Employing people in the UAE while the company stays British
A UK company opening in Dubai has to decide who employs whom before the first hire, not after. Free zone against mainland, the UK contract that does not travel, and the intra-group agreement that makes the whole thing legible.
The UK–UAE corridor · Part of Outsourced General Counsel, Dubai
A UK company cannot employ someone working long-term in the UAE without a licensed UAE presence, because the residence visa and work permit are sponsored by a UAE-registered entity. Dinmore Bell decides and documents that structure, writes the contracts on both sides, and coordinates the immigration and tax specialists in each jurisdiction.
Most UK companies opening in Dubai decide the employment question late, and they decide it by accident. Somebody good is available, the founder wants them started, and the contract that gets sent is the UK one with the addresses changed. It works, in the sense that the person starts. It stops working at the first visa renewal, the first termination, or the first time somebody asks which entity actually employs the team.
The decision worth making deliberately is narrow and it comes first: who employs whom, and under which law. Everything else follows from it.
Can a UK company employ someone in the UAE?
Not for a person physically working in the UAE on a long-term basis. Employment in the UAE is tied to a residence visa and a work permit, and those are sponsored by a UAE-registered entity. A UK company with no UAE presence has nothing to sponsor with.
This is the fact that surprises people, because in most of Europe a UK company can pay a local employee through a registered payroll without incorporating anything. The UAE does not work that way. The entity, the licence, the visa and the employment contract are one chain, and the chain starts with a licensed presence.
So the practical options are three, and the right one depends on how permanent the plan is.
A UAE entity of your own. Mainland or free zone, with its own licence, its own establishment card, and its own visa quota. This is the option for anyone who intends to trade locally or hire more than a couple of people.
An employer of record. A licensed third party employs the person, sponsors the visa, and invoices you. It is quick, it is more expensive per head, and it means the person is not your employee, which has consequences for confidentiality, intellectual property and restraint that people rarely read through.
A genuinely UK-based employee who travels. Legitimate where the work really is performed from the UK. Not a workaround for someone living in Dubai.
Free zone or mainland, and why it decides your employment terms
The jurisdiction you licence in determines which employment law governs the contract. Mainland and most free zones apply the federal labour law. A small number of financial free zones, notably the DIFC and ADGM, have their own employment legislation and their own courts.
For most founder-led businesses the answer is the federal law: Federal Decree-Law No. 33 of 2021, which governs private-sector employment and took effect on 2 February 2022. It is administered by the Ministry of Human Resources and Emiratisation.
Two features of it routinely catch UK employers.
The first is that the law abolished unlimited contracts. Private-sector employment runs on fixed-term contracts, renewable, and the UK habit of a permanent contract with a notice period does not translate directly. The contract has an end date, and somebody has to be responsible for renewing it before it passes.
The second is the MOHRE standard contract. What is registered with the ministry is the governing document for the employment relationship as the authorities see it. A longer side agreement can sit alongside it and deal with commercial matters, but where the two conflict on core terms the registered contract is what the ministry has.
The DIFC and ADGM route is different, more familiar to a common-law reader, and carries its own end-of-service arrangements. It is the right answer for regulated financial businesses and frequently the wrong answer, on cost, for a trading company that simply needs staff.
The UK contract that does not travel
The document you already have was written for an English-law employment relationship. Several of its central provisions do not survive the move.
End of service. UAE federal law provides for a gratuity calculated on final basic salary and length of service. It is not a pension, it is not discretionary, and it accrues from day one. A UK contract says nothing about it, and a business that has not been accruing for it finds out what it costs on the day somebody leaves.
Notice and termination. The grounds, the process and the consequences differ from the UK's, and the concept of unfair dismissal as an English lawyer understands it does not carry across.
Restrictive covenants. Post-termination restraint is enforceable in the UAE in narrower circumstances and on different tests. A twelve-month non-compete lifted from a UK template is decorative.
Intellectual property. The assignment wording that works under English law should not be assumed to operate identically. Where the person is building the thing the business sells, this is the clause to get advice on rather than to copy.
