Key Laws and Employment Requirements in the Middle East

Erez Greenberg October 18, 2017
Key Laws and Employment Requirements in the Middle East

In our continuing series to highlight employment laws and labor requirements around the globe, we’d like to introduce you to the Middle Eastern region of the world. Known for its rich history and natural resources, this region is also a source of talent that many employers would love to access. This analysis will focus on three countries in this area: The United Arab Emirates, Saudi Arabia, and Egypt.

For a look at other areas of the world, be sure to check out:

United Arab Emirates

The United Arab Emirates, or UAE, is located in the Arabian Peninsula. It is one of six member countries of the Gulf Cooperation Council, a political and economic alliance among the member countries. While Dubai is the largest city in the UAE, Abu Dhabi is the capital of the country. Additionally, while Arabic is the official language, English is very common since approximately 88% of the country’s residents are expatriates.

Employment in the region is governed by laws set forth by the Ministry of Labor. Some key requirements:

Employment contracts are required: They can be limited or unlimited contracts depending on the project duration and expectations.

Annual Leave: Employees who have completed six months of service but less than one year receive 2 days of leave per month. Once an employer has completed a year of service they are entitle to 30 days leave.

Notice periods: Either part must provide a minimum of 30 days’ notice but no more than three months’ notice when terminating their contract, or compensate the employee in lieu of notice. This is to be done for both limited and unlimited contracts. Notice is not required if either party commits violations, fails to perform their functions or is found of gross misconduct.

Pensions: The employer, employee, and government all contribute to the General Pensions and Social Security Authority. Government contributes 15%, private employer contributes 12.5%, and the employee contributes 5%.

One other unique element about the UAE is “emiratisation,” or the incentive to hire local UAE citizens for projects. This is somewhat similar to Saudization (below), but this is positioned as a benefit to employers that are able to create sustainable positions for UAE nationals.

For additional information, see the CountryPedia page for UAE payroll and benefits

Saudi Arabia

Saudi Arabia is in the middle of a revolutionary plan to drive economic growth in the country. Vision 2030, which hopes to create 450,000 jobs in the region and achieve 96 strategic objectives is a big leap that should create new opportunities for employers. Because a third of Saudi Arabia’s population of 33 million are immigrants, changes in Saudi labor laws affect a wide range of individuals.

As noted above, the private sector must follow Saudization rules by employing a minimum percentage of nationals in all private companies (Nitaqat).

Employment in the region is governed by laws set forth in the Labor and Workmen’s Law. Some key requirements: Employment contracts may be fixed-term or indefinite. Employers should be aware that continuing to renew fixed-term contracts may convert them into indefinite contracts over time in the eyes of the law. Probation periods may last up to 180 days.

Annual Leave: Employees are entitled to 21 days paid leave. After 5 consecutive years of employment, employees are entitled to 30 days annual leave. Any leave not used at the end of employment will be paid in lieu.

Notice periods: Fixed-term Contract: an employer must provide at least one month notice unless stated differently in the contract.

Indefinite Term Contract: Either party with valid reasons may terminate the contract with 60 days’ notice period.

An employer who terminates without notice must provide payment in lieu.

Pensions: Employers must contribute 9% and employees are responsible for 9% of gross earnings.

For more information see our specific countrypedia page on Saudi Arabia payroll and benefits

Egypt

Egypt has a working population of approximately 32 million individuals. The country has partnered with the U.S. to focus on workforce capability development and training initiatives, each designed to increase sustainable prosperity within the nation. These types of trainings, combined with the country’s relatively high unemployment rate, mean that there is a potentially qualified labor force ready and willing to work.

Employment in the region is governed by laws set forth by the Labour Law. Some key requirements:

Employment contracts: may include probation periods, but the length may not exceed three months. In addition, there are three types of contracts typically used: fixed-term, open-ended (indefinite), and contract for performance of specific project-based tasks. If a fixed-term contract expires and both parties continue to perform, it is understood that the contract was automatically renewed for an indefinite period.

Annual Leave: Employees receive 21 days if they have worked at least 1 year. If they have worked over 10 years, they will receive 30 days. Employees over the age of 50 also receive 30 days.

Notice periods: the notice period varies depending on length of service. This ranges from two months’ notice for less than ten years of service to a maximum of three months’ notice for more than ten years of service.

Pensions: Employee contribution towards pension is 10.0% and the employers is 15.0%. Contribution rates for both parties are set to increase by .5% every seven years until capping at 26% in total.

Each of these countries are regional economic powerhouses with highly qualified and educated citizens that are available to perform work on a project-based or ongoing basis.

For more information about these and other countries see our countrypedia.

See our cost of hiring infographic for a comparison of criteria including paid time off, employer taxes average monthly salary.

Papaya Global payroll platform lets you:

  • Automate payroll with zero processing errors
  • Manage global payroll, PEO & contractors via one platform
  • Make cross-border payments in 100+ countries