Recruitment Agency Agreement (UAE)

A Recruitment Agency Agreement in the United Arab Emirates is a legally binding contract between a recruitment agency and an employer under which the agency agrees to source, screen, and introduce suitable candidates for one or more vacancies in return for a placement fee. The agreement is governed by the UAE Civil Code (Federal Law No. 5 of 1985), which under Article 125 recognises the contract as formed when offer and acceptance meet on the essential terms: the scope of recruitment services, the placement fee, and the roles to be filled. Article 246 requires both parties to perform in good faith, and Article 257 makes the contract the law of the parties.

Recruitment services are among the most commonly used professional services in the UAE, which hosts one of the world's highest concentrations of expatriate workers across every sector — technology, finance, hospitality, construction, retail, healthcare, and government. The Ministry of Human Resources and Emiratisation (MOHRE) administers the regulatory framework for recruitment agencies. Agencies that introduce candidates to employers for permanent direct employment hold trade licences from the relevant Department of Economic Development. Agencies that supply workers who remain on the agency's payroll while working at a client's premises — the manpower supply or temporary staffing model — additionally require a MOHRE manpower supply licence under the Regulations for Manpower Supply Companies. Both models are used in the UAE market and the Recruitment Agency Agreement should clearly identify which applies.

Candidate-facing fees are prohibited under UAE law. The Labour Law (Federal Decree-Law No. 33 of 2021) and MOHRE regulations prohibit recruitment agencies from charging job seekers for finding them employment. Fees are payable solely by the employer. An agency that charges candidates faces regulatory penalties and risk to its MOHRE licence. The agreement should include an express warranty that the agency complies with this prohibition.

The commercial framework combines the UAE Civil Code with the Commercial Transactions Law (Federal Decree-Law No. 50 of 2022), which applies where both parties are merchants acting in the course of trade, and supplements the Civil Code on commercial obligations and limitation. The agency's corporate form is governed by the Commercial Companies Law (Federal Decree-Law No. 32 of 2021).

Placement fees in the UAE are typically calculated as a percentage of the candidate's first annual gross basic salary — commonly 15% for mid-level permanent placements, with higher rates for executive search. All placement fees are subject to VAT at 5% under the VAT Law (Federal Decree-Law No. 8 of 2017), administered by the Federal Tax Authority (FTA).

Candidate personal data — CVs, contact details, identity documents — is subject to the Personal Data Protection Law (Federal Decree-Law No. 45 of 2021), administered by the UAE Data Office. The agreement should define how candidate data is shared between the agency and the employer and require both parties to process it lawfully. Free-zone parties in the DIFC and ADGM are subject to their respective data protection regimes. Electronic execution is valid under the Electronic Transactions and Trust Services Law (Federal Decree-Law No. 46 of 2021).

A Recruitment Agency Agreement in the United Arab Emirates is needed whenever an employer formally engages a recruitment agency to source candidates and both parties want enforceable terms under the UAE Civil Code (Federal Law No. 5 of 1985). A written agreement prevents disputes about fees, exclusivity, replacement guarantees, and candidate ownership that regularly arise in informally arranged recruitment relationships.

Technology and financial services companies across Dubai, Abu Dhabi, and the free zones — particularly the DIFC and Abu Dhabi Global Market — regularly engage specialist recruitment agencies to source skilled professionals for roles in software development, investment banking, compliance, and asset management. The agreement specifies the roles, the fee structure, and the guarantee terms before the search begins.

Hospitality and retail groups engage recruitment agencies for bulk hiring across multiple properties and outlets. A framework agreement covering multiple roles over 12 months is more efficient than negotiating individual terms for each placement, and provides the employer with cost certainty.

Construction, engineering, and project management firms bidding on infrastructure and development projects across Dubai, Abu Dhabi, and the Northern Emirates need to mobilise teams of engineers and specialists rapidly. Recruitment agreements with multiple specialist agencies give the employer a broad sourcing network.

