Joint ventures in the GCC: Employment considerations in the UAE, KSA and Qatar

Joint ventures (JVs) remain a common and often effective route for businesses seeking to enter or expand within GCC markets, particularly the UAE, KSA and Qatar. While legal and commercial negotiations typically focus on ownership structures, governance rights and profit-sharing arrangements, employment issues are frequently just as complex and, if not properly managed, can become a source of material risk.

In the UAE, KSA, and Qatar (as well as generally across the GCC and wider Middle East) these arrangements operate within the framework of the respective labour laws governing private sector employment and establishing the rights and obligations of employers and employees. Those frameworks share common themes, including work authorisation, employer sponsorship or registration, wage payment controls, statutory leave, termination rules and employee duties, but the detail differs by jurisdiction and should be checked carefully when structuring the JV.

Within this framework, the use of seconded employees, the allocation of control over key personnel, and the management of employment obligations within a dual-shareholder structure require careful consideration from the outset.

Appointment and control of key personnel

A central feature of most JV arrangements is the allocation of rights to appoint senior management. This commonly includes C-suite roles such as Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer. These rights are usually set out in the JV agreement and constitutional documents and are often linked to the respective contributions of the shareholders. 

Consideration should be given to which shareholder has the right to appoint and the process for doing so eg shareholder resolution and any majority voting. The right to appoint also entails the right to remove again entailing considerations around process and decision making. 

From an employment perspective, the individual appointed into the role must still be engaged in compliance with the relevant Labour Law, which requires a valid employment contract and a recognised employment relationship with a licensed or registered employing entity. In practice, this is often the incorporated JV entity, although the precise employment, sponsorship and work authorisation structure will need to be confirmed locally in the UAE, KSA and Qatar.

In practice, the shareholder holding appointment rights will frequently second personnel from within its existing organisation. However, while this may achieve commercial alignment, it does not alter the underlying legal principles governing employment in the incorporated joint venture entity as the direct employer of these individuals.

The employment status of seconded employees

Secondment is not expressly regulated as a standalone concept. However, its legal basis can be derived from provisions relating to temporary work, outsourcing arrangements, and the assignment of employees in the relevant labour laws.  We set out below the relevant articles in the UAE, KSA and Qatar Labour Laws:

• UAE: Articles 11 and 12 of UAE Labour permit (i) outsourcing of work to another employer and (ii) the assignment of employees to different roles, providing a statutory basis for secondment-type arrangements. 
• KSA: Articles 58–60 of the KSA Labour Law allow (i) temporary assignment to a different workplace (including without consent in limited circumstances) and (ii) restrictions on transferring or materially changing the employee’s role without consent. 
• Qatar: Article 45 of the Qatar Labour Law restricts assignment to work other than that agreed, except in limited circumstances (e.g. temporary reassignment or necessity), provided the work does not fundamentally differ, does not harm the employee and does not reduce their wage, thereby placing limits on secondment-type arrangements.

For cross-border or multi-jurisdictional JVs, this means the secondment structure should be tested separately in each country rather than assuming that a UAE-style approach will automatically work in KSA or Qatar. Local rules on sponsorship, transfer of services, work permits, temporary work and assignment to different duties may affect both the documentation and the practical implementation of the arrangement. 

Where employees relocate into the GCC, the legal position is generally that they must have:

• a valid work permit and residence visa linked to a sponsoring employer; and
• a compliant employment contract with that employer. 

In many JV structures, this results in the secondee being formally employed by the JV entity rather than the originating shareholder.

This position is significant because, under the UAE Labour Law, the KSA Labour Law and the Qatar Labour Law, employees are subject to a number of statutory obligations, including duties to:

• perform work with due care and diligence;
• comply with the employer’s instructions; and
• maintain confidentiality and protect the employer’s interests. 

In a JV context, those obligations are owed to the JV entity as the legal employer, even where the employee has been introduced by, and remains commercially aligned with, a particular shareholder.

Where a shareholder has the right to appoint and therefore to second an employee into a joint venture entity, an agreement with the joint venture entity will be required to document (and audit) the secondment arrangement including considerations such as headcount costs, any external interests the employee will hold (e.g. corporate or statutory manager appointments), delegations of authority and termination of the secondment; e.g. if the shareholder can unilaterally terminate the secondment will there be a transitionary period, will the joint venture entity itself have notice of that decision?  Will any other shareholders in the joint venture entity be able to hire the individual if their employment is terminated?

Managing conflicts of interest and information flows

The dual role of secondees can create tension between legal duties owed to the JV and commercial expectations from the appointing shareholder.

This risk is heightened in senior roles where individuals have access to strategic information or are responsible for driving the JV’s direction. From a statutory perspective, the obligation to protect the employer’s interests is reflected across GCC labour frameworks, including employee duties of confidentiality, loyalty, compliance with employer instructions and protection of employer property and information. These obligations reinforce the need for clarity around:

• the employee’s reporting line and decision-making authority;
• the extent to which information can be shared with shareholders; and
• the treatment of confidential or commercially sensitive information.

