UAE compliance: what businesses need to know

There’s one thing that businesses around the world have in common: they all have to comply with various commercial laws and regulations. This is no different for companies operating in the UAE region. 

Business laws are implemented to protect employee and consumer rights, ensure safety and govern commercial markets. And, although there are nuances for specific sectors, there are many overarching regulations that all business leaders must keep in mind.

Failing to comply can have damaging consequences. First, there’s the financial impact, as businesses can face hefty fines. For example, failing to meet the UAE’s Ultimate Beneficial Owner (UBO) rule – which requires companies to reveal anyone who has direct or indirect control of a business – can result in fines ranging from Dh15,000 to Dh100,000.

There’s also the reputational impact. A poor compliance record can make it significantly harder for businesses to attract and retain new partners, investors or employees – as well as potentially leading to the suspension of business licenses.

The pressure is on business leaders and HR teams to stay on top of local regulations and ensure continuous compliance. However, as the laws governing private sector operations are constantly evolving, doing so is easier said than done.

UAE Labor Law – new and improved

Recent changes to the UAE Labor Law – the first time it has been overhauled in more than 40 years – have introduced more compliance requirements for businesses to consider.

The updates have been designed to increase flexibility and competitiveness in the employment market, and apply to all private sector businesses that operate onshore in the UAE. Companies must be aware of these changes and the steps needed to ensure compliance. Here are a few of the highlights:

  • All employment contracts must now have a fixed term of up to three years, replacing the unlimited contracts that had become commonplace.
  • Several ew models have been introduced to suit today’s flexible job market, including temporary work, flexible working and shared jobs
  • Paid bereavement leave has been introduced – going up to five days’ allowance for the death of a spouse – while maternity leave has been extended. Expecting mothers are now entitled to 45 days leave at full pay and a further 15 days leave with half pay.
  • Although the exact figure is yet to be determined, the first minimum wage will be introduced for all private sector employees
  • Companies with 50 employees or more must establish internal policies that govern holidays, bonuses, appraisals and salary reviews, working hours, health and safety, grievance and disciplinary procedures
  • the new law prohibits discrimination on the basis of race, color, sex, religion, nationality or disability.

These updates illustrate why maintaining compliance is such a tricky and time-consuming task – putting business leaders and HR teams under pressure. The good news is that the cloud offers a way to ensure compliance in an effective and cost-efficient way.

There’s power in the cloud

There are several reasons why businesses should be investing in the cloud to support their compliance efforts.

Firstly, they can free HR teams up from the admin burden. Cloud-based platforms can automate overtime calculations and severance payments, streamline offboarding processes and handle many more of the mundan administrative tasks associated with compliance. This all helps to save time, boost productivity and reduce the risk of human error.

Most importantly, it enables HR teams to dedicate more time towards the things that really matter: engaging employees, meeting their evolving needs, and supporting business growth. A more productive and efficient HR department will be able to add real business value, instead of getting bogged down in manual processes.

The connected nature of cloud-based platforms means they can also be regularly updated to remain compliant with local labor laws and any other legal requirements. As a result, they can flag potential compliance issues in real time.

What’s more, digital platforms can provide analytic reporting around things like payroll, expenses and contract statuses. This makes it easier for businesses to keep track of key information and ensure their policies meet regulatory requirements. If the rules change, these policies can be quickly updated in the system and automatically rolled out to the entire workforce.

That’s why businesses must be prepared to unleash the transformational power of the cloud. However, most businesses can’t do it by themselves. They need a partner that knows the local regulatory landscape inside out, is ingrained in the local culture, and is dedicated to providing innovative solutions to customer pain points.

That’s a partner that will be best placed to advise on policy updates, help mitigate any potential business impact, and deliver long-term value as part of an impactful digital transformation strategy.

Ultimately, businesses must remember that compliance isn’t a one time thing – it’s an ongoing journey. Those that aren’t prepared to embrace the power of cloud will quickly find themselves falling behind their competitors – both both in terms of technical capabilities and attractiveness to potential employees. Get in touch to find out how we can help you leverage the cloud.

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