Startups and scale-ups in Dubai Internet City, Hub71 in Abu Dhabi, and other UAE technology hubs use recruitment agencies to access global talent pools for early technical hires when the company does not yet have an in-house HR function.

Healthcare, education, and government-related entities require recruitment agreements with agencies that have experience sourcing professionals under the licensing requirements of the relevant health, education, or government authority. The agreement should specify that candidates presented by the agency have the qualifications required to obtain the necessary professional licences in the UAE.

A UAE Recruitment Agency Agreement compliant with the UAE Civil Code (Federal Law No. 5 of 1985) and the Commercial Transactions Law (Federal Decree-Law No. 50 of 2022) must contain the following key elements. The forms-legal.com UAE recruitment agency agreement template addresses each component in a structure accepted by the Dubai Courts, the Abu Dhabi Judicial Department, and free-zone tribunals.

Party identification must record the full legal names of the recruitment agency and the employer, the trade licence number, and where applicable the MOHRE manpower supply licence number. Recording the agency's licences confirms it is lawfully authorised to supply recruitment services.

Roles and scope must describe the vacancies or category of roles the agency is engaged to fill, the number of positions, and the location. A framework agreement covering multiple hires should describe the category of roles and provide for individual role briefs to be agreed during the term.

Service type must distinguish the model: contingency (fee only on successful placement), retained search (upfront retainer plus success fee), executive search, temporary staffing, or RPO. The rights and obligations differ significantly across these models.

Placement fee must state the calculation method: a percentage of first annual gross salary, a fixed fee, or a markup on the worker's daily rate for temporary staffing. UAE market rates for permanent placements are typically 12% to 20% of annual basic salary. All fees must be expressed exclusive of VAT under the VAT Law (Federal Decree-Law No. 8 of 2017), with VAT added on each invoice.

Replacement guarantee must set the guarantee period — typically 90 days — and the remedy: one free replacement or a pro-rata refund on a sliding scale. Exclusions must list the circumstances where no remedy applies, such as redundancy or material role change.

Payment terms must state when the fee is invoiced (typically on the candidate's start date for contingency placements), the payment period, and the method. Federal Tax Authority (FTA) compliant tax invoices are required.

Candidate exclusivity and off-limits provisions must address whether the employer can approach introduced candidates for other roles without triggering a fee, and the duration of the post-introduction protection period, typically 12 months.

Data protection obligations under the Personal Data Protection Law (Federal Decree-Law No. 45 of 2021) must address the lawful basis for sharing candidate data and the employer's obligation to use it only for evaluating the candidate.

Compliance must require the agency to comply with MOHRE regulations and the Labour Law (Federal Decree-Law No. 33 of 2021), and confirm no candidate-facing fees.

Governing law and forum must confirm UAE law and identify the governing court.

Completing a Recruitment Agency Agreement for the United Arab Emirates is straightforward when the commercial terms — fee percentage, guarantee period, and roles — are agreed before signing. Work through the template with the agency's trade licence and MOHRE licence details to hand.

Start with the parties. Enter the recruitment agency's full legal name exactly as it appears on its trade licence from the relevant Department of Economic Development. Record the trade licence number. Enter the MOHRE manpower supply licence number if the agency operates a temporary or contract staffing model. Enter the employer's full legal name, trade licence number, and both parties' registered addresses.

Enter the agreement date in DD/MM/YYYY format.

Describe the roles to be filled: job titles, number of vacancies, and location. For a framework agreement covering multiple future hires, describe the categories of roles and note that individual role briefs will be agreed during the term.

Select the service type: contingency, retained search, executive search, temporary staffing, or RPO. This determines how the fee is calculated and when it is payable.

Enter the start date in DD/MM/YYYY format and the term.

Set the placement fee: express it as a percentage of first annual gross basic salary (for permanent roles) or as a markup/margin (for temporary staffing), exclusive of VAT under the VAT Law (Federal Decree-Law No. 8 of 2017). Complete the payment terms: invoice date, payment period, and method.

Set the replacement guarantee period, typically 90 days, and select the remedy: one free replacement, pro-rata refund, or credit.

