How to set up a recruitment agency in the UAE
The recruitment industry in the UAE is thriving. Government initiatives to attract international talent such as the provision of more remote working opportunities and long-term residency schemes have successfully created thousands of new jobs in the private sector.
In fact, the Department of Economic Development (DED) has recently revealed that between one and three thousand business licenses are being issued on a monthly basis and according to a recent survey carried out by HSBC, 75% of companies in the UAE rank effective recruitment as the most important factor in their growth plans.
This means that if you are considering establishing a recruitment company in the UAE, now is the ideal time to capitalise on this market growth and establish your business.
This article will take a closer look at the recruitment industry in the UAE before looking at the main considerations for setting up a recruitment agency as well as the types of business licences that are available and the documents that are required for incorporation.
How many employers in the UAE are currently looking to hire staff?
According to recent surveys at Bayt, the leading job site in the Middle East and North Africa, more than 7 out of 10 employers in the UAE are expecting to increase their staff numbers this coming year as the labour market continues its recovery post Covid-19. The healthcare, retail and human resource industries are the areas expected to show the most growth.
What are the most important considerations when establishing a recruitment agency in the UAE?
In order to ensure the success of a new recruitment agency, an effective business plan is crucial. The following are a few key points to consider:
- What business sector do you wish to focus on?
- Is there a specific demographic that you want to target?
- Who is your main competition?
- How many employees will you need and how will you finance the business?
Other factors that should also feature in your business plan include:
- Setting an appropriate pricing structure - How do you intend to price your services? These fees will change depending on whether you target permanent or temporary staff.
- Identifying a niche – A good strategy for a newly formed recruitment agency in the UAE is to focus on a specific sector. This is because gaining significant market share against established general recruitment agencies will be much more challenging. Finding ways to continually innovate will ensure that your agency remains competitive in the market.
- Planning for future growth - You should establish expected turnover, staff numbers and prospective clients in the agency’s early stages but also have a realistic expectation of how much and how fast the company will grow. By being proactive rather than reactive you will be better prepared to deal with fluctuations in the market and keep the agency moving forward.
- Office requirements - It’s necessary to have a plan for office space that you can afford and in a location that corresponds with your target demographic and industry. The UAE offers different business setup options on the mainland as well as free zone and offshore locations. Each have different advantages and disadvantages so it’s worth looking into all your options.
- Insurance requirements – It is mandatory in the UAE to have Employers’ Liability Insurance. This covers the risks associated with potential claims and also covers your premises as well as any motor vehicles or accidents.
- Financing - There’s so much to take into account with financing a recruitment agency in the UAE and it’s likely a business loan will be necessary, not only to get things off the ground but also to create a secure cash flow right from the outset.
Types of Recruitment agencies in the UAE
You must register your recruitment agency with the Ministry of Labour and obtain a commercial licence to set up a recruitment agency in the UAE. This licence will authorise your business to operate in the country and must be renewed on a yearly basis. There are two types of licences that you can obtain for recruitment agencies. These are:
With a brokerage agency licence, your company will act as the mediator between employers and employees, negotiating contractual and employment terms on behalf of the employer.
The brokerage agency will not subsequently be involved in any employment relationship which occurs as a result. Its main role will be to create and maintain databases of prospective employee profiles, available positions and applications and put this information at the disposal of the hiring company.
Temporary Recruitment Agency
A temporary recruitment agency directly recruits labour for a third party, either from within the UAE or from outside.
The recruitment agency becomes the direct employer of the employee with a business relationship and all it implies.
What are the requirements to obtain a recruitment licence?
The following are a few of the main considerations for obtaining a recruitment licence:
- The applicant must have a clean criminal record
- The company must have an address in Dubai registered as its head office and all business activities must be carried out at this address
- The applicant must confirm, in writing that no change will be made to business partners after written consent is given by the Ministry of Human Resources and Emiratisation (MOHRE).
How much does it cost to obtain a recruitment agency licence?
The fee for a brokerage agency licence is AED50,000 and the fee for a temporary recruitment agency licence is AED100,000.
In addition to the cost of the licence, a bank guarantee must be submitted to MOHRE for the full duration of the licence of AED300,000 and AED1,000,000 respectively for the brokerage and temporary recruitment licence.
Documents Required to Obtain a Recruitment License
To obtain a recruitment licence the following documents must be submitted to MOHRE:
- A copy of the applicant's valid passport
- A copy of the family book
- A copy of the applicant’s ID
- A certificate of good conduct or rehabilitation
- A copy of the commercial name booking for the new trade licence
- Written and signed acknowledgment from the applicant
- A sketch/ illustration of the establishment premises
The above requirements are to set up a full mainland DED recruitment licence. If the company does not need to be in the mainland then you can also set up the recruitment company in one of the various Freezones across the UAE. This will allow the company to conduct Recruitment and HR Services within that Freezone and internationally. For more advice on the ideal location to set up your recruitment company depending on your target market then please speak to the expert team at PRO Partner Group for more information and a full assessment.
How can PRO Partner Group help?
We can help you decide which is the best licence for your recruitment agency, process all work visas and other necessary documentation and help you through all other aspects of your company setup.
If you need guidance on setting up a recruitment agency in the UAE or any other related company setup, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, Oman, Qatar or Saudi Arabia then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at email@example.com or complete the contact form below and we will be delighted to assist you.