United Arab Emirates
The Government of the United Arab Emirates (UAE) is urgently pursuing economic diversification and regulatory reforms to promote private sector development; reduce dependence on hydrocarbon revenues; and build a knowledge economy buttressed by advanced technology and clean energy.
The UAE serves as a major trade and investment hub for the Middle East and North Africa, as well as increasingly for South Asia, Central Asia, and Sub-Saharan Africa. Multinational companies cite the UAE’s political and economic stability, excellent infrastructure, developed capital markets, and a perceived absence of systemic corruption as factors contributing to the UAE’s attractiveness to foreign investors. The UAE seeks to attract foreign direct investment (FDI) by i) not charging taxes or making restrictions on the repatriation of capital; ii) allowing relatively free movement into the country of labor and low barriers to entry (effective tariffs are five percent for most goods); and iii) offering FDI incentives.
The UAE in 2021 launched broad economic and social reforms to strengthen pandemic recovery, respond to growing regional economic competition, and commemorate its 50-year founding anniversary with a series of reforms.
The UAE and the country’s seven constituent emirates have passed numerous initiatives, laws, and regulations to attract more foreign investment. Recent measures include visa reforms to attract and retain expatriate professionals, a drive to create new international economic partnerships, major investments in critical industries, and policies to encourage Emirati entrepreneurship and labor force participation. These economic development projects offer both challenges and opportunities for foreign investors in the coming years. In 2022, UAE changed its work week for government bodies from Sunday to Thursday to Monday to Thursday with a half day on Friday in order to more closely align with world markets.
Additionally, the UAE approved a comprehensive reform of the national legal system, which, among other aims, developed the legal frameworks around data privacy, investment, regulation and legal protection of industrial property, copyrights, trademarks, and residency. The first-ever federal data protection law regulates how personal data are processed across the UAE, with separate laws on government, financial, and healthcare data to follow. The new Commercial Companies law removes restrictions to facilitate further mergers and acquisition activity. The federal trademark law further expands the scope of legal protection for companies’ trademarks, products, innovations, and trade names by protecting non-traditional patterns of trademarks. These legal reforms are broadly considered to be positive by U.S. companies, but investors will need to carefully consider how these broad changes affect their operations.
The Ministry of Finance announced in January 2022 that the UAE will introduce a federal corporate tax on business profits starting in 2023 as part of its membership in the OECD Inclusive Framework on Base Erosion and Profit Shifting. Companies await further guidance on how the new tax policy will be implemented, but it is expected to have a broad and significant impact on companies operating both inside in the UAE and “offshore” in the country’s many economic free zones.
The UAE announced in October 2021 that it would pursue net zero greenhouse gas emissions by 2050, to include an investment of $163 billion in renewable energy.
|TI Corruption Perceptions Index||2021||24 of 180||http://www.transparency.org/research/cpi/overview|
|Global Innovation Index||2021||33 out of 132||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, historical stock positions)||2020||$19.5||https://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita||2020||$39,410||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|
1. Openness To, and Restrictions Upon, Foreign Investment
The UAE actively seeks FDI, citing it as a key part of long-term economic development plans. In 2021, as part of the series of reforms to commemorate the UAE’s 50th anniversary, the government announced a series of programs to with the goal of attracting $150 billion worth foreign investment in the coming decade. The COVID-19 pandemic accelerated government efforts to attract foreign investment to promote economic growth.
Under Federal Decree-Law No (26) of 2020, the “Commercial Companies Law,” onshore UAE companies are no longer required to have a UAE national or a Gulf Cooperation Council (GCC) national as a majority shareholder. UAE joint stock companies no longer must be chaired by an Emirati citizen or have Emirati citizens comprise the majority of its board. Local branches of foreign companies no longer must have a UAE national or a UAE-owned company act as an agent. In March 2021, an intra-emirate committee recommended a list of strategically important sectors requiring additional licensing restrictions. The Abu Dhabi Department of Economic Development (ADDED) published in May 2021 a list of 1,105 commercial and industrial business activities that are eligible for 100 percent foreign ownership, effective June 2021. In August 2021, ADDED introduced the “Reduction Program” to facilitate investment and ease of doing business in Abu Dhabi emirate by reducing requirements and cutting fees. As part of the program, Abu Dhabi cut business startup fees by 94 percent in 2021. In June 2021, the Dubai government published guidelines for full ownership procedures for more than 1,000 commercial and industrial activities.
