Intesa Sanpaolo promotes Southern Italy’s SEZS: The International roadshow starts in Dubai

Intesa Sanpaolo is participating in the Government’s Italian System Mission in the UAE to be presented to Emirati and international investors through various meetings starting from the presentation of the Italian Special Economic Zones and, in particular, the three SEZs of Southern Italy, with an event under the auspices of the Italian Embassy at the Dubai International Financial Centre, on Tuesday 16 April. The meeting, expected to be attended by the Italian Deputy Prime Minister and Minister of Economic Development Luigi Di Maio, will be dedicated to enhancing investment opportunities in Italy and developing trade and economic potential linked to these areas.

The meeting will feature speeches by Massimo Deandreis, General Manager of SRM, Francesco Guido, Intesa Sanpaolo Regional Manager of Campania, Basilicata, Calabria and Puglia, and Pietro Spirito, Ugo Patroni Griffi and Sergio Prete, the chairmen of the Naples, Bari and Taranto SEZs, respectively. The closing session will be moderated by Christophe Hamonet, Head of Dubai branch, which is Intesa Sanpaolo’s hub for Middle East, Turkey and Africa.  The event will be open to a public of SMEs and about 200 investors and will focus on the vast opportunities for foreign investments concerning infrastructure, logistics, energy, ITC, circular economy and the manufacturing and service industry that the SEZs offer companies thanks to favourable fiscal arrangements and administrative simplifications.

For these reasons, since November 2017 Intesa Sanpaolo, as the first and only bank in Italy to support the SEZs, provided a credit ceiling of 1.5 billion euro to encourage investments in production and infrastructure to enhance the ports. Thanks to the central position of the Mediterranean, Italian SEZs play a strategic role as a development engine for Southern Italy, to relaunch Italian ports and trade.

In just over a year, even before the completion of the regulatory framework, the Intesa Sanpaolo Group has examined medium and long-term investment projects in the three SEZs in Italy’s south formore than 130 million euro and has already provided 15 million euro also adding to these a structured range of non-financial services for international development and the growth of companies in terms of training, innovation and assessment of opportunities for structured and extraordinary finance transactions. After Dubai, the roadshow will continue in some cities in China by the end of the year.

According to estimates from the Studi e Ricerche per il Mezzogiorno (Srm) centre connected to the Intesa Sanpaolo group, the SEZs, which are starting in Italy although there are already 4,500 operating in the world, after ten years since their establishment generate a 40% increase in exports. For Southern Italy this is worth 18 billion euro, public investments have a multiplier effect of 3:1 and each euro of tax credit generates two euro of private capital, benefiting the entire port and trade system that branches off the Mediterranean.

In 2018 trade between Italy and the UAE equalled 6 billion euro, of which more than 3.6 billion euro (60%) is via maritime transport. Machines and mechanical elements account for about 30% of the goods transported, followed by oil and gas (23%), metals, chemical products, auto-mobiles and the aeronautical sector. However, there are many other sectors which could benefit from new trade via the SEZs connected to our ports.

About 20 highly export-focused customer SMEs of the Group that have been selected for their excellence in the three SEZs of Southern Italy will be hosted by Intesa Sanpaolo in these two intense days of public and bilateral meetings and will be presented to possible parties in the UAE to expand the business and facilitate trade.

As part of the Government’s Mission, the Intesa Sanpaolo Group is participating in the business forum dedicated to ‘Infrastructures’, with a contribution from Pietro Pelù, the CorporateCommercial Manager of the Group for Campania, Basilicata, Calabria and Puglia, and regarding ‘Energy’ with a contribution from Massimiano Tellini, head of Circular Economy at the Intesa Sanpaolo Innovation Center. As a SEZs representative, chairman of the Naples SEZ Pietro Spirito is also joining the ‘Infrastructures’ business forum.

Francesco Guido, Regional Manager of Campania, Basilicata, Calabria and Puglia of Intesa Sanpaolo: “Our aim is to show the potential of Italian ports by encouraging investments by national and foreign operators and supporting our companies with a credit ceiling of 1.5 billion euro to make Italy the leading crossroads in the Mediterranean. In particular, thanks to the collaboration of our Dubai hub, the Intesa Sanpaolo Group’s business is fundamental for trade with the entire Gulf, Middle East and Africa region. Our commitment derives from the firm belief that SEZs represent an unmissable opportunity for the South’s economy which must internationalise and therefore grow in size and generate sustainable employment. However, the contribution offered by the Regions will be crucial”.


