There are many areas of your business where legal and compliance directives play a role, and working in the Middle East, this is no different. However, in some countries of the Middle East, there's an added layer of regional compliance on top of federal law. And then there are grouped country agreements which affect employment too.
So, how should you best approach complex workforce compliance? Here in the Middle East, many global brands choose to outsource manpower—but should you?
In this blog post, we'll offer our advice as Middle East outsourcing and HR experts to help you make the best decision for your company.
Middle East Workforce Legal and Compliance Issues: How Complex Are They?
To make this discussion succinct, let's examine one legal and compliance issue: labour laws in the Gulf Cooperation Council (GCC)—a small group of Middle Eastern countries.
The Gulf Cooperation Council (GCC) countries, including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE, have distinct labour regulations. However, they do come together to comply with a regional agreement known as the Kafala system (a sponsorship system for migrant workers under specific employers).
The Kafala system has undergone significant reform to offer more freedom for migrant workers, but under this agreement each country has the right to enforce changes from a country-focused law perspective. And change in these countries is happening.
For example:
● United Arab Emirates (UAE): The UAE recently introduced sweeping reforms under its Federal Decree-Law No. 33 of 2021, enhancing worker protections, promoting equal pay, and clarifying leave entitlements (also adapting its approach to the Kalafal system). These are not observed in free zones, like the Dubai International Financial Centre (DIFC), which operates under its own employment framework.
● Saudi Arabia: As part of its Vision 2030 program, Saudi Arabia has modernised its labour compliance laws to attract more international businesses. Part of the amendments have focused on easing the employer-employee relationship under the Kafala system, allowing greater mobility for expatriate workers.
● Qatar: Qatar has implemented significant labour reforms in preparation for hosting global events (World Cup 2022), including a non-discriminatory minimum wage and improved conditions for expatriates under its own amended version of the Kafala system.
Yet each country's employee guidelines differ. To ensure your workforce processes remain compliant, you need to understand the law in each country and across a grouped region.
Then, there are regional changes within a country.
Countries like Iraq face changes in regional labour regulations. For example, cities like Baghdad and Erbil tend to have more formalised labour markets over rural areas, with better enforcement of labour laws. Added to this is the difference between the rule of federal Iraq and the Kurdistan Region.
Understanding the expectations of any region, country or group of countries is critical for workforce compliance.