Federal Law No (32) of 2021 introduced two new types of companies: the special purpose acquisition company, or “SPAC,” and the special purpose vehicle, or “SPV.” The law also amended certain provisions related to Limited Liability Companies and public joint stock companies and introduced a regime to allow for the division of Joint Stock Companies.
Non-tariff barriers to investment persist in the form of visa sponsorship and distributorship requirements. Several constituent emirates have introduced new long-term residency visas and land ownership rights to attract and retain expatriates with sought-after skills in the UAE.
The Federal Decree-Law No (26) of 2020, outlined above, reduced limits on foreign control and right to private ownership of companies. Neither Embassy Abu Dhabi nor Consulate General Dubai (collectively referred to as Mission UAE) has received any complaints from U.S. investors that they have been disadvantaged relative to other non-GCC investors.
UAE officials emphasize the importance of facilitating business investment and tout the broad network of free trade zones as attractive to foreign investors. The UAE’s business registration process varies by emirate, but generally happens through an emirate’s Department of Economic Development. The UAE issued Federal Law No (37) of 2021 on commercial registry law to make the Economic Register a comprehensive reference for economic activities in the country and enable use of the unified economic register number as a digital identity for establishments. Links to information portals from each of the emirates are available at https://ger.co/economy/197 . Dubai waived and reduced fees for a total of 88 services provided by various Dubai Government entities in July 2021.
In September 2021, the UAE introduced the “Green Visa,” which allows self-employed individuals meeting certain professional requirements to achieve residency for themselves and family members without obtaining a work permit, a shift from previous immigration policies. The UAE also created a “Freelancers Visa” and expanded “Golden Visa” eligibility to include certain managers, CEOs, specialists in science, engineering, health, education, business management, and technology. The Golden Visa, first announced in 2019, allows foreigners who make major investments or focus on in-demand professions to live and work in the UAE without Emirati sponsors and offers extended visa validity compared to the UAE’s traditional work-related visa program.
The UAE introduced in September 2021 a single online platform to present all foreign investment opportunities in the UAE: invest.ae .
Dubai launched the Invest in Dubai platform, a “single-window” service in February 2021 to enable investors to obtain trade licenses and launch their business quickly. In August 2020, the Dubai International Financial Center (DIFC) introduced a new license for startups, entrepreneurs, and technology firms, starting at $1,500 per year. In January 2022, ADDED announced it had removed more than 20,000 requirements to set up businesses in the emirate as part of an ongoing overhaul of procedures. Twenty-six local and federal partner entities participated in the reductions program.
As part of Dubai Multi Commodities Center’s (DMCC) broader environment, social, and governance strategy, the DMCC announced in February 2022 that it will bring 20 social and environmental impact-driven businesses into its community through an Impact Scale-Up Program. Accordingly, the DMCC will provide qualifying companies with substantial discounts on business setup costs for five years.
Five-year residence visas are available for investors who purchase property worth $1.4 million or more, and 10-year residence visas are available for individuals who invest $2.8 million in a business. The government also provides visas for entrepreneurs and specialized talent in science, medicine, and specialized technical fields. The Abu Dhabi Department of Culture and Tourism launched in February 2021, the Creative Visa for individuals working in cultural and creative industries, including heritage, performing arts, visual arts, design and crafts, gaming and e-sports, media, and publishing.
The UAE is an important participant in global capital markets, including through several sizeable sovereign wealth funds, as well as through several emirate-level, government-related investment corporations.
3. Legal Regime
The onshore regulatory and legal framework in the UAE continues to generally favor local Emirati investors over foreign investors.
The Trade Companies Law requires all companies to apply international accounting standards and practices, generally the International Financial Reporting Standards (IFRS).
The Securities and Commodities Authority (SCA) Board Decision issued a decision in 2020 that public joint stock companies listed on the Abu Dhabi Securities Exchange (ADX) or the Dubai Financial Market (DFM) must publish a sustainability report. In March 2021, the SCA made it mandatory for listed companies to have at least one female representative on their board.
