In the wake of global economic recession and speculation around a possible "double-dip" recession, the economic environment continues to present challenges to employers in the UAE.

Following pay freezes and reductions in headcount, many employers have this year increased salary and benefits. It is therefore an appropriate time for employers to revisit employee remuneration and their overall strategy going forward.

In addition to global uncertainty, the following factors bring the area of employee compensation and benefits into focus:

  • recent changes to the sponsorship regime in the UAE which should make flexible working arrangements more viable;
  • reports that the World Bank is advising the UAE government on possible pension arrangements for expatriate employees as an alternative to end of service gratuity;
  • increasing initiatives in relation to corporate governance; and
  • continuing pressure on businesses to keep overhead costs in check.

Maximising benefits in a cost effective way is a key concern for employers, particularly in turbulent times. Whilst having appropriate arrangements in place is essential, it is also important that benefits are clearly communicated to employees so that employers can harness their value to the fullest extent. A suite of clear, concise and accurate employment contracts, staff handbooks and other employee communications is a vital starting point.

Instructions from our clients indicate an active recruitment market in which companies are hiring and employees are resigning to join other employers (often, competitors). Employee turnover is a unique challenge for employers in this region and attracting, rewarding and incentivising a transient employee population will be a key component to a business's success. Employers must continually assess their compensation and benefits policies to ensure they remain competitive. In doing so, employers will ensure they are in the best possible position for recruiting, retaining and motivating top talent.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.