It's usually the first thing a seller asks, and often the thing they worry about most. You've built a team, some of them have been with you for years, and now you're selling. What happens to them?
Here's how it works in the UAE, and what you should plan for.
The Legal Position: Contracts Continue
This is the part most sellers don't know, and it's good news.
Under Article 48 of Federal Decree-Law No. 33 of 2021, employment contracts in force at the time of a change in the form or legal status of an establishment remain effective, and the new employer becomes responsible for implementing the terms of those contracts, from the date the establishment's data is amended with the authorities.
In plain terms: your staff don't lose their jobs because the business changed hands. Their contracts carry over to the new owner on the same terms.
The law also defines continuous service as uninterrupted service with the same employer or his legal successor from the date work began. So the years your staff worked for you still count after the sale.
What That Means in Practice
- The new owner can't cut salaries without the employee's consent, because the existing contract terms continue to apply
- Length of service doesn't reset. Someone who worked eight years for you doesn't start again at zero
- Benefits and entitlements continue as written in the existing contracts
End-of-Service Gratuity
Gratuity is governed by Article 51 of the same law:
- Payable after at least one full year of continuous service
- 21 days' basic salary for each year of the first five years
- 30 days' basic salary for each year beyond five
- Capped at two years' total salary
- Calculated on basic salary, not the full package
Because service is continuous through a change of ownership, those years accumulate rather than resetting. How the liability for accrued gratuity is settled between the outgoing and incoming owner is something the two sides normally address in the sale agreement, and it's worth raising early rather than at the end.
Visas
If staff are on the company's visas, those visas sit with the company, not with you personally. When the licence transfers, the visa file transfers with it.
In practice this means:
- The new owner takes over as sponsor
- Visas usually need updating with the authorities after the transfer
- Staff on your personal sponsorship are a different matter and need handling separately
This is one of the more administrative parts of a sale, and it's worth confirming the position with a PRO before you agree terms.
Do Staff Have to Stay?
The contracts continue, but nobody can be forced to work for someone they don't want to work for. An employee can resign, following their notice period as normal.
This matters more than sellers realise. In salons, clinics, studios and restaurants, the team often is the business. A buyer paying for a loyal client base is really paying for the people who serve them. If the key staff leave, the buyer feels it immediately.
When Should You Tell Your Team?
This is a judgement call, but here's what usually works:
- Not at the start. Sales fall through. Telling staff months before anything is agreed creates anxiety and often leads to people leaving while you're still trying to sell.
- Not at the last minute either. Finding out on handover day feels like being kept in the dark, and people react badly to that.
- Usually once the deal is firm — deposit paid, terms agreed, transfer underway. At that point you can tell them with something certain to say: who the buyer is, that their jobs continue, and what happens next.
- Key staff sometimes earlier, if the buyer wants to meet them or if you need them to commit to staying.
What Buyers Want to See
If you're preparing to sell, having this ready makes the process smoother:
- Employment contracts for all staff
- Visa status and expiry dates for each employee
- Salary and benefits for each role
- Length of service for each person
- Accrued gratuity figures
- Any outstanding disputes or claims
Frequently Asked Questions
Do employees automatically transfer when a business is sold in the UAE?
Under Article 48 of Federal Decree-Law No. 33 of 2021, employment contracts in force at the time of a change in the form or legal status of the establishment remain effective, and the new employer is responsible for implementing their terms.
Does my staff's service start again with the new owner?
No. The law defines continuous service as uninterrupted service with the same employer or his legal successor, so service continues rather than resetting.
Who pays the gratuity for years worked before the sale?
How the accrued gratuity is handled is normally agreed between seller and buyer in the sale agreement. It's worth settling this early, and taking legal advice on the wording.
Can the new owner reduce salaries after taking over?
Not without the employee's consent, because the existing contract terms continue to apply.
What happens to employee visas?
Visas held under the company transfer with the licence, and the new owner becomes the sponsor. The paperwork is usually handled through a PRO.
Can I sell without telling my staff?
You can keep the process confidential while it's ongoing, which is normal and why NDAs are used. But the team needs to be told before handover.
Does this apply in free zones?
Free zones have their own authorities and processes, and the DIFC and ADGM operate under separate employment regimes entirely. Check the rules for your specific zone.
Thinking of Selling?
Looking to buy or sell a business in the UAE? Visit businessesforsale.ae to browse our listings, or get in touch for a confidential chat.
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