Christophe Hamonet, Head of Dubai branch, which is Intesa Sanpaolo’s hub for Middle East, Turkey and Africa: “The Special Economic Zones may both stimulate the development of Italy’s southern regions and be an interesting opportunity for foreign investors wishing to set up or expand logistic or production sites in the middle of the Mediterranean. These areas boast equipped ports, connections to the European networks, low tax, simplified procedures with the public administration and incentives to adopt a circular economy. The United Arab Emirates is one of the most important stock exchanges in the world, hosting numerous investment funds, banks and multinationals. The Government’s Italian System Mission is an excellent chance to promote the SEZs. Intesa Sanpaolo, the largest Italian bank in the UAE with a branch in Dubai and one in Abu Dhabi, is committed to playing a leading role in facilitating the launch and growth of new economic relationships between the SEZs and interested investors”.

General Trading Company Fujairah

Setting up a General Trading company in UAE

General trading license will allow your business to trade any type of goods within and outside UAE, except the goods which are not allowed or prohibited under the law and few other exceptions (for example to trade precious metals and stones, you need to setup a proper company in DMCC).

In a trading license, you are only allowed to trade goods falling under your registered activity; in some free zones you can select multiple activities, but only if they below to the same macro-sector.

A Harvard Business Review article on the topic argues that “great business models can reshape industries and drive spectacular growth.” If your company spots a new market opportunity, and shifts its operations to adapt to that opportunity, the growth potential can be huge. So to be restricted by a license, sometimes can reduce or stop development of your business.

Basically general trading license is more expensive than a trading license. But not everywhere. Fujairah’s Creative City free zone offers entrepreneurs the ability to combine more than one kind of business activity under the same license at no extra cost.

Contact us for more information or to start the procedure

Say – for example – your background was in the IT sector, and you decided to launch an IT trading company in the UAE. Some of your business would involve importing materials which would be essential for running the business, and so a IT trading commercial license would almost certainly be the best option.

The business is a success and you soon get approached by a number of people who would love to learn from your expertise in the industry, and this sparks an idea – to set up a training school in the IT field.

However, in much of the UAE, your initial business license would prohibit you from launching this potentially lucrative new model as you would not be licensed to provide any kind of educational services. To launch the business, you’d need to apply and pay for a dual license – which can be expensive and inefficient.

And this is why Creative City’s general trading license is so special. As long as your original business idea and the new activity are permitted to be carried out in Creative City, there really is no barrier to diversifying your business and tapping into new opportunities.

Introducing Creative City

Creative City is located in Fujairah, in the east of the UAE and about 90 minutes from Dubai. The free zone was launched in 2007 and provides a business environment for a wide range of activities – anything from education to trading, event management to publishing, consultancy to broadcasting.

Share capital in UAE Free Zone Companies

Share capital in UAE Free Zone Companies

The term ‘share capital’ (or capital stock in US English) refers to the amount of money that has been put into the business by investors and the business owner; in a strict accounting sense, share capital is the nominal value of issued shares. Each free zone can set its own laws pertaining to how companies can be formed within its jurisdiction – and one topic that causes a lot of uncertainty is share capital.

UAE free zones have different share capital requirements during the application process. There may be no requirement at all to declare share capital in some free zones, while in other cases you may have to provide evidence of share capital worth up to AED 1m. As well as in same cases you need to fully deposit share capital or at least to show you have the availability (Jebel Ali Free Zone, for instance, requires applicants to provide proof that they have AED 1m in share capital as a minimum), in same other cases you just need to declare it (Shams in Sharjah, Creative City in Fujairah and TwoFour54 in Abu Dhabi, for instance, have no requirement to show the share capital).

Here’s why some free zones demand to see evidence of share capital:

  • Free zones want to ensure new businesses launching on their premises are built on solid foundations and will become profitable – they do not want to take the risk of letting office space to companies that will fold in a few months. Share capital shows that the business has access to enough cash to pay for rent, salaries and business development.
  • It demonstrates that investors are confident that the business will work.

If you are planning on setting up a business in a UAE free zone, an essential part of your research will be to find out the share capital requirements of your chosen free zone. This information can be easily found on the website of your preferred location.

If you have chosen to launch your business in a free zone which requires evidence of your share capital, you will need to include this in your application process. In order to do this, you would need to:

  • Open a UAE business bank account
  • Deposit your share capital in this account
  • Create a copy of your bank statement
  • List shareholders and the amount of your business they own
  • Enclose a copy of your bank statement

Every UAE free zone aims to attract different kinds of businesses and so share capital requirements make up an important part of the application process in some jurisdictions. But this doesn’t have to be a headache. Working with a company formation specialist will help make the process seamless and straightforward, ensuring your application conforms with all the requirements of your preferred free zone.

UAE launches 10-year residency visas and 100% ownership for investors

UAE launches 10-year residency visas and 100% ownership for investors

In order to shore up the UAE’s position as a primary destination for international investors, specialists (doctors, engineers, ….) and global talented students, a new system of entry visas for investors and professionals has been approved, with a long-term visa for up to 10 years.

