Mainland versus Free zone for a recruitment agency

A Dubai mainland recruitment agency is formed through the Dubai Department of Economy and Turismo and requires approval from MOHRE where the proposed activity falls within regulated recruitment or employment-agency services.

The mainland company may be able to serve employers throughout the MOHRE-regulated EAU private sector, subject to:

A commercial licenza issued by DET is only one component of the structure. The agency must also hold any required MOHRE permission before it begins regulated recruitment operations.

A Free zone company is incorporated and licensed by a specific Free zone authority.

The presence of the word "recruitment" in an activity description does not automatically authorise every form of employment intermediation negli EAU.

The Ministry of Human Risorse and Emiratisation regulates recruitment and employment-agency activities within its jurisdiction under the EAU labour-law framework.

Relevant legislation includes Federal Decree-Law No. 33 of 2021 Regulating Labour Relations and its Executive Regulations.

The regulatory framework distinguishes between activities such as:

The agency may need to satisfy conditions concerning:

The current conditions should be verified with MOHRE and DET before incorporation because the exact requirements depend on the proposed activity and company structure.

Recruiting mediation generally involves bringing employers and jobseekers together without the agency becoming the worker's employer.

The agency may:

The client company becomes the successful candidate's employer and is responsible for the employment relationship and work permit.

A recruitment-mediation agency must not represent itself as a temporary-employment company unless separately authorised.

A temporary-employment or outsourcing agency may employ workers and make their services available to a beneficiary business under a permitted arrangement.

This model carries substantially greater legal and financial responsibility than permanent placement.

The agency may need to manage:

A business should not use a low-cost consultancy licenza to provide employees to other companies.

If the client directs the worker's daily activities while another company sponsors and pays that person, the arrangement should be examined carefully for labour-supply and outsourcing implications.

Executive search often involves identifying and approaching senior professionals who are not actively applying for jobs.

Commercial features can include:

Although executive search may appear closer to management consultancy, it can still constitute recruitment or employment intermediation where the firm introduces candidates to employers for placement.

Calling the service "leadership advisory" does not remove the need for recruitment approval when the underlying work is candidate placement.

Recruiting-process outsourcing can range from consultancy to the operation of an employer's recruitment function.

Services may include:

If the provider only supplies technology or process advice, its licensing profile may differ from that of an agency selecting and placing candidates.

Where the provider actively sources, introduces or recruits workers, regulated recruitment requirements can apply.

The contract should identify which party is legally responsible for each stage.

An employer-of-record model generally involves one entity legally employing a person while that individual provides services connected with another business.

The term is used broadly in international business, but it is not a universal EAU licenza category that automatically authorises third-party employment.

The proposed provider should assess:

An overseas EOR model should not be imported into the EAU without adapting it to local labour and licensing rules.

Recruiting of domestic workers is governed by a separate regulatory framework from ordinary private-sector recruitment.

Domestic-worker recruitment can cover roles such as household workers, depending on the legal classifications in force.

A normal employment-agency licenza does not automatically authorise domestic-worker recruitment.

Fondatori intending to enter this market should request a dedicated regulatory assessment.

A Free zone company should not assume it can provide unrestricted candidate-placement services to mainland employers.

The answer depends on:

A Free zone company may be able to provide certain services to mainland clients, but regulated recruitment activity must remain within the permission granted by the responsible autorità.

A client's willingness to pay an invoice does not prove that the agency is properly licensed.

Dubai introduced a broader framework in 2025 allowing eligible Free zone establishments to conduct specified activities outside their Free Zones after obtaining the appropriate DET licenza or permit.

Even if a general consultancy activity is eligible for a mainland operating permit, regulated recruitment, employment intermediation or temporary staffing may still require MOHRE approval.

A permit should therefore not be treated as a shortcut around recruitment-agency licensing.

A mainland structure is generally more suitable for an agency that wants to serve a broad portfolio of EAU employers because it can provide:

The agency must still satisfy the specific licensing conditions. Mainland incorporation alone does not authorise recruitment.

The fondatori should obtain written confirmation of the permitted activity and avoid relying solely on a sales representative's general description.

An established foreign recruitment company may consider:

Foreign corporate documents may require notarisation, legalisation, attestation or certified Arabic translation.

The overseas licenza and experience do not automatically authorise recruitment negli EAU.

Ordinary mainland businesses can often be 100% foreign-owned, but regulated recruitment-agency activities may carry additional ownership, management, integrity or qualification conditions.

