 Remuneration packages are an essential tool for employers in attracting and retaining high performing staff. In the United Arab Emirates (UAE), where the demand for doctors is high, competitive remuneration packages are vital.This article provides a high level overview of the options for remunerating doctors in the UAE and examines ‘market practice’ in the region. Immigration restrictions: In order for an expatriate employee to lawfully work and reside in the UAE, they must hold a UAE residence visa and labour card, for which they must be sponsored by a locally registered entity. As part of this process, the individual is required to enter into and register with the authorities, a prescribed form employment contract. As a consequence, the individual will be considered an employee of the sponsor and will be entitled to the full suite of benefits under the UAE Federal Law No. 8 of 1980, as amended (Labour Law) (including annual leave, sick leave, end of service gratuity, payment for overtime etc.). Therefore, the cost of compliance with the Labour Law is a factor to be taken into account when determining doctor remuneration packages. Basic salary only: The simplest remuneration structure, from both an administration and human resources perspective is to provide employees with an all-inclusive basic salary. Although this is the simplest approach, it is not commonly used for doctors in the UAE as other remuneration packages are preferred. Basic salary plus allowances: It is more common for employers to split up basic salary and allowances as under the Labour Law, allowances are expressly excluded from the calculation of the end of service gratuity. Employers cannot take this to the extreme and pay doctors allowances only to limit an employer’s liability for end of service gratuity. Such an approach will be interpreted by a Labour Court as attempting to contract out of the minimum employee entitlements under the Labour Law, which is not permissible. In addition, although there is no prescribed statutory minimum wage in the UAE, providing no basic salary may result in immigration and sponsorship implications. For example, an employee who has a monthly salary of less than AED 4,000 (or AED 3,000 with accommodation), will be unable to sponsor their spouse or children. Commission, basic salary and/or allowances: It is market practice in the UAE for doctors to participate in commission based remuneration schemes whereby the doctor will receive a commission / share of profit based on the work performed by the doctor. As the definition of ‘Remuneration’ under the Labour Law includes all payments made to an employee on a ‘production or commission basis in return for the work he performs under the Contract of Employment’, all statutory entitlements calculated based on ‘Remuneration’ will likely include any commission / profit share payments. This could result in significant liability for the employer, particularly in relation to end of service gratuity. Employers may specify in the doctor’s company employment contract that employee entitlements (if any) will be calculated on the employee’s basic salary only. Although this may be an effective tool in managing an employee’s expectations, if a doctor were to challenge the calculation of his/her entitlements, this may result in an employer being required to pay out all employee entitlements at the higher rate. Commission only: Some employers operate more consultancy type arrangements with doctor remuneration being based on commission / profit share only. In addition, doctors may be required to ‘opt out’ of standard employee entitlements in order to be eligible to participate in the potentially lucrative scheme. The problem with such an arrangement is that the employee entitlements set out in the Labour Law cannot be contracted out of. Any payments made through a commission / profit scheme cannot replace an employee’s entitlement to receive the minimum entitlements in the Labour Law. _____________ |