In particular the system will grant investors and talents up to 10-year residency visas for specialists in medical, scientific, research and technical fields, as well as for all scientists and innovators, entrepreneurs and innovators as well as five-year residency visas for students studying in the UAE, and 10-year visas for exceptional students. This will give them the opportunity to study their practical options in the future.

The decision has been taken made during a council chaired by HH Sheikh Mohammad Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai at the Presidential Place in Abu Dhabi on Sunday; HH Lt. General Shaikh Saif Bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Interior, and HH Sheikh Mansour Bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs, were also present.

HH Sheikh Mohammad also directed the Ministry of Economy, in coordination with the concerned parties, to implement the resolution and follow up on its developments, and to submit a detailed study in the third quarter of this year.

The new visa system will increase the chances of attracting investors and competencies to the UAE and thus, further boost the country’s economic competitiveness globally. The global investors’ ownership of UAE-based businesses is expected to reach 100% by the end of the year.

Taxes in Dubai, Abu Dhabi and UAE

Taxes in Dubai, Abu Dhabi and UAE

Currently, the Dubai government has only ratified a tax on profits of branches of foreign banks and of all companies operating in the oil, petrochemical and gas sector. There are no taxes on capital gains, the capital itself and dividends.

However, in order to have a business in the UAE you need to pay an annual license fee (whose value depends on the type of business); and there are a number of other fees: the company may need resident visas for the entrepreneur, his or her family and their employees. Then, there is the newly-implemented EChannel (a sort of company registration needed to issue the necessary Immigration Card to issue visas). And from 4 February all those who want to apply for a new work visa must produce a certificate of good conduct that must be translated, certified and stamped by the proper Embassy and the Ministry of Foreign Affairs.

Most customs duties are very low and may even be excluded for certain categories of products like in the case of materials to be used for the production of goods to be re-exported. But in other cases they reach 100% of the value of the product (alcoholic beverages, energy drinks, tobacco).

Then, on 1 January 2018 the United Arab Emirates introduced VAT, whose input has far-reaching implications for companies that will need to make use of professional figures or service companies for their management. VAT is set at 5% but basic foodstuffs, education and health care will be exempt; in addition it will cover transactions involving the exchange of products or services within the UAE and with Saudi Arabia.

Taking a look at neighboring countries (in particular Qatar and Saudi Arabia), you can see that businessmen opening activities there need to consider the cost of setting up the companies, the possible share capital to be paid, the mandatory office that will pay 10% and 20% of taxes respectively on all that is generated with foreign countries. And even if all the generated income is foreign, a certified auditor needs to be accounted for. So today opening a business in a Free Zone is still your best bet (not requiring the visa requirement, physical office, accounting records, share capital to be paid).

EChannel system Dubai UAE

What is the E-Channel Immigration System and how will it affect your company?

The country’s rapid expansion from a population of just one million in 1980 to around nine and a half million today has been largely underpinned by rising numbers of expatriate workers. Such is the influx of foreign workers in recent years that today approximately 90% of the UAE’s population is non-Emirati, according to the CIA’s World Factbook.

The UAE economy has also been bolstered by a huge rise in the number of overseas travellers visiting the UAE on tourist visas. Dubai alone attracted 14.3 million visitors in 2015, making it the fourth most visited city in the world, behind only London, Paris and Bangkok. This is up five million since 2010 when 9.3 million overseas arrivals came to the city.

The UAE has adjusted its immigration policies and procedures over the years to cope with this increase in demand for visas and to ensure a smooth application and issuing process. The latest changes – in the form of E-Channel immigration – look set to make the process even easier, cutting down admin time and paperwork for both businesses and individuals.

What is the E-Channel immigration system? 

Launched as part of the UAE 2021 vision under the slogan ‘Smart Services with Future Vision’ – the E-Channel Immigration System is a new, unified immigration system that has been implemented in six out of the seven Emirates. Dubai and Abu Dhabi continue to use their own independent immigration systems for the time being.

The most noticeable change to the current procedure is that now both businesses and individuals can apply for visas, residence permits, and entry permits through a single online portal – instead of visiting a typing centre or immigration office.

The new system – known in Arabic as the ‘Tahaluf’ system – removes the need for hard copy documents and aims to ensure that all applications are processed more efficiently with improved integration across the Emirates.

Once registered on the E-Channel portal, individuals and businesses can apply for their visas, or entry permits (residence, visit and tourist) – and for those of employees or relatives. The whole process, including payment can be carried out online and where applicable permits can be printed at home.

Registration fees vary depending on the Emirate you are in but are in the region of AED 7,500 with a refundable deposit component of approximately AED 5,000. Registration must be renewed annually at a cost of around AED 1,000.

How to register in the E-Channel portal

The online E-Channel immigration portal has been designed to be incredibly easy to use.

If you are a free zone incorporated entity, it is the free zone’s details which must be used for log in purposes. In this case, you must register to the E-Channel portal via your agent and/or free zone appointed and authorised typing centres.