Generally, legislation is only published after it has been enacted into law and is not formally available for public comment beforehand. Government-friendly press occasionally reports details of high-profile legislation. The government may consult with large private sector stakeholders on draft legislation on an ad hoc basis. Final versions of federal laws are published in Arabic in an official register “The Official Gazette,” though there are private companies that translate laws into English. The UAE Ministry of Justice (MoJ) maintains a partial library of translated laws on its website. Other ministries and departments inconsistently offer official English translations via their websites. The emirates of Abu Dhabi, Dubai, and Sharjah publish official gazettes online in Arabic. Regulators are not required to publish proposed regulations before enactment.
As a GCC member, the UAE maintains regulatory autonomy, but coordinates efforts with other GCC members through the GCC Standardization Organization (GSO). In 2021, the UAE submitted 109 notifications to the WTO committee, including notifications of emergency measures and issues relating to Intellectual Property Rights.
Islam is identified as the state religion in the UAE constitution and serves as the principal source of domestic law. Common law principles, such as following legal precedents, are generally not recognized in the UAE, although lower courts commonly follow higher court judgments. Judgments of foreign civil courts are typically recognized and enforceable under local courts. Domestic law is a dual legal system of civil and Sharia laws – the majority of which has been codified. Most codified legislation in the UAE is a mixture of Islamic law and other civil laws.
The legal system of the country is generally divided between a British-based system of common law used in offshore free trade zones (FTZs) and onshore domestic law. The United States District Court for the Southern District of New York signed a memorandum with the DIFC courts providing companies operating in Dubai and New York with procedures for the mutual enforcement of financial judgments. The Abu Dhabi-based financial free zone hub Abu Dhabi Global Market (ADGM) signed a Memorandum of Understanding (MoU) with the Abu Dhabi Judicial Department in February 2018 allowing reciprocal enforcement of judgments, decisions, orders, and arbitral awards between ADGM and Abu Dhabi courts.
The UAE constitution stipulates each emirate can set up a local emirate-level judicial system (local courts) or rely exclusively on federal courts. The Federal Judicial Authority has jurisdiction over all cases involving a “federal entity.” The Federal Supreme Court in Abu Dhabi is the highest federal court. Federal courts have exclusive jurisdiction in seven categories of cases: disputes between emirates; disputes between an emirate and the federal government; cases involving national security; interpretation of the constitution; questions over the constitutionality of a law; and cases involving the actions of appointed ministers and senior officials while performing their official duties. The federal government administers the courts in Ajman, Fujairah, Umm al Quwain, and Sharjah, including vetting, appointing, and paying judges. Judges in these courts apply both local and federal law, as appropriate. Dubai, Ras Al Khaimah, and Abu Dhabi administer their own local courts, hiring, vetting, and paying local judges and attorneys. Abu Dhabi operates both local (the Abu Dhabi Judicial Department) and federal courts in parallel.
Employment Law: In December 2021, the UAE issued Federal Law No (33) of 2021, which took effect on February 2, 2022, and repealed UAE Federal Law No (8) of 1980. The new labor law defines contracts, working hours, leave entitlements, safety, and healthcare regulations.
The new labor law also sets a minimum wage for employees in the private sector to be determined by the UAE Cabinet.
Trade unions, strikes, and collective bargaining is prohibited. Expatriates’ legal residence in the UAE is tied to their employer (kafala system), but skilled labor usually has more flexibility in transferring their residency visa. In 2009, the UAE Ministry of Human Resources and Emiratization (MOHRE) introduced a Wages Protection System (WPS) to ensure unbanked workers were paid according to the terms of their employment agreement. Most domestic workers remain uncovered by the WPS.
The constitution prohibits discrimination based on religion, race, and national origin. The new labor law protects UAE government efforts to enhance the participation of Emirati citizens and notes that such efforts do not constitute discrimination. Federal Law No (06) of 2020 stipulates equal wages for women and men in the private sector.
The DIFC issued amendments in September 2021 to The DIFC Employment Law No (2) of 2019, addressing issues such as paternity leave, sick pay, and end-of-service settlements. ADGM also issued new employment regulations with effect in January 2020, which allowed employers and employees more flexibility in negotiating notice periods and introduced protective provisions for employees ages 15-18.
