Your UK staff when you open in Dubai
The work permit decides who the employer is, and it decides it before anybody opens a contract. What a secondment actually requires, why the licence and not the contract sets the limit, and the three documents to finish before the first person relocates.
The UK–UAE corridor · Part of Legal Counsel Dubai: Outsourced General Counsel for UAE Businesses
A UK company cannot ordinarily employ someone to work in Dubai: the work permit is issued to a UAE-licensed establishment, and that establishment becomes the employer. Dinmore Bell sets up the structure that follows, whether a secondment, a local entity or an employer of record, and writes the contracts on both sides.
Every UK business that opens in Dubai asks the same question within a fortnight of deciding to go, and almost always in the same words: can we just keep employing them from here?
It is a reasonable question. The person is already on the UK payroll, they know the business, and nobody wants to renegotiate their package because their desk has moved. The answer is usually no, and the reason has nothing to do with the employment contract. It is the licence and the permit that decide who the employer is, and they decide it before anyone opens a document.
Can a UK company employ someone who is working in Dubai?
Not in the ordinary case. A work permit is issued to an establishment registered in the UAE, for a named worker, and the occupation has to match what that establishment is licensed to do. A UK company with no UAE presence has nothing to apply with.
The Ministry of Human Resources and Emiratisation runs thirteen categories of work permit, and the UAE Government's own guidance is blunt that it is illegal for a person to work in the UAE without a valid permit. Permits are granted to establishments on behalf of workers, and the worker's assigned occupation has to align with the company's licensed activity. There is a freelance permit that a person holds themselves, without an employer sponsoring them, and it is a genuine route for a consultant. It is not a route for a full-time member of your team.
So the sequence runs the other way round from how most businesses plan it. You do not agree the contract and then sort out the visa. The entity that holds the licence, and the activity written on that licence, determine which occupations you can sponsor at all. That is a structuring decision made months before the first person relocates, and it is the one most often taken by whoever set up the company rather than by whoever employs the people.
What does a secondment actually require?
Three documents that agree with each other: a host employment contract with the UAE entity that sponsors the permit, a variation to the UK contract that suspends rather than ends it, and a secondment agreement between the two companies setting out who pays for what.
A secondment is the arrangement founders think they are describing when they say the UK company will keep employing someone. Done properly it is not a way of avoiding a UAE employer. It is a way of having two, deliberately, with the relationship between them written down.
The host contract is the one MOHRE sees. It is on the ministry's own form, in Arabic and English, and it governs the day-to-day relationship: hours, leave, the end of service gratuity, notice. It cannot be quietly overridden by a side letter, and attempting it tends to produce the worst of both positions, where the employee enforces whichever document suits them.
The UK contract does not disappear. If the intention is that the person returns, the UK employment is usually suspended with continuity of service preserved, which matters for statutory rights and for anything that vests over time. Share options are the usual casualty here, because option rules frequently define a leaver by reference to ceasing employment with the issuing company, and a secondment structured carelessly does exactly that.
The secondment agreement between the two companies is the one nobody writes. It settles which entity bears the cost, on what basis it is recharged, who carries the risk of a claim, and what happens if the assignment ends early. Where the UK company is recharging the cost of a person working in the UAE, that recharge is a transfer pricing position as well as an intercompany invoice, and it needs to be agreed with your accountants rather than invented at year end.
Do we still run UK payroll for them?
Sometimes, and for longer than people expect. HMRC's position is that an employer must continue to operate PAYE on payments to employees working abroad, and National Insurance usually continues for the first 52 weeks where the employer has a UK presence and the employee was ordinarily resident here.
The UK tax treatment is a separate question from who employs the person, and the two get conflated constantly. HMRC's guidance on employees working abroad sets out that PAYE continues to be calculated on all payments made to employees who work abroad, and that for a country with no social security agreement with the UK, National Insurance contributions continue for the first 52 weeks provided the employer has a business presence in the UK, the employee was ordinarily resident here, and was living here immediately before going.