Otherwise, to get started, visit the E-Channel website and select either individual or establishment services.

Next click on the ‘Registration’ button. You will be asked to input your email address – instructions on how to set up your account will be sent here. Once you have received your confirmation message from the Ministry of Interior (MOI), simply select the ‘Complete Registration’ link to continue creating your profile.

Once set up on the E-Channel immigration system portal, you can start using online services right away.

Benefits of the E-Channel system

The biggest benefit of the new E-Channel immigration system is its efficiency. The MOI calls the new system ‘…a pioneering step to ensure speedy process and accuracy in the visa and residency services.’ And it’s difficult to see how this won’t be the case. For the first time, license applications, visas, amendments, upgrades, renewals, and most other associated activities can now be managed from a single portal – with the whole process entirely online. The MOI is naturally confident that this will result in faster, more efficient processing. As well as freeing up your time, the E-Channel system is also designed to lower your administrative burden – removing the need to visit immigration centres to fill out excessive paperwork. Any required documents such as passport copies or ID cards can be simply scanned and uploaded to the portal with no need to produce hard copies. By the end of 2018, the E-Channel system is expected to have reduced the need for in-person visits to government centres by up to 80%.

Business Centre Office Solutions

Business Centre Office Solutions

Once you have opened your company, you may need to get a physical space; without spending lots of money… it better! We have partnered with the leading global provider of business centres to ensure you receive unbeatable rates and an all in one solution for your office needs. With 24 locations across the UAE and 3,000 locations globally, you are sure to find the office space suited to your needs and near you!

Information about company setup in Arabic.

We have two excellent packages exclusively for our clients:

Business World Gold Package

  • Unlimited daily access to common work area in any location worldwide (3,000 locations) during business hours
  • One registered guest allowed per contract
  • Minimum 6 month contract.
  • Price: AED 500 per month

Virtual Office Plus Package

  • 5 days of private office usage per month, at the business center where the address is registered
  • Business address at one of the 24 selected business centers in the UAE
  • Business telephone number & call answering service
  • Unlimited daily access to common work lounge in any location worldwide during business hours
  • Minimum 6 month contract.
  • Price: AED 1,250 per month
UAE to start sharing financial data under CRS in 2018

Being a resident in UAE, will protect you from sharing financial data under CRS in 2018

“The Common Reporting Standard (CRS), developed in response to the G20 request and approved by the OECD Council on 15 July 2014, calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. It sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.

The first reporting due date for the CRS in the UAE is 30 June 2018 and consequently by 30 June of the year following each reporting period. Reporting is an annual event.

The following are the effective dates for the implementation of the CRS in the UAE:

  • Pre-existing Accounts to be subjected to due diligence procedures are thosein existence as at 31 December 2016.
  • New Accounts to be subjected to due diligence procedures are those openedon or after 1 January 2017.
  • The first CRS reporting period ends on 31 December 2017.
  • The review of Pre-existing High Value Individual Accounts at 31 December2016 must be completed by 31 December 2017.
  • The Reportable Pre-existing High Value Accounts need to be reported by 30June 2018.
  • The review of Pre-existing Lower Value Individual Accounts at 31 December2016 must be completed by 31 December 2018.
  • First exchanges of information by the UAE Competent Authority to theReportable jurisdictions will occur on or after 30 September 2018.

The UAE along with Saudi Arabia, Bahrain Qatar and Kuwait will start collecting data on individuals and companies starting January this year and will be ready to share the data with other international jurisdictions starting 2018.

As part of the data collection, starting January 2017, banks and financial institutions could ask their customer to make self-declarations or share the data on their tax status.

Under the CRS agreement, from January 2016, financial institutions in more than 50 countries around the world have begun collecting information on their clients and their accounts. This data will be passed on to the clients’ country of residence in 2017.

A further 47 countries will be starting to collect data in 2017, ready to exchange it in 2018. The UAE and all Gulf countries except Oman are in this list. This exchange of information will be annual.

The US made the first move in its 2010 Foreign Account Tax Compliance Act (Fatca) that forced foreign banks to start handing over their clients’ data or face a 30 per cent tax. Under both Fatca and the CRS, information will be automatically transferred bringing transparency in global fund movements and tax compliance.

The CRS sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.

In a typical scenario, if one lives in one country and has assets in another, under CSR his information will be shared between countries and the local tax authority in his country (where he is citizen or domiciled for tax purposes) will automatically receive information on the financial assets he owns overseas.

Reporting Financial Institutions are required to perform due diligence procedures and report information on all accounts held by an account holder who is resident for tax purposes in a jurisdiction other than the USA or the UAE jurisdiction. The USA is excluded because jurisdictions will be reporting to the USA under FATCA.

Resident Person” in the UAE means:

A. An Individual:

a) Any UAE National
b) An individual who is a resident in UAE with:

  1. a valid Emirates ID and
  2. a valid Residency Visa.

