EOR vs. AUG: all that you need to know.

EOR vs. AUG all that you need to know.


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For knowing the difference between EOR vs AUG for that Once you get into the UAE, you’ll need to hire the proper staff to work for your company. The hiring process may be fascinating, but it may also be a real challenge. That’s why you need to count on a specialized team that can assist you.

In this article, you’ll learn everything about EOR vs. AUG and all that you need to know related to them. You’ll need them to find a workforce. You’ll get a better understanding of how their services may take a load off your shoulders. Let’s take a look:

  1. What is an Employer of Record (EOR) in Dubai?
  2. What is the AUG license used for?
  3. How does the EOR System work in Dubai?
  4. Cases in which AUG has an impact on your EOR solution.
  5. Is there any difference between an EOR and a staffing agency?
  6. Features and benefits of using an EOR in Dubai.
  7. How can Connect Resources help you?

1. What is an Employer of Record (EOR)?

An Employer of Record Dubai (EOR) is a company that takes over the legal obligations of hiring your staff.  This is to reduce the complications involved with HR operations, market according to employee pay. On paper, the EOR becomes the principal employer of your employees.

This critical service keeps your company compliant and assists with worldwide development when legislation concerning perks and taxes gets difficult. The EOR may help you get access to new markets, improve your benefit rates, and even sponsor work visas.

Additionally, here you can learn more about the things you have to be aware of before you start working with an EOR.

2. What is the AUG license used for?

First, this is a German license. In Germany, the labor leasing license is known as AUG. Labor leasing is very popular among businesses looking to fill short-term positions. You can also use it to cover temporary employment needs because it allows you to hire workers without committing to long-term employment.

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Hence, when a company needs the services of a specialist for a single project, AUG is a viable alternative to regular employment. Offering them a full-time position would be prohibitively expensive in these circumstances.

Hence, you can use labor leasing licenses for two purposes:

  • Considering removing chain law. The employing company has a direct contract with the end client (the business to which the service is delivered). So, there’re only two entities involved in the process, rather than multiple. This makes it easier to resolve any issues that may arise during the service agreement’s duration.
  • Creating a legal foundation for short-term employment and giving contractors legal protection. Companies use the licenses to hire short-term workers without having to hire them as full-time employees with a direct employment contract.

3. How does the EOR System work in Dubai?

The contract with your employee complies fully with Dubai labor laws and includes benefits such as insurance and pensions. An EOR can hire, train, and manage your new employees in Dubai in a matter of days.

As a result, what an EOR can do for you is as follows:

  • Hiring your new talent in accordance with Dubai’s laws and regulations.
  • They’re in charge of the employment contract, Human Resources (HR), taxes, and payroll.
  • They provide and arrange for the necessary visas or freelance work permits.
  • The EOR keeps your employees up-to-date on holiday plans, benefits, and changes in labor laws.
  • They keep you up-to-date on local law changes and adapt to them in a compliant manner.
  • The declarations of your employees are sent to them monthly. They’ll invoice you on time, and once they receive the payment, they’ll deduct the taxes. They’ll also deduct other contributions, ensuring that your employees receive their paychecks on time.
  • You retain control over your employee’s daily activities and responsibilities.

If you want to get more information about how the EOR works in the country, click here.

4. Cases in which AUG has an impact on your EOR solution.

You can hire full-time employees through an EOR provider. Besides, there’s typically no need for AUG if they’re not being leased to another client (most likely working remotely). Plus, the employment agreement is typically open-ended, rather than being contracted out to German-based clients and working onsite.

However, there are a few situations in which you’ll need an AUG license. There’re several factors you must consider to determine whether this is the case or not:

  • Where your company is located.
  • Where you’ll look for new employees.
  • In which locations your employees will be working. You have to decide if the work will be done remotely, on a client’s property, or if it’ll be a workplace. Also, you must decide in which country it’ll be.
  • Another issue to consider is the status of your employee. Here’s where you determine if you want a full-time employee or a contractor.

When you’re dealing with freelancers, however, there is no need for AUG because the end customer is responsible for categorizing the worker. There’ll be cases where the employees will need to be hired either directly (by the end client) or through a management company (AUG set-up).

The first one is when the role they’re performing doesn’t meet the requirements for freelancing. And the second one is when other employees are working for the end client who performs similar tasks.

4.1. Requirements.

In general, the requirement for an AUG license when you’re hiring through an EOR applies only if at least one of the following conditions is met:

  • It’s a temporary position.
  • The employee and the end client are both based in Germany.
  • When you hire a worker through EOR by a non-German firm. In this case, the requirement for an AUG arises only if the person is permanently assigned to a client location in Germany.

5. Is there any difference between an EOR and a staffing agency?

People usually say “employer of record services” and “staffing services” as if they’re interchangeable. Although the two are mutually beneficial, an EOR and a staffing agency are independent entities with unique tasks and obligations.