In practice, this requires a combination of:

• robust employment contracts;
• clear secondment agreements; and
• internal governance processes (including conflict disclosure mechanisms).

Without these safeguards, there is a risk that employees may inadvertently breach their statutory duties or expose the JV to claims for misuse of confidential information.

Regulatory and compliance considerations across the UAE, KSA and Qatar

Secondment arrangements must also operate within the regulatory framework of each relevant GCC jurisdiction. In the UAE, KSA and Qatar, employment status, immigration permission, work authorisation and employer registration or sponsorship are closely connected, although the mechanics and terminology differ.

Across the UAE, KSA and Qatar, the key compliance points typically include:

• the individual must hold the correct work authorisation, immigration status and/or residence permission for the jurisdiction in which they are working; 
• the employing, sponsoring or host entity must be properly licensed or registered with the relevant labour, immigration or free zone authority; and
• the contractual employer, payroll arrangements and statutory benefit obligations should align with the work authorisation and local labour law position. 

This reflects the broader GCC principle that each entity in a JV structure is treated as a separate legal employer, with its own compliance obligations. 

The UAE, KSA and Qatar labour laws each regulate core aspects of the employment relationship, including wage payment, working hours, leave, disciplinary action, termination and end-of-service entitlements. The practical outcome may be similar, but the statutory mechanics, time limits and procedural requirements are not identical. 

In practice, this gives rise to a number of considerations for JVs:

• salary payments must comply with the agreed contractual structure and, where applicable, the Wage Protection System or equivalent wage payment controls in the relevant jurisdiction;
• employment contracts must accurately reflect the employing entity; and
• intercompany arrangements must clearly allocate responsibility for remuneration and benefits.

Although secondment agreements are not mandated by statute, they are an important tool for documenting these arrangements and mitigating risk.

Business protection: Confidentiality and intellectual property

Business protection issues in a JV environment are closely linked to statutory employment obligations.

While GCC labour laws do not always provide a single consolidated employment-law provision dealing with intellectual property, statutory employee duties, including confidentiality, protection of employer property and compliance with lawful instructions, form part of the legal basis for safeguarding proprietary information. 

In addition, non-compete protections may be available in the UAE, KSA and Qatar, but their enforceability is generally subject to statutory limits and principles of reasonableness, including restrictions on duration, scope, geography and the legitimate business interest being protected. 

Within a JV, these statutory provisions should be supplemented contractually to:

• define ownership of IP created during the secondment;
• regulate the use of pre-existing shareholder IP; and
• impose appropriate post-termination restrictions.

This is particularly important where secondees are central to the JV’s operations or hold knowledge that may be commercially valuable beyond the life of the venture.

Employment risks on exit or breakdown of the JV

Employment issues often become most acute where a JV is unwound or where disputes arise between shareholders.

Across the UAE, KSA and Qatar, termination of employment is governed by local statutory rules dealing with notice, permitted termination grounds, summary dismissal, resignation, final settlement and end-of-service entitlements. In broad terms, the relevant provisions cover:

• ordinary termination of the contract and applicable notice periods;
• termination without notice or summary dismissal in specified circumstances; and
• payment of accrued wages, leave, end-of-service gratuity or other statutory termination entitlements. 

Once employment is terminated, the employer is required to complete the relevant administrative processes, including:

• final settlement of employment entitlements; and
• cancellation of the employee’s work permit and, where applicable, the residence visa, which formally ends the sponsorship relationship. 

This creates practical challenges in a JV context. Employees cannot simply be “moved” between entities without addressing termination, rehire, and immigration formalities. While changes of employer may be possible following termination or contract expiry, this is subject to compliance with the relevant labour authority and immigration requirements in the UAE, KSA or Qatar. 

In a dispute scenario, cooperation from the JV entity (as the legal employer and possible visa sponsor) may be required, which can delay or complicate the redeployment of key personnel.

The importance of forward planning

Many of the risks associated with employment arrangements in a JV can be mitigated through careful planning at the outset.

From a statutory perspective, the UAE, KSA and Qatar labour laws each provide the framework for:

• employment contracts and work authorisation;
• the allocation of rights and obligations between employer and employee; and
• termination and exit processes (Articles 42–47). 

However, those laws do not address the commercial complexities of JV structures in detail. As a result, contractual arrangements between shareholders, and the related employment documentation, play a critical role in bridging that gap.

Well-structured JV arrangements should therefore anticipate:
•    how secondees will be engaged and managed;
•    how statutory duties will be observed in a dual-interest environment; and
•    how employment and immigration processes will be handled in the event of exit.

Final thoughts

• Employment considerations in GCC joint ventures, particularly those involving the UAE, KSA and Qatar, are both strategically significant and legally nuanced. The statutory framework in each jurisdiction provides the foundation for employment relationships, but it does not eliminate the structural tensions that arise where employees are deployed across multiple stakeholders.
• In particular, secondment arrangements require careful alignment between legal employment obligations, immigration requirements, and commercial expectations.
• A proactive and well-documented approach can help ensure compliance with UAE, KSA and Qatar law, protect business interests, and reduce the risk of disruption if the JV relationship evolves or comes to an end.

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