B. An Entity:

a) An entity which is incorporated, registered, managed and controlled within the territory of the UAE.


This article / these notes are designed to provide information in relation to the implementation of the Automatic Exchange of Information for tax purposes – the Common Reporting Standard – CRS in the UAE. It should be noted that the Guidance Notes do not have the force of law. If you are in any doubt as to your obligations under the law you should seek independent professional advice. Responsibility cannot be accepted for any liability incurred or loss suffered as a consequence of relying on any matter published herein.

Hiring employees and labour law in UAE

Hiring employees and labour law in UAE

The United Arab Emirates Labor Law regulates the process of hiring employees in Dubai. The employer is the one responsible for the procedure of hiring a foreign employee and the costs that come with this process.

The employer’s responsibilities in Dubai

Before a company in Dubai can hire foreign employees, it must obtain two types of documents – an establishment labor card and an establishment immigration card from the Ministry of Labor.  The Labour Law sets forth the obligations of the employer in relation to the employees. The company that hires personnel must provide work contracts and offer benefits for the individuals. The company must also observe the requirements for the maximum work hours per week, vacation time and special benefits for certain types of employees, like those on maternity leave or those on sick leave.

Labour regulations in the UAE are governed by the UAE Labour Law – Federal Law No. 8 of 1980.

  • Amendments include Federal Laws No. 24 of 1981, No. 15 of 1985 and No. 12 of 1986.

We, Zayed Bin Sultan Al Nahyan, President of the United Arab Emirates; After perusal of the provisions of the provisional Constitution; and Law No. 1 of 1972 regarding the competence of Ministries, powers of Ministers and Laws bringing amendments thereto; and in accordance with the proposal of the Minister of Labour and Social Affairs; the approval of the Council of Minsters and the Federal National Council as ratified by the Federal Supreme Council, decree as follows…

Here is the first part of the law.

UAE Labour Law 2012 download

Federal Labour Law Number 8 covers most of the essential rules and regulations you need to know with respect to salaries, termination, gratuity etc. It is (or was) available in English online at the UAE Ministry of Labour (MOL) website and in bookshops, and is worth familiarising yourself with.

You will probably hear many people complain that the employment contract is not worth the paper it’s written on. Certainly there are people who’ve had an unpleasant job experience somewhere where things did not seem to go according to what they understood from their contract. Or worse. To minimise the risk of problems, keep in mind the following points.

  • Legally, only the Arabic version of a contract is valid in the UAE.
  • Having a written contract is at least something. A verbal contract is worth much less.
  • You should read your contract carefully before accepting a position and resolve any questions or issues before signing it. Make sure you have a written copy of any changes negotiated, or a revised contract. That’s important. If an issue is unresolved before signing a contract, expect it to stay that way no matter what you are told.
  • You should be given an English version. Consider carefully the implications of what you are doing if you sign a contract in Arabic without understanding it.
  • Alarm bells should go off if a company will not send you a copy of the contract before you arrive, or they ask you to sign what appears to be a different contract when you do arrive.
  • If you do have a problem with your employer and want a legal opinion, there are many lawyers available (who charge a fee of course). See a list of possible lawyers in UAE to try.
  • It is possible that you end up in a situation where it is difficult to resolve things even if the law is apparently on your side. You can expect that the one with the most wasta (influence, power) will win, in which case, put your tail between your legs and hope the door doesn’t hit you on your way out.
  • Your embassy might be able to help by providing you a list of lawyers to contact.

Most jobs in Dubai have a probationary period of between one month and one year. During this time you can be dismissed without notice and are not entitled to any end of service benefits. It is not clear if this works both ways i.e. you can resign without notice. Some say the law says no, but people have successfully resigned from their jobs at short notice during probation.

The UAE Labour Law does not cover certain job categories (maids and other domestic workers, federal and government employees, agricultural workers) which seems to mean that people employed in those sorts of jobs have few, if any, rights. For example no gratuity payments, unless something is specified in a contract (but even then it sometimes seems as if a contract is not worth the paper it’s written on). The following worker categories are exempted:

  1. Employees of the Federal Government and of governmental departments of the emirates of the Federation, employees of municipalities, other employees of federal and local public authorities and corporations, as well as employees who are recruited against federal and local governmental projects.
  2. Members of the armed forces, police and security.
  3. Domestic servants employed in private households, and the like.
  4. Farming and grazing workers, other than those working in agricultural establishments that process their own products, and those who are permanently employed to operate or repair mechanical equipment required for agricultural work.

Pre-Requisite for an employment

For employment of any expatriate employee, an application will have to be made to the Labour Ministry in the UAE. This application should be approved by the Labour Ministry before the employee enters the UAE. Such employment permits have a validity of three years, subject to renewals for the same period. The Labour permit for an expatriate employee cannot be issued by the Labour Ministry, unless a formal written labour contract has been filed with the Ministry.