The UAE signaled throughout 2021 its intention to develop a more commercially friendly legislative environment to strengthen foreign investment. In March 2021, the UAE government announced it would allow full foreign investments in the industrial investments as part of its ten-years comprehensive industrial strategy the so called “Operation 300 Billion,” by updating the industrial law to support local entrepreneurs and attract foreign direct investment. It said the new industrial law would include flexible conditions to provide opportunities to small and medium-sized companies and allow 100 percent foreign ownership.
The Commercial Companies Law removes the restriction that the nominal value of a share in a joint stock company must be no less than $272,000. The new law also makes certain changes to the provisions regulating limited liability companies and public joint stock companies. It abolishes the maximum and minimum percentage of the founders’ contribution to the company’s capital, and cancels the legal limitation of the subscription period. The law eliminates the requirement for the nationality of the members of the board of directors, and allows companies to transform into a public joint stock company and offer new shares without being restricted to a certain percentage. It allows companies to divide and create legal rules governing division operations. Branches of foreign companies licensed in the UAE would be also allowed to transform into a commercial company with UAE citizenship.
To register with the Abu Dhabi Securities Exchange, go to: https://www.adx.ae/English/Pages/Members/BecomeAMember/default.aspx
To obtain an investor number for trading on Dubai Exchanges, go to: http://www.nasdaqdubai.com/assets/docs/NIN-Form.pdf
The Ministry of Economy’s Competition Regulation Committee reviews transactions for competition-related concerns.
Mission UAE is not aware of foreign investors subjected to any expropriation in the UAE in the recent past. There are no federal rules governing compensation if expropriations were to occur. Individual emirates would likely treat expropriations differently. In practice, authorities would be unlikely to expropriate unless there were a compelling development or public interest need to do so.
The bankruptcy law for companies, Federal Decree Law No (9) of 2016, came into effect in February 2019. The law covers companies governed by the Commercial Companies Law, FTZ companies (with a few exceptions for free zones with their own bankruptcy and insolvency regime, such as the DIFC and ADGM), sole proprietorships, and companies conducting professional business. It allows creditors owed $27,225 or more to file insolvency proceedings against a debtor 30 business days after written notification to the debtor. The law decriminalized “bankruptcy by default,” ending a system in which out-of-cash businesspeople faced potential criminal liability, including fines and potential imprisonment, if they did not initiate insolvency procedures within 30 days. In October 2020, the UAE Cabinet approved amendments to the law and added provisions regarding “Emergency Situations” that impinge on trade or investment, to enable individuals and business to overcome credit challenges during extraordinary circumstances such as pandemics, natural and environmental disasters, and wars. Under the amendments, a debtor may request a grace period from creditors, or negotiate a debt settlement for a period up to 12 months.
The bankruptcy law for individuals, Insolvency Law No (19) of 2019, came into effect in November 2019. It applies only to natural persons and estates of the deceased. The law allows a debtor to seek court assistance for debt settlement or to enter liquidation proceedings as a result of the inability to pay for an extended period of time. Under this law, a debtor facing financial difficulties may apply to the court for assistance and guidance in the settlement of his financial commitments through one or more court-appointed experts, or through a court-supervised binding settlement plan.
4. Industrial Policies
All FTZs offer unique incentives to foreign investors. The UAE does not offer incentives to underrepresented investor groups nor does it yet offer green investment incentives.
There are numerous FTZs throughout the UAE. Foreign companies generally enjoy the same investment opportunities within those zones as Emirati citizens. All FTZs provide 100 percent import and export tax exemptions, 100 percent exemptions from commercial levies, 100 percent repatriation of capital and multi-year leases, easy access to ports and airports, buildings for lease, energy connections (often at subsidized rates), and assistance in labor recruitment. In addition, FTZ authorities provide extensive support services, such as visa sponsorship, worker housing, dining facilities, and physical security. Free zone businesses which conduct business with mainland UAE, will be subject to corporate tax from June 1, 2023.
FTZs have their own independent authorities with responsibility for licensing and helping companies establish their businesses. Investors can register new companies in an FTZ, or license branch or representative offices. All Abu Dhabi FTZs as well as several Dubai FTZs offer dual licensing in cooperation with local Department of Economic Development. A dual license enables an LLC established in an FTZ to obtain an onshore license allowing the company to conduct onshore business in that emirate without partnering with an Emirati national, recruiting extra staff using the services of an onshore labor office, or to rent extra office space onshore.
