You wish to recruit somebody to the team in March. The offer is extended, the candidate accepts the offer and the start date is agreed.
That starting date may rely on something that you won’t see. It will be related to whether your provider paid last month’s salaries on time.
An employer of record employs your staff on its own register, which is the whole point of the arrangement. It also means the government’s enforcement lands there.
The payment date and the hiring date are now the same lever.
Why Your Hiring Stops Before the Fine Lands
Salaries in the UAE private sector are due on the first day of each Gregorian month for the previous month’s work, paid through the Wage Protection System.
If you miss the date, the results follow a sequence. No new work permit is given to the establishment that is late from day five onwards.
The administrative fine is not received until day 11.
So the hiring consequence is six days in advance of the money consequence. A provider can be late, unfined and unable to get your next person. That doesn’t appear on an invoice.
The smallest problem is a delayed start. When a candidate resigns and starts planning a move, they have given you his/her word on a date. Make that date later, and some won’t wait.
You Would Not Be the One Notified
The alerts are sent to the establishment. This means that the provider gets the mail and you don’t get any.
The first indicator on your part is a lack of a permit application. There is no warning, no Letter and no mention in the monthly invoices that anything has changed.
The time between also can be brief. Day five is only four days after alerts start so a provider that has an issue with cash flow in the first week of a month may not be onboarded before you would have cause to ask.
This is where the provider needs to have their own formation. Some workforce solutions have their own entities across the market the provider is operating in, at least keeping the variable within their own hands. If the provider works in partnership with a local provider, the register they are working on is that of an organisation with whom they have no connection or visibility.
Whose Payroll Is It, Legally?
The responsibility lies with the establishment registered with the labour ministry. The company that is undertaking the work is not the company the rule calls on.
If you are hired by an employer of record, the employer of record is the provider. It is on your staff’s register, your contracts are called its name and your wage obligation is its. That’s an actual transfer and that’s a lot of what you are paying for.
Yet its troubles come to you, too, for your people are here. Now you rely on a firm that you can’t see what they’re doing with your payroll.
What This Makes Worth Asking
Any price comparison of providers says little about any of this.
The same is a short question, the question that does. Does this establishment pay by the 1st of the month, monthly and have permits ever been suspended?
However, this should be readily available for anyone who has the registered position for others. Gulf providers who have to pay for it make it seem like a normal question rather than an awkward one.
There are two factors that make the answer more believable. A provider with more years in the region to judge. It is a provider’s self-answered questions when they are operating their entities in each market. The two rules don’t guarantee anything and both eliminate players.
Frequently Asked Questions
Does an employer of record take on my payroll liability?
Not only the legal requirement, but if the provider is the registered establishment that employs your staff. The dependency, no. You are now using someone else to come up with a set date each month.
Is paying most of the payroll on time good enough?
If an employer pays at least 85 per cent of wages on time, it is considered compliant, even if they are under.
Can I outsource only the payroll run instead?
The payment responsibility can be delegated by an employer, and the employer remains fully responsible for complying with the requirements. This means that you have the exposure on the transfer that you will not make.
Are my current staff affected if a deadline is missed?
The day 5 step is a suspension of new permits and not a cancellation of existing permits, which means that the immediate impact is on hiring. More advanced stages call for automatic labor disputes and a traveling ban on the labourer’s.
Why does a second late month matter more than the first?
When this happens again, within 6 months, it can result in reclassification. It is a lasting notation that will be on the establishment your employees are registered on, and will not expire after the month that caused it.
The Date to Put in Your Diary
Most businesses check the fee and the time to onboard the provider.
Make a note of one more addition to that list. What happened on 1st of last month and the month before? If you hear an answer, ask whose establishment the answer is about, as a provider working with a partner is answering about someone else.
It’s a little question concerning a bank transfer and no one’s going to ask the question. This also determines whether or not you will be able to get hired for March.
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