But, nationals in the UAE can enter into an employment contract at any time.

Employment contract

An employment contract should essentially include date of employment contract, date of commencement of employment contract, nature of contract (limited or unlimited), terms of contract, designation and compensation.

There are two types of employment contracts – Limited Employment Contracts and Unlimited Employment Contracts.

Limited Employment Contracts are for a specified duration with characteristics such as specific commencement and completion date, not more than four years. However, it can be renewed with mutual consent. The employment automatically terminates at the end of contract period.

However, in the case of unlimited contracts, there will be a true commencement date, but no completion date. The contract is terminated on mutual agreement by either party, by giving a 30 day notice of termination. The employee will, however, be entitled for compensation, if the termination of the contract by the employer is for an unjustified cause.

Period of probation

The Article 37 of the Law stipulates that the period of probation can be for a maximum period of six months. An employee or the employer can terminate the employment contract at any time during the probation period without the employer being liable to pay the end of service gratuity or the employee compensation for damages.

All wages and benefits during the probation period should be paid along with repatriation costs, provided, the termination of employment contract is at the behest of the employee.

On completion of the probation period, it will be considered as an employment with the employer, and the employee will be considered for calculating gratuity and other terminal benefits. However, the end-of-service gratuity or compensation in lieu of notice need not be paid by the employer during the probationary period. Probation is not compulsory, and is left to discretion of parties to agree upon the actual term of probationary period.

Payment of wages

According to the law, remuneration is paid to the employee in return for his services under a labour contract, whether in cash or in kind, annually, weekly, monthly, daily, hourly, on a piece-rate, or productivity linked. Wage also includes cost of living allowances and incentives in recognition of honesty or efficiency, provided, these incentives have been specified in the labour contract or are part of internal rules of the establishment.

The term ‘basic wage’ is the wage specified in the labour contract as agreed between the parties for the term of contract. Any allowances of any nature are not included in basic wage. The UAE labour law does not prescribe any minimum wage. Wages can be paid in any currency, including UAE Dirhams or other currency, as agreed by the parties mutually.

Part time work permits

Since last year, college and university students sponsored by the institute under which they are enrolled are allowed to work part-time under certain conditions, with a part-time work permit provided by the Labour Ministry. Part-time employment permit is also open to expatriate residents working full-time, holding a valid labour card. It is also open to expat wives sponsored by their husband. The part-time employment permit basically permits the holder to remain employed in more than one part-time job. Part-time work permits are available with a validity period of one year. However, female dependents and students with UAE residence visas, and expatriate male dependants who are sponsored by Emirati women do not need a work permit to work part-time.

Short-term and temporary labour permit

Expatriate workers over the age of 18, can seek short-term work permits valid for 60 days at a time, according to latest rules by UAE Labour Ministry. This 60-day work permit can be renewed up to 5 times, provided, the renewal is done prior to expiry date of the permit or last renewed period. Short term work permits are not open to UAE and GCC nationals, and they do not need a work permit.

Employment of juveniles and women

Employment of Juveniles under the age 15 is banned in UAE. However, effective January 2011, teenagers in the age group 15-18 years are allowed to work, on obtaining a teenage work permit from the Labour Ministry. However, there are certain restrictions on the type of work and hours of employment.

Employers, before employing a juvenile, should retain copies of certain documents in the juvenile’s personal file, such as birth certificate, physical fitness certificate issued by a specialized physician, written consent from juvenile’s guardian, etc. Further, the employment of a juvenile is prohibited when the job requires night shifts, or involves hazardous jobs or is harmful to health, such as underground jobs in mines, quarries, furnaces of melting metals, oil refining, asphalt industry and bakeries. Further, when working hours exceed six hours a day, one or more breaks should be provided. Juveniles are not permitted to work overtime, or on holidays. A Juvenile work permit has a validity period of one year.

Employment of women at night between 10:00pm and 7:00am is prohibited, except under certain situations such as during work stoppages due to force majeure, employees in technical and administrative position, or other jobs as determined by the Labour Ministry, wherein the woman employee is not required to perform a manual job. Women are also not to be employed in difficult tasks and other duties harmful to health or morals.

Working hours

The maximum working hours for an adult employee is eight hours a day (48 hours a week). This can be increased to nine hours a day, for specific jobs like those in cafeterias, hotels, trades and guards. The travel time is not included in working hours. If the nature of job requires overtime, employee shall be paid for the extra time, wherein the payment shall be equivalent of the wage paid during regular working hours, plus an increase of not less than 25 percent of his wage for overtime period. However, if the overtime hour of the employee falls between 9:00pm to 4:00pm, the employee will be paid an overtime equivalent to normal working hours plus increase of not less than 50percent of his wage for the overtime period.