The cabinet published Federal Decree Law No (45) of 2021 in November 2021 regarding personal data protection (the Data Protection Law). The law came into effect in January 2022, and the executive regulations are due to be issued in March 2022. The law indicates that personal data may be transferred outside the UAE, if the country or territory to which the personal data is to be transferred has adequate protection of personal data, or if the UAE accedes to bilateral or multilateral agreements related to personal data protection with the countries to which the personal data is to be transferred. The UAE Data Office, established under a separate law (Federal Decree Law No (44) of 2021), will be the single national data privacy regulator.
All foreign defense contractors with over $10 million in contract value over a five-year period must participate in the Tawazun Economic Program, previously known as the UAE Offset Program. This program also requires defense contractors that are awarded contracts valued at more than $10 million to establish commercially viable joint ventures with local business partners, which would be projected to yield profits equivalent to 60 percent of the contract value.
The UAE does not force foreign investors to use domestic content in goods or technology or compel foreign IT providers to turn over source code, but it strongly encourages companies to utilize local content. In February 2018, the Abu Dhabi National Oil Company (ADNOC) launched the In-Country Value (ICV) strategy, which gives preference in awarding contracts to foreign companies that use local content and employ Emiratis. In February 2020, the Abu Dhabi Department of Economic Development and ADNOC signed an agreement to standardize ADNOC’s ICV certification program across the Abu Dhabi Government’s procurement process.
5. Protection of Property Rights
The federal government allows emirates to decide the mechanisms through which ownership of land may be transferred within their borders. Abu Dhabi has generally limited land ownership to Emiratis or other GCC citizens, who may then lease the land to foreigners. The property reverts to the owner at the conclusion of the lease. However, in 2019, the Abu Dhabi Government issued Law No (13) of 2019 amending the rules on foreign ownership of real estate in the Emirate of Abu Dhabi. Under the law, foreign individuals and companies wholly or partially owned by foreigners are allowed to own freehold interests in land located within certain investment areas of Abu Dhabi for an unrestricted period.
Although Dubai has restricted ownership to UAE nationals in certain older, more established neighborhoods, traditional freeholds, also known as outright ownership, are widely available, particularly in newer developments. Freehold owners own the land and may sell it on the open market. The contract rights of lienholders, as well as ownership rights of freeholders, are generally respected and enforced throughout the UAE.
Mortgages and liens are permitted with restrictions, and each emirate has its own system of recordkeeping. In Dubai, for example, the system is centralized within the Dubai Land Department, and is considered extremely reliable.
In January 2022, the ruler of Dubai issued Law No (2) of 2022 on the expropriation of property for public use in the Emirate of Dubai. The new Law regulates the terms and conditions under which buildings and facilities can be expropriated and sets out the terms for providing compensation to the owners whose properties are expropriated. In July 2021, Dubai issued resolution No (25) of 2021 to add some lands to the areas for ownership by non-UAE nationals of real property in the Emirate of Dubai.
The UAE has an established a legal and regulatory framework for intellectual property rights (IPR) protection. In recent years intellectual property holders have seen marked improvement in the protection and enforcement of IPR. In April 2021, the UAE was removed from the U.S. Trade Representative’s Special 301 Report Watch List. Recent UAE government changes include enhancing IP protections for the pharmaceutical and biotechnology industries; transforming legislation surrounding patents, industrial design, trade secrets, copyrights and trademarks; acceding to the Madrid Protocol; lowering previously prohibitive trademark fees; increasing transparency in the outcomes of counterfeit seizures; increasing notifications, seizures, and public destructions by Dubai Customs; and creating intergovernmental and quasi-governmental groups responsive to USG and U.S. industry concerns; and licensing music at Expo 2020. While additional steps are needed to remedy problems with music licensing and IPR enforcement in FTZs, the UAE government has taken action to address several concerns of rights holders.
Emirate-level authorities such as economic development authorities, police forces, and customs authorities enforce IPR-related issues, while federal authorities manage IPR policy.