The authority may assess:

The fondatori should verify the current conditions for their specific agency model before agreeing on shareholding.

A general statement that every EAU company can be 100% foreign-owned should not be applied automatically to a regulated recruitment licenza.

The MOHRE recruitment-agency framework can require financial security appropriate to the activity.

Mediation and temporary-employment or outsourcing activities do not carry identical risk. Temporary-employment businesses generally require substantially greater financial capacity because they assume direct obligations to workers.

The exact amount and form should be verified immediately before application. It should not be confused with share capital, licenza fees or the agency's operating cash.

Recruiting agencies can have significant cash-flow requirements even when registered share capital appears modest.

Funding may be required for:

A permanent-placement firm may wait several months between starting a search and receiving its fee.

A temporary-employment agency may have to pay workers before the client settles its invoice. The working-capital model must therefore reflect payroll exposure and customer payment terms.

A regulated recruitment agency may need dedicated and appropriately approved premises.

The authority may consider:

A flexi-desk may suit a limited HR consultancy or technology business where the authority permits it. It should not be assumed sufficient for a regulated mainland recruitment agency.

The agency should not sign a long lease before confirming that the premises satisfy DET and MOHRE requirements.

The core principle is that workers should not bear recruitment and employment costs that the law places on the employer.

The EAU Labour Law prohibits employers from charging workers recruitment and employment fees or collecting those costs from them, directly or indirectly.

A licensed recruitment agency should structure its commercial fees with the employer or client—not the jobseeker.

Prohibited or high-risk practices include:

A candidate's consent does not necessarily make an unlawful charge acceptable.

A EAU agency may work with recruiters in source countries, but it should perform due diligence before relying on them.

The EAU agency should verify:

The agreement should prohibit candidate charging where inconsistent with EAU law and require disclosure of sub-agents.

An overseas partner's misconduct can create regulatory and reputational risk for the EAU agency and its client.

Job advertisements should be genuine, accurate and connected with a real recruitment mandate.

An agency should not publish:

Where the client's identity is confidential, the agency can protect it without misleading applicants.

Advertisements should also distinguish between direct employment, temporary assignment, contract work and talent-pool registration.

The agency should establish:

Submitting a candidate's CV to an employer without permission can create privacy, trust and commercial disputes.

Recruiters frequently disagree over who introduced a candidate and when a placement fee becomes due.

The client agreement should define:

A CRM system should retain time-stamped records of submissions, client feedback and candidate consent.

Database ownership should also be addressed when recruiters leave the agency.

The agency's terms of business should cover:

Standard terms copied from another country may not reflect EAU labour or licensing rules.

A recruiter should clearly distinguish between information received from a candidate and information independently verified.

Depending on the role, checks may include:

The agency should obtain appropriate consent and avoid promising that screening eliminates all hiring risk.

For regulated professionals, a CV review does not replace primary-source verification or regulator eligibility.

Sanità professionals may require eligibility, primary-source verification and licensing through DHA, DOH, MOHAP or another competent authority.

A recruitment licenza does not authorise the agency to issue professional eligibility or guarantee licenza approval.

Recruiting for regulated financial institutions can require enhanced confidentiality, competency screening and background checks.

Teachers and academic staff may require qualification attestation, regulator approval and safeguarding checks.

High-volume mobilisation can involve trade testing, accommodation, safety, transport and overseas recruitment partners.

This requires a specialised licenza and should not be conducted under an ordinary corporate recruitment activity.

Where the agency is the legal employer, it must understand the full employment cost.

The commercial quotation should consider:

Charging a client only a small markup over basic salary can leave the agency unable to meet statutory obligations.

The payroll and invoicing system should reconcile each worker, assignment, timesheet, salary payment and client invoice.

A mainland temporary-employment or outsourcing agency may be responsible for paying workers through the Wages Protection System where the applicable rules require it.

The agency should maintain:

A client's failure to pay the agency does not necessarily excuse late payment to workers.

Cash-flow reserves and credit control are therefore central to the viability of a staffing business.

A recruitment agency is itself an employer and must assess whether Emiratisation requirements apply to its workforce.

The business should monitor:

The agency should also avoid helping clients disguise employment relationships or create fictitious Emiratisation arrangements.

A recruiter's conformità reputation can be damaged if it participates in false employment records or salary arrangements.

Mainland and Free zone recruitment-related companies can apply for EAU corporate bank accounts. Approval remains subject to bank due diligence.

Banks may review:

An agency receiving funds from jobseekers can raise serious conformità concerns.