If the employee is required to work on a weekend, he shall be given a day off during the week as a substitution, or will be paid a basic wage, plus minimum of 50percent of that wage. Under any circumstance, overtime hours shall not exceed two hours in a day, except if the work is mandatory to prevent huge losses.

However, all the above provisions may not be applicable to people in senior position, or in administrative supervisory role, or if such people have similar authority over employees or as the authority of the employer. This is also not applicable to crews of naval ships or marine employees.

Annual leave/sick leave/maternity leave

For every year of service, an employee is entitled to, an annual leave of not less than two days for every month, provided, his service is more than six months and less than a year. Thereafter 30 days annually if his service exceeds one year. At the end of the service, the employee is entitled to an annual leave for the fraction of the last year, he spent in service. During the employee’s annual leave, he/she will be paid basic wage plus housing allowance, if applicable, along with any other allowances, which he receives during normal working month.

The employee will have to report to the employer any illness or injury that prevents his from working, within maximum of two working days. The employee may not be entitled for any sick leave during the probation period. Following a three month period of continuous service following the probation period, the employee entitled to full wage during first 15 days of sick leave, half wage during next 30 days, and without pay for any following period.

Women employees are entitled for 45 day maternity leave with full pay, including the period before and after delivery, provided she has served the organization continuously for not less than a year. At the end of maternity leave, the employee can extend her maternity leave for a maximum period of 100 days without pay.

Law for safety measures

The UAE Federal Labour Law specifies certain provisions for employee safety and healthcare, stipulated under Article 91 to Article 101. The provisions of the law mandates that every employer should provide his employee with protection against occupational hazards during work, display instructions regarding fire prevention, make available first aid kit, provide clean and hygienic working environment, offer medical care up to standards determined by labour ministry, and ban entry of alcoholic drinks into the work premises.

An employer is also responsible for providing suitable transportation, accommodation, food, drinking water, and means of entertainment or sports activities to the employees. All these services, except food material, will be on employer’s account.

Disciplinary codes

The disciplinary codes includes fines, warning, suspension from work, prevention of periodical allowances, deprivation of promotion, termination of services and forfeiture of all or some of his gratuity. However, the forfeiture of gratuity shall not be imposed for any reason, other than for those stated in Article 120 of the labour law.

Termination of Contract

An employment contract can be terminated under circumstances such as, the two parties agreeing to cancel the contract mutually with the employee consenting to give this in writing, or, at the end of contract term according to rules of law, or if one of the two parties wish to end the contract, provided, they provide the notice as per the provision of the law, with acceptable reasons to cancel the contract without prejudice.

At the termination of the employment contract, an employee is entitled to any amount due in lieu of notice period, particularly, in case of unlimited contract. The employee is eligible for compensation (in case of unreasonable dismissal by employer) in case of unlimited contract, or compensation equivalent to the period until end of contract in case of limited contract, settlement of any balance of unutilized leave, or overtime payment balance, end of service gratuity calculated or repatriation expenses.

Repatriation of employee

An employer will have to sustain repatriation expenses of the employee, to the place of recruitment, or to any other place at the end of the contract, as agreed upon by the two parties. However, if the employee is responsible for termination of his contract, he will not be eligible for repatriation expenses, and he will have to bear his own expenses.

Gratuity payment

Any employee, who completes one year or more in continuous service, shall be eligible to gratuity at the end of the service. The gratuity is calculated as 21 day’s wages for every year of the first five years, and 30 day’s wages for each additional year thereafter, provided, that total gratuity shall not exceed the wages of two years.

Gratuity is calculated on annual basis, after the employee completes at least one year of service.

An employee may be deprived of gratuity if he has been dismissed for any of the reasons stated in Article 120 of labour law, or if he left the job at self-will to avoid dismissal, or if the establishment has a pension scheme, which could be beneficial substitute to the employee instead of gratuity.

Dispute settlement

In case of any unresolved dispute between employee and employer, an application will have to be made to the labour office in the emirate wherein the establishment is located. The employer or employee will be summoned to hear the argument at labour office, and should make the recommendation within two weeks from the date on which the application is filed. In case, the parties fail to settle the dispute at the Labour Office, the matter will be referred to the court to be litigated in normal manner.

Labour inspections

The Labour Inspection Department and the personnel employed therein shall undertake labour inspections. The visiting inspector will carry the identification card issued by the Labour Ministry, and shall be entitled to enter the premises for inspection. A Labour Inspector is responsible for supervising the proper enforcement of provision of labour law, providing necessary information and technical guidance, so as to adopt the best means of the provision of the law.

Retirement age

Maximum age for foreign workers to remain employed in the UAE is now 65 years.

Death compensation

In case the widow/widower lives with parents and offspring who were dependent on the deceased, the compensation will be divided as in a manner wherein the widow/widower will take one-eighth, and if more than one widow, this one eighth will be divided equally among them. The parents shall take one-third divided equally between them.