Before 2021, inventors could receive patent protection in UAE through either the UAE national patent office or the regional GCC Patent Office. On January 5, 2021, the GCC Patent Office stopped accepting new patent applications as the regional patent system undergoes significant reforms. While GCC patent applications filed before January 5th will continue to be processed, inventors will need to rely on the national UAE patent office to seek patent rights until the new regional GCC system is established.
Resources for Intellectual Property Rights Holders:
Intellectual Property Attaché for the Middle East & North Africa
U.S. Embassy Abu Dhabi | U.S. Department of Commerce U.S. Patent & Trademark Office
Tel: +965 2259 1455 Peter.Mehravari@trade.gov
For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/
7. State-Owned Enterprises
State-owned enterprises (SOEs) are a key component of the UAE economic model. There is no published list of SOEs or GREs at the national or individual emirate level. The influential Abu Dhabi National Oil Company (ADNOC) is strategically important and provides a major source of revenue for the government. Emirates Airlines and Etisalat, the largest local telecommunications firm, are also internationally recognized brands. In some cases, these firms compete against other state-owned firms (Emirates and Etihad airlines, for example, or telecommunications company Etisalat against du). While they are not granted full autonomy, these firms leverage ties between entities they control to foster national economic development. In Dubai, SOEs have been used as drivers of diversification in sectors including construction, hospitality, transport, banking, logistics, and telecommunications. Sectoral regulations in some cases address governance structures and practices of state-owned companies. The UAE is not party to the WTO Government Procurement Agreement.
There is no privatization program in the UAE. There have been several listings of portions of SOEs, on local UAE stock exchanges, as well as some “greenfield” IPOs focused on priority projects. However, several SOEs have allowed partial foreign ownership in their shares. For example, Abu Dhabi National Oil Company for Distribution, many national banks, some utility operators and the telecom operators, Etisalat and du, now allow minority foreign ownership. In November 2021, Dubai announced plans to list ten SOEs on the Dubai Financial Market as part of a broader strategy to double the financial market’s size to $817 billion.
11. Labor Policies and Practices
Despite a pandemic-induced economic slowdown in 2020, unemployment among UAE citizens remains low. Although there were significant departures of foreign workers during the pandemic, expatriates represent over 88.5 percent of the country’s 9.6 million residents, accounting for more than 95 percent of private sector workers. As a result, there would be large labor shortages in all sectors of the economy if not for expatriate workers. Most expatriate workers derive their legal residency status from their employment.
The Emiratization Initiative is a federal incentive program to increase Emirati employment in the private sector. Requirements vary by industry, but the Vision 2021 national strategic plan aimed to increase the percentage of Emiratis working in the private sector from five percent in 2014 to eight percent by 2021; in 2019 the UAE reached 3.64 percent. The government said it would work closely with the private sector to achieve this target. In August 2020, the Emirates Job Bank (EJB), a government-facilitated job portal for UAE nationals, obliged government, and onshore private employers to provide an explanation for interviewed UAE citizens were not hired, before allowing the employer to hire a non-citizen. Most Emirati citizens in the private sector are employed by government-related entities (GREs). In September 2021, the UAE launched Program Nafis (“compete” in English) to support the employment of Emirati nationals in the private sector. Under Nafis, the UAE will spend up to $6.5 billion to employ 75,000 Emiratis in the private sector over 2021-2025, with the aim for Emiratis to hold 10 per cent of the UAE’s private sector jobs by 2026.
A significant portion of the country’s expatriate labor population consists of low-wage workers who are primarily from South Asia and work in labor-intensive industries such as construction, manufacturing, maintenance, and sanitation. In addition, several hundred thousand domestic workers, primarily from South and Southeast Asia and Africa, work in the homes of both Emirati and expatriate families. Federal labor law does not apply to domestic, agricultural, or public sector workers. In 2014, the federal government implemented a law mandating a standard contract for all domestic workers. The UAE in 2017 issued a domestic workers law, which regulates their rights and contracts.
Under the new UAE labor law, employers must pay severance to workers who complete one year or more of service, which is calculated on the basis of their basic salary. Expatriate workers do not receive UAE government unemployment insurance. Termination of UAE nationals in most situations requires prior approval from the Ministry of Human Resources and Emiratization (MOHRE).
