Compliance Considerations When Engaging a Staffing or EOR Service

To protect your business and employees, it’s crucial to use a contract specifically designed for Staffing or EOR services, addressing the unique challenges and regulatory requirements of the UAE.

In today's dynamic market, many businesses are outsourcing services to manage their contingent or temporary workforce. At Manpower Middle East we are experiencing a growing demand for Staffing or Employer-of-Record (EOR) services across the UAE and GCC, where we may be required to arrange for Visa & Payroll support for their Contingent/Temporary Workforce.

If your business is considering engaging a Staffing or EOR service in the UAE, understanding which contractual framework to use will help you mitigate compliance risks.

In the UAE, businesses are bound by a range of legal frameworks and contracts when engaging with third-party providers. One of the most common contracts used in business transactions is the Goods & Services Agreement (GSA) a standard form procurement contract which clients often request service providers like Manpower to sign.

However, when it comes to specialized services like Staffing or EOR, a GSA may not always be the ideal solution. This article explores the distinctions between GSAs and Staffing- or EOR-specific agreements in the UAE and examines which is the more prudent choice.

Why a Standard GSA Might Not Be an Ideal Contract for Staffing or EOR Services

While a GSA may technically be used for Staffing or EOR services, it is generally not recommended for the following reasons:

Misalignment with Service Nature: GSAs are designed to cover a combination of products and services, which may lead to a misalignment of expectations for Staffing- or EOR-specific tasks. For instance, GSAs may not specify the critical deadlines for Staffing or EOR such as Salary Transfer Timelines, Query Response etc, or they may lack sufficient clarity on service-related performance metrics, such as accuracy of salary disbursements.
Lack of Compliance Focus: In the UAE, employers must adhere to several stringent regulations, such as the Wage Protection System (WPS), MOHRE guidelines, and tax compliance. When engaging a Staffing or EOR service provider using the GSA contractual framework, adequate focus may not be placed on these regulatory requirements, which could expose the business to compliance risks. On the other hand, a specific Staffing or EOR service agreement would be tailored to take these into account.
Insufficient Data Protection: While the GSA and Staffing- or EOR-specific contracts can all have robust data protection measures, Staffing or EOR-specific contracts are specifically designed to address the unique needs of the HR function. This allows for more comprehensive and tailored protection of employee data. Given the UAE's strict data privacy laws, this can help mitigate data-related risks.
Risk of Errors and Liability Issues: Errors in Staffing or EOR can lead to serious consequences, including legal liabilities, penalties, and employee dissatisfaction. A GSA may not clearly define the Staffing or EOR provider's liability for mistakes like underpayments, incorrect tax filings, or non-compliance with labor laws. Apart from that, a GSA may not clearly define the role and responsibilities of both parties. For example, in situations where the client directs and manages the contractor while the Staffing or EOR Provider facilitates Staff Augmentation support, Staffing or EOR-specific contracts should state the party liable for acts and omissions of the contract worker whereas a general GSA may not have such a clause on liability exposure.
Performance Standards: Staffing or EOR services require strict adherence to performance metrics, such as timely and accurate payment processing, compliance with tax filings, and error correction. A GSA may lack the necessary service-level expectations that are critical in a Staffing- or EOR-specific contract.

Conclusion: Use a Staffing- or EOR-Specific Agreement

In the UAE, where compliance with labor and Staffing or EOR regulations is essential, using a GSA for Staffing or EOR services is not advisable.

While GSAs are well-suited for contracts involving both goods and services, Staffing or EOR are highly specialized, service-centric functions that demand a dedicated Staffing or EOR Services Agreement. A Staffing- or EOR-specific contract ensures that your business is protected from errors, compliance risks, and data breaches, while also ensuring the smooth, timely, and accurate processing of employee salaries.

To safeguard your business and employees, it is important to use a contract that is tailored specifically to Staffing or EOR services, addressing the unique challenges and regulatory requirements of the UAE.