If there exists one or both of parents and a child, supported by deceased employee, who left behind no widow, the child shall take two-thirds, while the remaining third goes to the parent or parents in equal share.

In the absence of widow/widower, parents, brothers and sisters, the compensation will be distributed equally among children of the deceased. If the deceased has only dependent parents, then the amount will be distributed equally between the parents.

Employment ban/labour ban/work permit ban

These are all different terms for the same thing, which implies that the employee or the worker is not allowed to work in the UAE for a certain period of time. An employment ban can be usually for six months, one year, or permanent.

A six month ban is automatically imposed when leaving a job, unless there is reason not to, or when a longer ban in imposed.

A one year ban is imposed when a worker resigns before completing the limited contract period. A one year ban is imposed mostly in cases of expat workers leaving government jobs, expat workers who break the terms of their labour contract, in case of expatriates who lose a case with labour department against their employer if they were on temporary work permit and filed case with labour department, and possibly against workers who leave their job within a year of starting.

A permanent ban is imposed on absconding employees, or on those who break the labour law in any way.

During a ban, although nothing may be stamped on the employee’s passport, when a new employer submits an application to Labour Ministry, it will automatically be rejected, if a ban is already on the employee’s name in the computer file.

It may be possible to avoid or lift a ban by paying a fee, when transferring from one sponsor to another. However, it is best to check with the labour department of the particular emirate about transfer of sponsorship, ban lifting fee etc.

However, no labour ban will be imposed on UAE nationals who are not subject to labour bans, expatriate workers moving to a government job, oil company employees, expat workers moving to another employer within same free trade zone, expats having completed fixed term contract and having given notice in advance about not renewing it, expats who complete one year of unlimited contract and get NOC from current employer, expats sponsored by their spouse for residence visa, and in cases of expats having worked in the same company for more than two years (as of January 2011) on unlimited contract.

Other exemptions from employment ban or labour ban are for certain categories such as Engineers, Doctors, Pharmacists, Male Nurses, Qualified Accountants and Auditors, Agricultural Guides, Administrative Employees holding university degrees, Drivers licensed to drive heavy vehicles and buses, workers in private oil companies, and technicians operating on scientific, electronic instruments and laboratories, drivers licensed to drive heavy vehicles and buses and getting transferred on sponsorship to a similar party, and workers in private oil companies when the transfer is between such companies.

Points to be noted

To minimize the risk of problems, it is better to be aware of the following:

Legally, the Arabic version of the labour contract is more valid in the UAE. However, the employee should be given an English version of the contract, too.

A verbal contract is worth nothing. A written contract is a must, and the contract should be carefully read before accepting a position.

In case a company does not send a contract copy before arrival of the employee, or if the employee is asked to sign on a different contract, the employee should be more cautious in his approach.

In case of any issues with the employer, the employee can seek a legal opinion, as there are plenty of lawyers in the UAE to contact about such legal issues. However, it is better to be aware that the one with the most influence will win. Else, the employee can also contact his/her embassy for contact details of lawyers in UAE.

Brexit and Dubai: how it will impact?

Brexit and Dubai: how it will impact?

The announcement of the Brexit vote decision caused a worldwide ripple; before the referendum held in June 2016, many economists produced gloomy forecasts. UK removing itself from the European Union caused instantaneous global disruptions and financial market volatility. The economy took a swift blow almost immediately upon the announcement. Markets dropped rapidly and the pound hit a 31-year low against the greenback.

Then almost three weeks into the new year and the UK economy seems to be in rude health; forecasts seems to be wrong.

However, the UK has not actually left the EU yet – the real change may only happen once it does. The current uncertainty, ahead of talks between the UK and the rest of the EU, over what form Brexit will take is an issue for many firms when it comes to investment planning. Certain regions of the world are holding their collective breath in anticipation as they wait to see how everything pans out. This is largely due to the potential economic ramifications they will experience as a result of the move.

Dubai is among these regions, especially within the real estate arena considering that British investors are the third largest investors in the emirate’s property market.

The fall in sterling against the dirham gives people the opportunity to make overpayments to their mortgage in UK, as their dirhams now go further when converted into sterling. Essentially, for those who have considered purchasing property in the UK, this asset has become substantially cheaper.

The pound is forecast to fall another five percent against the US dollar by the end of the year; and we remind you that AED (UAE dirham) and US dollar are in a constant relationship of Dh3.67 per US dollar. so we are likely to see an even lower level of sales to UK nationals in the short term. But there is no guarantee that further Brexit policy decisions will result in further falls, or whether it will come back against the dirham.

In any case UK nationals may decide “to setup business in dirham” (maybe in a Free Zone) in order to have a dirham/usd related business. And with a Free Zone company they can have it with a fairly low investment.