As companies grow, they may turn to global talent to help reach new goals. Working with independent contractors can be a beneficial route to complete specialized projects. If a company intends to hire an independent contractor in the UAE, they should understand what this worker type entails and the associated responsibilities.
Hiring independent contractors in the UAE
When companies have specialized projects to complete, an independent contractor can provide the necessary skills and experience. While independent contractors are a valuable asset for a growing company, there are several considerations to be aware of when hiring this type of worker.
Independent contractors vs. employees
Independent contractors and employees are 2 separate worker classifications, and understanding their differences is vital to ensure compliance. Employees must have a labor permit, and they are under complete supervision of the employer.
Independent contractors have operational freedom and are not subject to employer supervision or control. Contractors have the freedom to work with several companies at once, determine their own working hours, supply and use their own tools, and create invoices upon project completion. Employers are not required to provide any benefits to independent contractors.
Penalties for misclassification
Misclassifying employees as independent contractors can bring notable penalties. If the Ministry of Labor finds that a company has misclassified an employee, they will likely receive various fines from the government, and be required to make back payments on social security contributions.
How to hire independent contractors in the UAE
There are 3 significant steps for hiring independent contractors in the UAE.
1. Carefully conduct interviews.
When conducting interviews with potential independent contractors, it’s essential to treat the interaction like a business transaction. None of the questions should imply any form of supervision or permanent employment. Questions about character traits should be avoided — instead, the company should focus on skills and experience that clarify a contractor’s ability to complete the project. To garner attention from the right candidates, the company should ensure they’ve included the term “independent contractor” in the advertisements for the position.
2. Create a service agreement.
Rather than drafting an employment contract, companies should create a service agreement to outline the terms of the project and what’s expected of contractors. The following information should be included:
- Pay rate and arrangements
- Scope of project and due date
- Termination terms and procedures
3. Introduce necessities.
Any form of onboarding can imply employer supervision. When you hire hiring an independent contractor, introduce only the necessities and give them the freedom to access them as needed. These necessities may include essential workflows and important contacts for employees they may interact with during their work.
How to pay independent contractors in the UAE
Contractors will most often provide their own invoices to receive payments. These terms should be clarified in the service agreement. Every contractor will operate differently. Some may ask for an initial fee upfront with installments over the course of the project, while others may ask for a lump sum once the project is complete.
The country does not have an income tax, and employers are not required to make any contributions to social security before paying independent contractors.
Terminating independent contractors
Clear termination policies should be outlined in the service agreement.
Turn to G-P when hiring independent contractors in the UAE.
As a part of our #1 suite of global employment products, G-P Meridian Contractor™ allows companies to hire and pay global contractors faster, with self-service workflows and a wide set of flexible payment options. Whether you’re hiring employees or contractors, our platform streamlines the process with a single solution for your global workforce.
Contact us to learn more.