The bank-account application, website, licenza and business plan should all describe the same model.

A mainland recruitment company is generally subject to the ordinary EAU Corporate tax regime.

The ordinary rates are:

Corporate tax applies to taxable income rather than gross placement fees or staffing invoices.

The agency should distinguish money received on its own account from amounts collected or paid on behalf of another party.

A Qualifying Free zone Person may receive:

The company must satisfy requirements relating to:

Ordinary recruitment services supplied to mainland employers or overseas clients do not automatically constitute a Qualifying Activity.

The Federal Tax Authority's Free zone Persons Guide should be considered together with the current law and implementing decisions.

Free zone incorporation should not be selected solely on the promise of 0% tax.

Recruiting, executive-search and staffing services supplied negli EAU are generally subject to 5% IVA unless a specific exception applies.

A EAU-resident business must normally register for IVA when taxable supplies and imports exceed AED 375,000 over the previous 12 months or are expected to exceed the threshold during the next 30 giorni.

Voluntary registration may be available from AED 187,500, subject to the statutory conditions. Federal Tax Authority IVA registration

The agency should assess IVA on:

A Free zone address does not ordinarily make recruitment services IVA-free.

A EAU agency recruiting for an overseas employer may be able to zero-rate its service if all export-of-services conditions are satisfied.

The analysis should consider:

Contracts, employer-registration details, correspondence and the actual service flow should support the IVA treatment.

Permanent-placement revenue should be recognised according to the contractual right to consideration and the applicable accounting framework.

The agency should track:

If a placement fee is refundable during a guarantee period, the accounting treatment should reflect the contractual and financial circumstances.

Recruiter commissions should be matched to the relevant placement and approved before payment.

The system should connect:

The agency should not assess profitability only from the difference between monthly invoices and basic salaries.

Accrued leave, end-of-service benefits, insurance, employee absence and client bad-debt risk can materially reduce the true margin.

Written confirmation of the activity scope should be obtained before relying on a Free zone structure.

A Free zone technology company may own and develop the recruitment platform.

A mainland recruitment agency may conduct licensed candidate placement.

The companies may enter agreements for software, brand use and shared services.

A dual structure should have a commercial purpose and clear allocation of functions. It should not be created merely to move regulated recruitment revenue into a Free zone.

The agency will earn success fees from mainland companies after candidates join.

A mainland company with the relevant DET and MOHRE approvals is generally the appropriate structure.

The firm recruits senior executives for businesses across the Middle East.

The fondatori should determine where employers are based, where services are performed and whether candidate introduction constitutes regulated EAU recruitment. A Free zone should be used only if its permission clearly covers the model.

The company licenses applicant-tracking software but does not introduce candidates or negotiate placements.

A technology or software activity may be more appropriate than a recruitment-agency licenza, provided its actual conduct remains within that scope.

This is a regulated and capital-intensive model requiring a mainland and MOHRE assessment, payroll controls, financial security and strong working capital.

It needs the correct recruitment authority and should maintain processes for professional eligibility, primary-source verification and healthcare-regulator coordination without guaranteeing candidate approval.

An overseas recruiter may contract with a properly licensed EAU agency. The parties should document referrals, candidate consent, fees, data transfers, non-circumvention and responsibility for regulatory conformità.

Determine whether the company will earn placement fees, retainers, staffing margins, software subscriptions, consultancy fees or referral commissions.

Separate HR consultancy, recruitment mediation, executive search, temporary employment, outsourcing, labour supply, job portals and domestic-worker recruitment.

Determine whether clients are mainland companies, Free zone entities, overseas employers, government bodies or individual consumers.

Establish the target professions, nationalities, skill levels and countries of recruitment.

Obtain activity confirmation from DET, the selected Free zone and MOHRE where applicable. Identify any additional sector authority.

Confirm the requirements for azionisti, beneficial owners, managers and responsible employees.

Determine the applicable guarantee, insurance, capital and working-capital requirements.

Document services, pricing, clients, candidate sourcing, overseas partners, staffing and conformità controls.

Complete name approval, constitutional documents, ownership declarations and commercial registration.

Complete the required MOHRE and other authority procedures before performing regulated recruitment.

Register the agency for the employee, work-permit and immigration processes applicable to its structure.

Provide the bank with a consistent description of the recruitment model, customer profile and expected transactions.

Prepare employer terms, candidate privacy notices, overseas-agent agreements, anti-fee policies and complaint processes.