Governing law. For a person employed by a UAE entity and working in the UAE, choosing English law in the contract does not displace mandatory local employment protections.
The intra-group agreement nobody writes
Once there are two entities, the relationship between them has to be documented: which one employs, which one bears the cost, what the UAE company is paid for, and on what basis. Without it, the arrangement is invisible to auditors, to tax authorities in both countries, and to any future buyer.
This is the piece that gets left out, and it is the cheapest of all of them to do properly at the start.
The questions are ordinary. Does the UAE entity provide services to the UK parent, or sell to customers on its own account? If it provides services, on what margin, and is that margin defensible? Who owns the intellectual property the Dubai team creates? Which entity contracts with regional customers, and does the UK company guarantee anything?
Getting this written is a short piece of work that makes the group legible. Leaving it out means that in three years somebody reconstructs it from bank statements. That is the same discipline covered in corporate structuring, applied across two jurisdictions instead of one.
What stays with the UK side
Sending an existing UK employee out on assignment rather than hiring locally keeps the UK obligations live. HMRC guidance on employees working abroad is clear that PAYE income tax continues to be deducted from payments to employees working overseas, and that National Insurance treatment depends on whether a social security agreement is in place with the destination country.
Where no agreement applies, UK National Insurance can remain due for the first 52 weeks where the employee is ordinarily UK-resident, the employer has a place of business in the UK, and the employee was UK-based immediately before leaving. Assuming that a move abroad ends the UK payroll obligation is how arrears accumulate quietly.
Running one employment function across two jurisdictions is mostly administrative discipline: one register of who is employed by which entity, on which contract, with which visa expiry and which renewal date, and one person responsible for acting on it. Dinmore Bell holds exactly that for clients operating on both sides of the corridor, and the wider function is described at outsourced General Counsel in Dubai.
Where a specialist is needed
Immigration filings and visa processing are handled by a licensed PRO or formation agent. Corporate tax positions in the UAE and the UK, transfer pricing on any intra-group charge, and the personal tax position of a relocating founder are matters for tax advisers in each jurisdiction. Representation before the UAE courts or the DIFC courts is conducted by locally admitted lawyers.
Dinmore Bell decides and documents the structure, writes and holds the contracts, runs the registers and the renewal dates, and instructs and coordinates those specialists so that the two entities behave like one business.
Common questions
- Can a UK company employ someone living in Dubai?
- Not on a long-term basis without a licensed UAE presence. The residence visa and work permit are sponsored by a UAE-registered entity, so a UK company with nothing registered locally has nothing to sponsor with. The practical routes are a UAE entity of your own or a licensed employer of record.
- Which law applies to my Dubai employees?
- For mainland and most free-zone entities, Federal Decree-Law No. 33 of 2021, administered by MOHRE. The DIFC and ADGM are the exceptions: each has its own employment law and its own courts, which is usually the right answer for regulated financial businesses and often an expensive answer for a trading company.
- Do I still need to run UK payroll for someone who has moved to Dubai?
- If they remain employed by the UK company, yes. HMRC guidance is that PAYE income tax continues to be deducted from payments to employees working abroad, and National Insurance may remain due for a period depending on residence, the employer's UK presence and whether a social security agreement applies.
- What is end-of-service gratuity and do I have to pay it?
- It is a statutory payment under UAE federal law calculated on final basic salary and length of service. It accrues from the start of employment and is not discretionary. A business that has not been accruing for it discovers the cost on the day somebody leaves.
- Will my UK non-compete clause work in the UAE?
- Generally not as drafted. Post-termination restraint is enforceable in the UAE in narrower circumstances and on different tests, so a twelve-month non-compete lifted from a UK template is largely decorative. It needs to be rewritten for the jurisdiction rather than translated.
- What is an employer of record and when does it make sense?
- A licensed third party employs the person, sponsors the visa and invoices you. It suits a first hire, a short pilot, or a market you may exit. It costs more per head and the person is not your employee, which matters for confidentiality, intellectual property and restraint.
Sources
- 01Federal Decree-Law No. 33 of 2021 u.ae
- 02employees working abroad gov.uk
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