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You've found the perfect candidate in Dubai. Now you're Googling UAE labour law, trying to figure out if you need a trade license, and whether you can even legally employ someone without a local entity (spoiler alert: you can).
We're based in the UAE with in-house compliance experts who handle this daily. We've helped hundreds of companies navigate UAE employment law without the entity setup headache.
This guide walks you through your three compliant options for hiring in the UAE without establishing a local company. You'll learn exactly what each costs, how long it takes, and which compliance requirements you can't skip.
Why Hire in the UAE Without a Local Entity?
Setting up a legal entity in the UAE takes months and costs anywhere from 15,000 to over 40,000 dirhams.
You need licenses, physical office space, and legal counsel just to get started. Then comes the ongoing overhead: accounting, HR admin, and compliance monitoring.
The good news? You don't need any of that to hire your first UAE employee.
The UAE ranked second globally for remote workers in 2025. Foreign investment into the UAE hit USD 23 billion in 2022, up 10% year-over-year. Companies are racing to tap into this market.
Here's what you gain by skipping entity setup:
- Speed to market. Hire within days instead of waiting three to six months for entity incorporation. When you spot the right marketing manager in Dubai or developer in Abu Dhabi, you can onboard them before your competitors even finish their paperwork.
- Lower upfront costs. Skip the AED 15,000+ in setup costs plus ongoing office rent and annual licenses. You're testing the market, not committing to a five-year lease.
- Market validation. Run a pilot team or launch a small sales operation without betting the company. If the UAE market doesn't work out, you can scale back without unwinding a legal entity and liquidating assets.
The UAE government supports this approach with Federal Decree-Law No. 33 of 2021 (enacted in 2022). This law introduced flexible work arrangements including remote, part-time, and shared employment models.
Roles that would've required complex workarounds a few years ago are now straightforward to structure.
Your 3 Options for Hiring in the UAE Without a Local Entity
You've got three paths to hire in the UAE without establishing your own company. Each handles the "who sponsors the visa?" question differently.
1. Employer of Record (EOR)
An Employer of Record becomes the legal employer on paper while you control the actual work. Think of it as renting legal infrastructure instead of building it yourself. An EOR secures a valid trade license to provide manpower supply services within the UAE.
Employer of Record services typically handle:
- UAE trade license and MOHRE registration
- Work permit and residence visa sponsorship
- Monthly payroll with WPS compliance
- Statutory benefits like end-of-service gratuity
- Contract drafting and registration
You conduct the interviews, extend the offer, manage daily tasks, and make all employment decisions. The EOR wraps it in legal compliance.
2. Independent Contractors
Contractors work under their own freelance permits or Green Visas. They invoice you, manage their own immigration status, and operate as self-employed individuals. The catch: misclassification risk.
UAE labour law has clear tests for employment versus contracting. If your "contractor" works fixed hours, uses your equipment, takes direction like an employee, or lacks other clients, MOHRE can reclassify them (legally identifying them as employees and not independent contractors).
That triggers back-payment of benefits, substantial fines, and potential deportation for the individual.
3. Staffing Agencies
Staffing agencies place temporary workers in your UAE operation. The agency employs the worker, handles all compliance, and charges you an hourly or daily rate.
This works well for:
- Short-term coverage gaps
- Seasonal demand spikes
- Project-based needs with clear end dates
However, it's expensive for long-term hires. You're paying both the workers’ salaries and the agency's markup, often 15-30% above base compensation.
Staffing agencies also limit your employer brand. The worker is employed by the agency, not you. You can't offer them your benefits package, include them in company equity plans, or bring them to your global all-hands.
For roles where talent retention matters, that's a problem.
Cost and Time-to-Market Comparison
Here's an idea of how much each hiring method costs and how long it takes.
Costs reflect setup in major business hubs (Dubai/Abu Dhabi). Free zones in other emirates like Ajman or RAK may offer lower setup costs.
How to Decide Which Hiring Model to Use
Four questions determine which hiring model makes sense for you.
- Speed of hiring. Need someone next month? EOR or contractors are your only realistic options. Entity setup won't finish in time.
