A company looking to hire an international collaborator in the host country has the choice between being a Foreign Employer (ESEF), engaging in international payroll services, or utilizing an Employer of Record (EOR).
All You Know About What is UAE Employer of Record?
Connect Resources provides guidance on UAE Employer of Record. An Employer of Record is a key partner for companies that want to have someone work for them in another country without directly hiring them. The EOR acts as the legal employer of the worker, although they do not recruit them.
In practice, the employer of record acts as a legal entity responsible for payroll management, including:
- Obtaining visas and work permits for international collaborators, thanks to their knowledge of the legal system in the host country.
- Ensuring contract compliance and employee protection by the host country’s labor code. Paying employees’ salaries in compliance with local laws.
- Meeting obligations related to personnel administration, such as social benefits, taxes, record-keeping, etc. They assume a significant portion of the responsibilities regarding compliance and tax legislation.
- Informing the client about minimum wages, collective bargaining agreements, various charges (including social security contributions and taxes), notice periods, contract termination, and departure indemnity terms.
- Facilitating communication between the employee and local authorities. Engaging an EOR offers multiple advantages for the client company in terms of human resources simplification, risk reduction, and cost savings:
- There is no need to establish a local legal entity to handle all aspects of managing international collaborators, such as immigration, payroll, compliance, taxation, etc. The EOR has local experts specializing in these areas.
- New collaborators can integrate within a few days and enjoy the social benefits afforded to existing employees. Client companies are relieved of time-consuming and potentially complex administrative tasks, especially if they are not familiar with local regulations.
- The risk of the contract being reclassified as a conventional employment contract is greatly reduced. Engaging an EOR represents a solution for rapidly expanding international presence, at a lower cost and in compliance with a secure framework.
The Dubai version of EOR
- In Dubai, there is a local equivalent of the Employer of Record (EOR). In this arrangement, an independent consultant performs a mission for a client company and signs an employment contract with a company that hosts the activity.
- The company handles all administrative matters, invoices for services rendered, and collects payments. They then pay a portion of the fees to the consultant as a salary, deducting social security contributions and management fees.
Three documents outline this tripartite relationship:
The membership agreement: A membership agreement between the company and the consultant concerning salary payments, ancillary services offered to the consultants, the professional liability insurance taken out by the company, and the mandatory financial guarantee.
Fixed-Term r Permanent: An employment contract between the consultant and the company, established at the same time as the membership agreement. It specifies the specific terms of each mission, which are agreed upon by the consultant and the client company.
The service contract: A service contract concluded between the company and the client company. This agreement specifies the nature of the service to be performed, the schedule, the fees, payment terms, mission expenses reimbursed by the client (if applicable), and the maximum amounts involved. Like the employment contract, the service contract reflects the conditions agreed upon by the worker and the client.
EOR is not a temporary employment contract or a loan of workforce between companies. It has two limitations compared to EOR. The client company can only use this solution for occasional missions that do not fall within its regular activities and for a maximum duration of 3 years in the case of recurring missions.