Set up placement tracking, recruiter commissions, worker payroll, WPS, IVA and Corporate tax records.

Do not advertise, place candidates or supply workers until all required permissions are active.

Advising on HR systems is not the same as introducing candidates for employment.

The authority considers the actual employment and supervision arrangement, not only the contract title.

Recruiting and employment costs should not be transferred to workers through direct or indirect fees.

Regulated recruitment can require security separate from share capital and operating cash.

The EAU agency can face legal and reputational exposure for misconduct in the recruitment chain.

Overseas terms may conflict with EAU labour, tax, privacy and licensing requirements.

Payroll, benefits, insurance, absence, end-of-service obligations and bad-debt risk must be included.

A DET or Free zone incorporation document may not be the final regulatory permission required to trade.

Before applying, confirm:

Regulated recruitment licensing, employment agreements and complex labour-supply structures should also be reviewed by appropriately qualified EAU legal and regulatory professionals.

Mainland is generally better for a conventional agency placing candidates with mainland EAU employers or supplying temporary workers. A Free zone may suit HR consultancy, recruitment technology, group talent support or limited activities expressly authorised by the Free zone.

A business carrying out recruitment mediation, temporary employment or outsourcing within MOHRE's jurisdiction generally requires the relevant MOHRE approval. A commercial licenza alone may be insufficient.

3. Can an HR consultancy place candidates?

Not automatically. HR consultancy commonly covers workforce and organisational advice. Introducing candidates to employers for placement fees can constitute regulated recruitment.

It should not assume unrestricted permission. The answer depends on the Free zone activity, service model, mainland operating arrangements and whether MOHRE approval is required.

Potentially, subject to DET, Free zone and MOHRE approval. Establishing a branch does not remove the regulatory conditions applying to recruitment.

Recruiting and employment costs that the law places on the employer must not be charged to workers directly or indirectly. Agency fees should generally be structured with the employer.

Recruiting mediation involves connecting employers and workers without the agency becoming the successful candidate's employer.

In a temporary-employment model, the agency may employ a worker and make that worker's services available to a beneficiary business under an approved arrangement.

It can be. When a firm identifies and introduces candidates to employers for a placement fee, the activity may constitute recruitment intermediation even if described as leadership advisory.

No. Permanent recruitment normally results in the client employing the candidate. Manpower supply can leave employment, payroll and worker obligations with the agency.

The arrangement may constitute outsourcing or labour supply. A general consultancy licenza should not be used to deploy sponsored workers to clients without confirming the required approvals.

The answer depends on the exact regulated activity and current ownership conditions. Broad foreign-ownership rules for ordinary companies should not automatically be applied to recruitment agencies.

Regulated recruitment-agency models can require financial security. The required amount and form depend on whether the agency conducts mediation, temporary employment, outsourcing or another regulated activity.

A regulated mainland agency may require appropriate dedicated premises. A flexi-desk may be acceptable for certain consultancy or technology activities but should not be assumed sufficient for recruitment-agency approval.

Potentially, subject to corporate-document legalisation, commercial licensing and MOHRE or other regulatory approval. The foreign licenza does not automatically authorise EAU recruitment.

Yes, but it should verify their licensing, candidate-fee practices, data protection and use of sub-agents. The relationship should be governed by a written agreement.

Yes, if it holds the appropriate recruitment permission. Sanità candidates may separately require primary-source verification and eligibility through DHA, DOH, MOHAP or another regulator.

No. Domestic-worker recruitment is governed by a specialised regulatory framework and requires the appropriate authorisation.

Not automatically. The company must satisfy every Qualifying Free zone Person condition, and the income must be Qualifying Income. Ordinary recruitment services are not automatically qualifying.

The ordinary rate is 0% on taxable income up to AED 375,000 and 9% on taxable income above that amount. Tax applies to taxable profit, not gross invoices.

Recruiting and staffing services supplied negli EAU are generally subject to 5% IVA unless a specific rule applies.

Mandatory registration generally applies when taxable supplies and imports exceed AED 375,000 over the applicable period or are expected to exceed the threshold within the next 30 giorni.

Where the agency is the employer, it generally remains responsible for paying its workers according to the applicable employment requirements. Client non-payment does not automatically remove that obligation.

A job portal can require a separate online-platform or portal activity. If the platform also introduces candidates or charges placement fees, recruitment licensing should be assessed.

No professional adviser should guarantee regulatory approval. KPM Global can assess the proposed model, coordinate documentation and support the application process, but approval remains with the relevant autorità.