The guest worker system generally guarantees transportation back to country of origin at the conclusion of employment. Repatriation insurance costs $16 per year per employee. Most employees are not subject to excessively onerous visa, residence, work permit, or similar requirements inhibiting mobility. Article (8) of the new Law indicates that unlimited contracts are to be abolished and replaced with work contracts of a fixed term for a period of three years.
Employees who live in the UAE on a sponsored work visa can undertake part-time jobs and work for multiple employers simultaneously to earn additional income. The new labor law allows children aged 15 and over to take on part-time jobs. The UAE Cabinet approved a measure in January 2021 permitting foreign university students in the UAE to sponsor their families, provided they have the financial means to do so and can afford suitable housing.
Although UAE federal law prohibits the payment of recruitment fees, many prospective workers continue to make such payments in their home countries. In 2018, the UAE government launched Tadbeer Centers, publicly regulated but privately operated agencies to improve recruitment regulation and standards. Tadbeer Centers are currently the only legally operating recruitment agencies.
There is no minimum wage in the UAE; however, article 27 of the new federal labor law (Federal Law No (33) of 2021) says the cabinet may, upon the proposal of the Minister of Human Resources and Emiratization and in coordination with the concerned authorities, issue a resolution to determine the minimum wage for workers or any category thereof. MOHRE unofficially mandates an AED 5,000 ($1,360) monthly minimum wage for locals at job fairs and requires job titles offered for Emiratis to be socially acceptable. Some labor-sending countries require their citizens to receive certain minimum wage levels as a condition for allowing them to work in the UAE. In January 2020, the UAE government introduced a salary requirement for residents seeking to directly sponsor a domestic worker, raising the minimum monthly income for the individual or entire family from $1,630 to $6,810, inclusive of all allowances.
The law prohibits public sector employees, security guards, and migrant workers from striking, and allows employers to suspend private sector workers for doing so. In addition, employers can cancel the contracts of striking workers, which can lead to deportation. Changes to the penal code effective January 2022 mandate deportation of noncitizen workers inciting or participating in a strike. According to government statistics, there were approximately 30 to 60 strikes per year between 2012 and 2015, the last year for which data is available. In December 2019, construction workers in Abu Dhabi engaged in an hours-long strike, claiming they had not been paid in months and that each was owed over $3,400. The police intervened to defuse the protests and arrested some of the workers for resisting. Mediation plays a central role in resolving labor disputes. MOHRE and local police forces maintain telephone hotlines for labor dispute and complaint submissions. MOHRE manages 11 centers around the UAE that provide mediation services between employers and employees. Disputes not resolved by MOHRE are transferred to the labor court system.
MOHRE inspects company workplaces and company-provided worker accommodations to ensure compliance with UAE law. Emirate-level government bodies, including the Dubai Municipality, also carry out regular inspections. MOHRE also enforces a mid-day break from 12:30 p.m.-3:00 p.m. during the extremely hot summer months. The federally mandated Wages Protection System (WPS) monitors and requires electronic transfer of wages to approximately 4.5 million private sector workers (about 95 percent of the total private sector workforce). There are reports that small private construction and transport companies work around the WPS to pay workers less than their contractual salaries. In 2020 the UAE began a pilot program to begin integrating domestic workers into the WPS. Less than one percent of domestic workers are enrolled in WPS. MOHRE announced the optional implementation of WPS for domestic workers starting January 27, 2022.
Following the promulgation of similar legislation in Abu Dhabi, Dubai’s government fully implemented Law No 11 in May 2017, which mandates employers provide basic health insurance coverage to their employees or face fines. Dubai’s mandatory health insurance law covers 4.3 million people.
The multi-agency National Committee to Combat Human Trafficking is the federal body tasked with monitoring and preventing human trafficking, including forced labor. Child labor is illegal and rare in the UAE. The UAE continues to participate in the Abu Dhabi Dialogue, engage in the Colombo Process, and partner with other multilateral organizations such as the International Organization for Migration and the United Nations Office on Drugs and Crime regarding labor exploitation and human trafficking.
Section 7 of the Department of State’s Human Rights Report (http://www.state.gov/j/drl/rls/hrrpt) provides more information on worker rights, working conditions, and labor laws in the UAE. The Department of State’s Trafficking in Persons Report (https://www.state.gov/reports/2021-trafficking-in-persons-report/) details the UAE government’s efforts to combat human trafficking.