Seconding employees into the UAE and Qatar to perform work for local entities continues to be a hot topic. Due to fairly strict immigration rules, secondments into both jurisdictions can be relatively challenging for employers and can have inadvertent and unintended consequences. This article explores the key considerations when seconding employees into the UAE and Qatar.
Who will sponsor the employee?
The immigration rules of the UAE and Qatar require that individuals (save for nationals of one of the six Gulf Cooperation Council (GCC) countries) be sponsored by a local entity or resident family member in order to reside in the region.
Furthermore, individuals, including those from the GCC, must have permission from the authorities (in the form of a labour card or work permit, for example) in order to perform substantive work in country.
This applies even where individuals maintain substantive employment with an entity based outside of the jurisdiction and/or where individuals are simply being seconded into the jurisdiction for a specified period.
A local sponsor who is prepared to sponsor and employ the individual will therefore need to be identified.
Where the secondment is for a relatively short period, there may be alternative immigration solutions available, depending on where the individual will be based and what they will be doing. This will need to be explored on a case by case basis.
Are there are potential hurdles to obtaining local sponsorship?
Local employers will have a specified visa allocation and it will therefore need to be confirmed that the local sponsor has sufficient visa allocation to sponsor the secondee.
Both the UAE and Qatar have in place nationalisation programmes which aim to increase the number of nationals employed in the private sector. In the UAE, a new Emiratisation scheme ("Tawteen") has recently been announced which, for selected employers, requires roles to be offered to suitable Emirati job seekers before being offered to non-nationals. In Qatar certain sectors such as banking and insurance have a specific quota of Qatari national employees with which they must comply before they can employ a non-Qatari national. This may of course result in permission to sponsor a non-national secondee being refused or at least delayed.
Wilst there is no official policy in this regard, certain nationalities will from time to time face issues obtaining approval to reside and work in the UAE and Qatar. This list changes from time to time based on the political climate. By way of example, in our experience, Syrian, Tunisian and occasionally Lebanese nationals may encounter difficulties obtaining approval to reside and work in the UAE; in Qatar the list also includes, Iraqi, Iranian and Libyan nationals.
What are the implications of an individual being sponsored by a local employer?
As part of the sponsorship process, the local sponsor will need to enter into an employment contract with the secondee.
There are no allowances made for the fact that the individual's primary employer is based outside of the region and, so far as the local authorities are concerned, the individual will be an employee of the local entity and entitled to rights under local labour laws in the same way as any other employee.
It is not possible to contract out of local labour laws and any attempt to do so (by way of wording in a contract, for example) would not be enforceable in the event of a dispute.
This means, for example, that the secondee would be entitled to annual leave and sick leave under the local labour law.
Furthermore, on termination of the secondment (and therefore the employment with the local entity) the secondee may be entitled to an end of service gratuity payment calculated in accordance with local labour laws.
Additionally, both the UAE and Qatar have in place a Wages Protection System which would necessitate the local sponsor paying the secondee the salary set out in their employment contract into a local bank account. Consideration would need to be given as to how to manage this in light of the secondee's ongoing employment with, and entitlement to salary from, the primary employer. From the secondee's perspective, tax is likely to be a key consideration in determining how to apportion the salary between the local and primary employer.
Employment rights under local law would be in addition to any retained employment rights in the primary employer's jurisdiction. The secondee would therefore effectively have dual employment rights which need to be effectively managed, to the extent possible.
What activities can a secondee sponsored by a local employer perform?
Sponsorship by a local employer would only entitle the secondee to work for the local employer in the local jurisdiction and not for the primary (and foreign) employer.
Such work would also need to be consistent with the activities listed on the trade licence of the local employer.
How should employers manage secondments to the UAE and Qatar?
It is imperative that secondment arrangements are clearly documented and secondees are aware of how and why they are seconded and the terms of the same to seek to manage expectations should a dispute arise at a later date. In addition employers should ensure that employees are aware as to how their "secondment" arrangements are differentiated from those which may locally be referred to as a secondment, eg. in Qatar the Ministry of Interior may approve a "secondment" or "borrowing" arrangement between 2 Qatari entities; this arrangement is materially different than the international secondments considered in this article.
There should be a commercial agreement in place between the primary employer and the local sponsor recording the terms of the arrangement including management of day to day employment issues, payment of employment costs and liability for any employment claims.
In addition, there should be an agreement in place between the primary employer and the secondee setting out the terms of the secondment. This agreement should address the dual employment issues by, for example, suspending any rights under the primary employment contract to the extent permitted under the relevant law.
It is a common misconception that local employment laws can be waived or contracted out of by way of an agreement with the employee. This is not the case and, in the event of a dispute, local courts would award a "secondee" any rights and entitlements under local labour laws notwithstanding any wording to the contrary in an agreement.
There are however practical ways of mitigating the impact of secondments into the UAE and Qatar and the resulting dual employment issues.
For example, under the UAE Labour Law, employment can be subject to a probationary period during which time an employee does not accrue annual leave or sick leave, the employer is entitled to terminate the employment without notice and the employee would not be entitled to any end of service gratuity following such termination. Ensuring that the duration of the secondment does not exceed the maximum probationary period is therefore one practical way of mitigating the dual employment risks.
Similarly, it may be possible to suspend or vary the terms of the primary employment for the duration of the secondment. This would depend on the applicable law to the primary employment.
Secondments into the UAE and Qatar, and therefore arrangements whereby an individual remains employed by their primary employer and employed, for local law purposes, by a local employer, are extremely common.
Often, where the secondee returns to the primary employer on termination of the secondment, there is no expectation that he/she will receive any termination entitlements under local law. However, we commonly see issues arise where, for whatever reason, the employment relationship breaks down. It is therefore prudent to consider and effectively manage, to the extent possible, the issues highlighted above from the outset.
Whilst in both jurisdictions there is a requirement of any foreign entity doing business, eg. deriving income or having employees on the ground, to comply with local establishment laws and register a legal entity in order to sponsor and employ employees, this article does not consider this point in any detail apart from to confirm that it is a material consideration on which employers should obtain legal, accounting and tax advice.
NOTE: Notwithstanding the fact that Qatar's new Immigration Law has sought to remove the use of the word "sponsorship" in favour of "employment" we have retained the concept of sponsorship in this article for ease when referring to secondment, i.e. the fact that the sponsor in the UAE and in Qatar is a different entity or individual that the employer.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.