Workplace Savings) or mandatory enrollment with Wage Protection System.
Failure to adhere to these requirements and make timely enrollments is considered a gross violation of the applicable regulations and could lead to any of the consequences mentioned above.
For instance, failure to register and pay through the Wage Protection System in Mainland (even if you pay your employees another way – by cash or bank transfer) is a violation, which could lead to Ministry of Human Resources & Emiratization (MoHRE) suspending activities of the company related to labor matters, including hiring and firing employees, and in case of further non-compliance – to UAE Central Bank blocking the company’s bank accounts.
When hiring employees in the UAE, free zones typically provide a standard employment agreement which often falls short of addressing the specific terms and requirements agreed upon by both the employer and the employee. As a result, companies seek assistance of local law advisors to help them create their own customized employment agreements.
These specialized contracts govern the terms of employment or services provided by key executives, such as managers. They often include provisions for additional responsibilities, customized compensation mechanisms, and restrictive covenants, ensuring alignment between corporate goals and executive performance.
A modern and increasingly popular corporate mechanism — share option plans offer employees the opportunity to acquire an ownership interest in the company. These plans serve as a powerful tool for fostering loyalty, incentivizing performance, and aligning the interests of employees with the long-term success of the organization.
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