- Short-term versus long-term goals. Testing the market for six months? Don't set up an entity. Planning to build a 20-person UAE team over three years? The entity maths probably works.
- Admin overhead. Do you want to handle visa renewals, MOHRE reporting, and WPS payroll compliance? If not, pay the EOR premium. If you're planning to hire local HR staff anyway, the entity makes more sense.
The most common pattern: start with an EOR, validate the market and build revenue, then transition to your own entity when the maths makes sense.
UAE Visa & Labour Law Requirements Explained
Whichever hiring method you choose, you need to understand the UAE's employment requirements.
- If you're hiring UAE nationals (Emiratis): They don't need work permits or employer-sponsored visas. You still need a MOHRE-registered employment contract.
- If you're hiring expats (non-UAE nationals): They need work permits and employer-sponsored residence visas, even if they already live in the UAE under a different visa. Their existing residence visa (sponsored by family, previous employer, or self-sponsored) doesn't give them the right to work for you and would require additional MOHRE clearance.
Work Permit and Residence Visa Process for Expats
Every expat employee needs a work permit issued by MOHRE before they can legally work. That permit is tied to a residence visa, which allows them to live in the UAE.
An EOR like RemotePass will take care of work permits for you. Here's the sequence:
- Sponsor applies for initial approval from MOHRE
- Submit employee documents (passport copies, photos, educational certificates)
- Receive work permit approval
- Process residence visa through the General Directorate of Residency and Foreigners Affairs
- Complete Emirates ID registration
The employee can't start work until the permit is issued. Working on a visit visa while "waiting for paperwork" is illegal and risks deportation plus re-entry bans. This non-compliant arrangement may also invoke penalties for illegally commenced work.
MOHRE Registration & Emirates ID
Every employment contract must be registered with MOHRE within 60 days of the hire date. The contract specifies:
- Salary breakdown
- Working hours
- Leave entitlements
- Notice periods
- Job duties
MOHRE won't approve vague or non-compliant terms. For example, you can’t say "standard working hours" when you mean 48 hours per week.
The Emirates ID is the employee's official government identification. It's required for opening bank accounts, signing tenancy agreements, and accessing government services. Processing usually takes up to two weeks after visa issuance.
Step-by-Step: How to Hire with an Employer of Record in the UAE
Here's what actually happens when you use an EOR to hire in the UAE.
1. Choose the Right EOR Partner
Look for providers with an active UAE trade license and established MOHRE relationships. Ask how many UAE employees they currently sponsor. A provider with 50+ active placements has proven systems.
Key questions to ask:
- Do you offer direct payroll through the Wage Protection System (WPS)?
- What's your average visa processing time?
- How many UAE employees do you currently sponsor?
- What happens if there's a compliance issue?
WPS compliance is mandatory, and you don't want payment delays because of your EOR’s banking issues.
2. Give your EOR Details About Your New Hire
You conduct the interview process and make the hiring decision. Once you've agreed on terms, you provide the EOR with your offer details: salary, job description, start date, job title, and any specific benefits.
The EOR drafts a MOHRE-compliant employment contract in English and Arabic. They'll include all mandatory clauses:
- Salary breakdown
- Working hours
- Annual leave
- Sick leave
- Notice period
- End-of-service gratuity calculation
You review the contract to ensure it reflects your agreement, the employee signs, and the EOR registers it with MOHRE.
3. The EOR Takes Care of Permits and Visas
The EOR collects the employee's documents: passport copies, educational certificates, previous employment records, and medical fitness test results. They submit the work permit application to MOHRE, including the job offer, contract, and company documents.
Once MOHRE approves the permit, the EOR processes the residence visa. This involves:
- Emirates ID registration
- Medical testing
- Biometric data collection
The employee can enter the UAE on a work entry permit or visit visa while this processes.
The EOR tracks all renewal dates. Work permits are typically valid for two years, residence visas for two or three years depending on the employee's role and qualifications.
4. The EOR Handles Payroll, Benefits and Ongoing Compliance
The EOR runs monthly UAE payroll through WPS-compliant bank transfers.