5.1. Roles EOR vs. AUG are all that you need to know.

An EOR vs AUG and its client, which might be a company or a staffing agency, have a collaborative relationship. While an employee is working for a client, the EOR serves as the legal employer for tax purposes. An EOR handles all administrative duties.

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For instance, these duties are payroll processing, federal and state tax withholding and filing, record-keeping, and all HR support tasks. Plus, the EOR does HR tasks such as benefits administration, employee termination, and any other worker concerns. Also, the EOR performs pre-employment screening such as background checks and drug tests.

By contrast, a staffing agency seeks applicants to suit customers’ temporary labor needs. It’s not commonplace for staffing firms to use an EOR for back-office functions.

5.2. Responsibilities

Each entity’s purpose establishes distinct responsibilities and liabilities. The client company retains control of day-to-day operations, while the employer of record handles the behind-the-scenes obligations. The client supervises employees and is in charge of ensuring workplace safety and compliance.

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Moreover, the EOR is in charge of the behind-the-scenes activities and undertakes the associated liabilities. These duties are legal compliance with payroll, taxes, and employee benefits. This relieves the burden of keeping up with continuously changing local, state, and federal rules on a company’s human resources staff.

5.3. Disadvantages

When it comes to international hiring, there are several drawbacks to using an EOR vs AUG. Employers, for one thing, have less control and influence over their global staff. While it relieves some of the burdens on your in-house HR department, it also has the potential to cause substantial changes in business culture and standards.

On the other hand, staffing companies aren’t without their drawbacks. They may have large skill pools, but it takes time to train and Hire contractors and workers. Company culture and team cohesiveness might be harmed by distance and the hiring process.

Furthermore, employers have much less control over the hiring process, and it’s possible to come across staffing firms with shoddy hiring practices.

Moreover, here you can find more information about the differences between these terms.

6. Features and benefits of using an EOR in Dubai.

No matter if you’re the provider, the employer, or the employee, you can certainly benefit from EOR services. Let´s observe:

6.1. For providers.

The most significant advantage of using an EOR is that you do not need to establish an entity in Dubai. This process can take months, and it’s unlikely that you’ll have the legal resources to pay your employees in Dubai during this time. That’d result in a significant delay in your global expansion plans.

Additionally, globalization is an exciting step that frequently leads to a growing and successful business. However, the red tape in a new country can be stressful. You could expand your business globally without a lot of red tapes and at a low cost by working with an EOR.

If you let an EOR handle the difficult part, you can concentrate on the exciting part: expanding your business. These are the things an EOR company can learn from you:

  • Getting registered with the tax and social security offices.
  • Learning about the local laws, customs, and regulations.
  • Gaining knowledge about local labor benefits and other contract-related etiquette.
  • Approaching potential employees and making an offer to them.
  • Setting up the Payroll System in a Compliant Manner.
  • Wage tax returns and national insurance forms must be submitted.
  • Keeping abreast of and compliant with changes in local regulations.

6.2. For employers.

As an employer, you’re usually responsible for all legal aspects of your employees’ employment. This process will almost certainly require more effort in a new country, even though it doesn’t have to. An EOR agency can assist you with:

  • A solution that is tailored to your company’s needs and plans.
  • Local experts who can tell you everything you need to know about the market.
  • Providing EOR best practices in taxation, treaties, expenses, and social security.
  • Hiring at a rapid pace.
  • Without having to worry about labor contracts, you can easily exit the market.
  • Within days, you’ll be able to begin your business in Dubai without incident.

6.3. For employees

Employees are the lifeblood of your company. They keep the engine running. So, it’s also critical to develop a stable agreement that’s satisfactory to both the employer and the employee. As a legal employer, the EOR is responsible for ensuring that your employees are satisfied with the work agreement.

Because of our extensive network and expertise, they’re able to provide employees with excellent benefits and a dependable, compliant employment contract. An agency will make certain things they enjoy:

  • Onboarding should be quick and transparent.
  • A contract of employment that complies with local regulations.
  • Punctual salary.
  • Excellent benefits, such as pensions and insurance.
  • A consistent point of contact.
  • Current information and consultation on changes to local regulations.

7. How can Connect Resources help you with EOR vs AUG?

If you´re thinking about establishing a successful company in Dubai, you’ll need an EOR. Every great business must have an EOR. Undoubtedly, an EOR vs AUG can make your life easier. We can fulfill your HR needs, so you´ll be able to concentrate on making your business greater.

Additionally, we can assist you with all relatable visas and licenses for work. We’re a company specialized in helping people to enter the UAE to develop professionally. Let us improve your business.

Would you like to Connect Resources to obtain more information on EOR vs AUG and all that you need to know? If you have any questions, call us on + 97143316688. You can email us at contact@connectresources.ae, and you’ll talk to one of our representatives who will answer your questions.

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