The UAE has no income tax on employment earnings, which is the fact everybody knows, and it is the reason the UK side gets ignored. It should not be. Somebody in the business has to hold the question of when UK payroll stops, whether a certificate of coverage is needed, and what the person's residence position actually is across a split year. That is work for your accountant and, where the numbers are large, a tax specialist. It is not work for the person relocating, who will make a reasonable guess and be wrong.
What about someone who only visits Dubai?
A visit is not employment, but a pattern of visits doing the work of the business can be. The risk is not usually immigration enforcement. It is that the UAE entity is found to be operating with unsponsored staff, and that the UK entity is found to be trading in the UAE without a licence to do so.
There is a real and widely used middle position: the person stays UK employed, travels on the appropriate entry permission, and does business development rather than delivery. It works where it is genuinely what is happening. It stops working when the person has a desk, a local phone number on the website and a UAE mobile in their signature, because at that point the arrangement is being described to the world as something the paperwork does not support.
The honest test is whether you would be comfortable explaining the arrangement to a regulator, a bank in an account opening review, or a buyer in diligence. All three ask, and the last one asks hardest.
The three documents to get right before the first person relocates
The first is the licence. Check that the activity on it covers the work the person is going to do, and that the free zone or mainland status matches where they will do it. A free zone licence permitting consultancy does not let you sponsor an engineer to work on a client's mainland site.
The second is the host employment contract, checked against the UAE position rather than against the UK one. End of service gratuity, annual leave, probation and notice all work differently, and a contract translated from an English template usually reads as generous in some places and unenforceable in others.
The third is the intercompany paper: the secondment agreement, the recharge basis, and the amendment to the UK contract. It is the least urgent of the three on the day and the most expensive to reconstruct two years later.
Where a specialist is needed
Immigration filings, the tax residence position and anything requiring advocacy before a UAE court are specialist work, and Dinmore Bell coordinates rather than performs them. Registered agents handle permits and visas; your accountants or a tax adviser own the transfer pricing and residence analysis; UAE-qualified counsel handles anything contentious in the local courts.
What sits in between is the part that is usually nobody's job: deciding which entity employs whom, making the three documents agree, and holding the position so that it still makes sense when the second and third people move. That is the work an outsourced General Counsel function is for, and it runs alongside the ordinary employment workload rather than as a separate corridor project.
Get the sequence right and the cost of moving the fourth person is a fraction of the cost of the first. Get it wrong and every relocation is a fresh negotiation with the same three documents that were never finished.
Common questions
- Can we keep someone on the UK payroll while they work in Dubai?
- Not as the whole answer. Somebody has to sponsor the work permit, and that has to be an establishment registered in the UAE whose licensed activity covers the work. The UK payroll question is separate and often continues for a period alongside the UAE employment, which is why the two contracts and the agreement between the companies have to be written together.
- Is a secondment different from just transferring someone?
- Yes, and the difference matters for continuity of service and for anything that vests. A transfer ends the UK employment. A secondment suspends it, keeps continuity, and is documented by a host contract, a variation to the UK contract and a secondment agreement between the two companies. Share option rules are the usual casualty when a transfer happens by accident.
- Do we need our own UAE entity, or will an employer of record do?
- An employer of record is a legitimate route and is often the right first step for one or two people, because it sponsors the permit without requiring you to hold a licence. It becomes less attractive as the team grows, as the work moves from business development to delivery, or where clients want to contract with a local entity.
- Does the employee keep paying UK National Insurance?
- Usually for a period. HMRC guidance provides that contributions continue for the first 52 weeks of working abroad in a country with no social security agreement with the UK, where the employer has a UK business presence and the employee was ordinarily resident and living here before leaving. PAYE continues to be operated on payments made to them.
- What is the risk of someone simply working from Dubai on visits?
- The exposure is less often immigration enforcement than the two questions that follow it: whether the UAE entity is operating with unsponsored staff, and whether the UK entity is trading in the UAE without a licence covering that activity. Banks in account reviews and buyers in diligence both ask, and the second asks hardest.
Sources
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