They withhold nothing for income tax (the UAE doesn't tax personal income) but they do manage end-of-service gratuity accruals.
Gratuity is calculated as:
- 21 days of basic salary per year for the first five years
- 30 days of basic salary per year after that
The EOR tracks this liability and pays it out when the employee leaves.
They also handle mandatory benefits: annual leave tracking, sick leave documentation, air ticket allowances if specified in the contract, and public holiday compliance. UAE recognizes both Islamic and secular public holidays, with dates shifting based on lunar calendar observations.
5. When an Employee Leaves, the EOR Handles Offboarding
When an employee leaves, the EOR processes the exit:
- Cancel work permit and residence visa
- Calculate final settlements (unused leave and gratuity)
- Run final payroll
- Provide labour card cancellation and experience certificate
If you're transitioning from the EOR to your own entity, they transfer employee records, contract details, and any accrued liabilities. You'll need to issue new contracts under your entity and process fresh work permits.
When to Transition from EOR to Local Entity
You'll know it's time to set up your own entity when you hit these triggers:
- You pay more in EOR fees than you would for your own HR operation. When your monthly global hiring costs could cover a local HR manager, payroll system, and compliance support instead, an entity makes more sense.
- You need to own intellectual property locally. Some IP registrations and licensing agreements require a local entity as the legal owner. If you're filing UAE patents or need software licenses under a UAE company, the EOR structure creates friction.
- You're invoicing UAE clients consistently. Many UAE procurement processes prefer or require invoices from UAE-registered companies. If you're leaving revenue on the table because of entity structure, that's your signal.
- You want to open a UAE corporate bank account. Banks won't open accounts for EOR arrangements. You need your own trade license for corporate banking, credit facilities, and payment gateway integration.
The time it takes to transition varies. Expect anything from three to six months. The process looks like this:
- Set up the entity while maintaining the EOR arrangement
- Transfer employees under new contracts once your licenses are active
- EOR cancels old visas while you process new ones under your company sponsorship
Budget for a one to two month overlap period where you're paying both the EOR and your new entity costs.
Final Thoughts on Hiring in the UAE Without an Entity
You don't need six months and a six-figure budget to build a team in the UAE. Whether you're hiring your first Dubai-based marketer or testing the waters with a three-person sales team, an Employer of Record gets you operational in weeks instead of months.
An EOR like RemotePass handles all the legal complexity while you focus on growth. You avoid the entity setup costs, the MOHRE registration maze, and the ongoing compliance headaches.
Ready to hire in the UAE without the entity setup? Book a demo with RemotePass and onboard your first UAE employee.
FAQs about hiring in the UAE without an entity
Is it illegal to work in the UAE without a work permit?
Yes. Every employee must have a MOHRE-sponsored work permit and residence visa before starting work. Working without proper documentation leads to fines starting at AED 50,000, deportation, and re-entry bans for employees. Employers face the same fines plus potential jail time.
Is it legal to work for a company without a contract?
No. Federal Decree-Law No. 33 of 2021 (enacted in 2022) requires written, MOHRE-registered employment contracts for all workers. The contract must specify salary, working hours, leave entitlements, and benefits. Operating without a registered contract violates UAE labour law.
What is the 2% Emiratisation rule?
Private companies with 50 or more skilled employees must hire 10% UAE nationals in 2026. Skilled roles include positions requiring specialized education or professional certification. Non-compliance costs AED 8,000 ($2,180 USD) per month for each unfilled position.
This only applies if you set up an entity in the UAE, not if you use an Employer of Record.
How do you hire employees in the UAE?
You can either set up a legal entity (LLC or Free Zone company) and sponsor employees directly, or partner with an Employer of Record who handles all legal employment responsibilities. With an EOR, you select the candidate and manage their work while the EOR processes contracts, visas, payroll, and compliance.
Can you be hired without a work permit?
No. Employment and work permits are legally linked in the UAE. You can't have one without the other. Both must be sponsored by a licensed entity or EOR. Starting work before your permit is issued is illegal and risks deportation.
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