Select the governing courts and arrange signature by an authorised representative of each party. Electronic signatures are valid under the Electronic Transactions and Trust Services Law (Federal Decree-Law No. 46 of 2021). Download the completed agreement as PDF or Word and keep a signed copy on file.

A Recruitment Agency Agreement in the United Arab Emirates is governed primarily by the UAE Civil Code (Federal Law No. 5 of 1985). Article 125 confirms the contract forms when the parties agree on the essential terms. Article 246 imposes a duty of good faith. Article 257 makes the contract the law of the parties. Articles 282 and 389 govern damages for breach. Article 272 allows rescission for failure to perform.

Recruitment agencies are regulated by the Ministry of Human Resources and Emiratisation (MOHRE). Agencies introducing candidates to employers for permanent employment must hold a valid trade licence and, for manpower supply (temporary staffing), a MOHRE manpower supply licence under the Regulations for Manpower Supply Companies (Ministerial Resolution No. 176 of 2015 and subsequent amendments). Charging job seekers for placement services is prohibited under the Labour Law (Federal Decree-Law No. 33 of 2021) and MOHRE regulations.

Candidates placed into permanent employment become employees of the employer under the Labour Law (Federal Decree-Law No. 33 of 2021) and Cabinet Resolution No. 1 of 2022. Their employment contracts must comply with the Labour Law, and MOHRE supervises compliance. End-of-service gratuity obligations under Article 51 of the Labour Law rest with the employer.

The Commercial Transactions Law (Federal Decree-Law No. 50 of 2022) supplements the Civil Code for commercial parties. Corporate form is governed by the Commercial Companies Law (Federal Decree-Law No. 32 of 2021).

VAT applies to recruitment services at 5% under the VAT Law (Federal Decree-Law No. 8 of 2017), administered by the Federal Tax Authority (FTA). Placement fees require compliant FTA tax invoices. Corporate Tax under the Corporate Tax Law (Federal Decree-Law No. 47 of 2022) applies to the agency's profits above the threshold.

Personal data of candidates is subject to the Personal Data Protection Law (Federal Decree-Law No. 45 of 2021) onshore, and to the DIFC or ADGM regimes in those free zones. Electronic execution is valid under the Electronic Transactions and Trust Services Law (Federal Decree-Law No. 46 of 2021).

A UAE Recruitment Agency Agreement protects both parties only when carefully drafted. The following errors frequently cause disputes or leave one side exposed.

1. Agency licences not recorded. Failing to record the agency's MOHRE licence number — where the agency operates a manpower supply model — leaves the employer unable to verify regulatory compliance and may complicate enforcement if the agency is unlicensed. Require the licence number in the agreement.

2. Placement fee not clearly defined. Agreeing a fee as 'a percentage of salary' without specifying whether this is basic salary, gross salary, or total compensation (including bonuses and allowances) creates invoice disputes. Define the calculation base precisely.

3. Silence on VAT. Placement fees are taxable at 5% under the VAT Law (Federal Decree-Law No. 8 of 2017). Failing to state that the fee is exclusive of VAT leads to disputes when the invoice arrives. State this from the outset and require FTA-compliant tax invoices.

4. No candidate exclusivity clause. Without a clause preventing the employer from hiring an introduced candidate for a different role without paying a fee, the employer can benefit from the agency's introduction for free. Include a 12-month post-introduction protection period.

5. Weak replacement guarantee terms. A replacement guarantee clause that does not define the guarantee period, the remedy (replacement or refund), and the exclusions (redundancy, role change) will be disputed when the employer claims under it. Be precise on all three elements.

6. No candidate data protection obligations. Omitting Personal Data Protection Law (Federal Decree-Law No. 45 of 2021) obligations on how the employer uses candidate CVs and personal data leaves the agency exposed if the employer misuses data it received as part of the recruitment process.

7. Candidate-facing fee not excluded. Failing to include a warranty that the agency does not charge candidates exposes the employer to reputational and regulatory risk if the agency's practices are later investigated by MOHRE.