United Arab Emirates: Owner/Operator Model: Whose Employees Are They Anyway?

Last Updated: 26 June 2018
Article by Natalie Jones

It is common in the UAE for hotels to utilise a separate owner operator model. The model works well when the interests of each separate party are broadly aligned. However, where the parties fall into dispute, a number of difficulties can arise. In this article we consider the potential employment issues in circumstances where an owner operator relationship breaks down.

Legal Framework – owner/operator model

In order to regulate the interests and obligations of a hotel owner and operator, a hotel management agreement ("HMA") is signed by each of the parties. A well drafted HMA contractually regulates the relationship between the parties. However, in relation to employees, there are certain issues which cannot be entirely resolved with a HMA.

With few exceptions, employees who carry out work in the UAE require a residence visa and a work permit. An employee may lawfully work in the UAE for the employer listed on the employee's visa and only from the employer's registered premises. Furthermore, an employee may not lawfully work for more than one employer simultaneously except in very limited circumstances.

Often, the owner of a hotel holds the licence for the hotel premises pursuant to which an e-signature card can be obtained; both of which are required to obtain residence visas for employees. Since employees must work for their sponsor at its premises, this ordinarily results in the hotel owner employing all hotel staff, despite the fact that day to day running of the hotel will be the responsibility of the operator. Irrespective of any contractual agreement between the parties in the HMA, the owner is the employer for local law purposes. Employees generally fall within one of two groups, as follows:

  1. those who are employed by the owner pursuant to contract(s) entered into between the employee and the owner. The selection and hiring process is often managed by the operator through executive level personnel (ultimately employed by the operator, as below). However, the operator has no direct contractual relationship with the employees; and
  2. employees in senior roles (general manager, finance manager, head of HR etc.) who likely have an existing employment relationship with the operator (often, in another jurisdiction) and who enter into a secondary employment relationship with the owner. This arrangement creates a scenario where the legal responsibility for the staff in the UAE remains with the owner, though the real employment relationship is between the operator and the individuals. The rationale for this approach is twofold; firstly, to ensure legal compliance in the UAE and secondly to give contractual recourse to an owner in circumstances in which there is a breach of the operator's obligations under the HMA caused by the operator's employees.

Breach or termination of the HMA

Throughout the duration of the HMA, parties are generally aligned and focusing on the overall feasibility and success of the hotel. Accordingly, there is little regard given to the obligations under the HMA during the initial phases of the hotel operation. Inevitably, there is also little concern at this stage as to which party is responsible for the employees, particularly since day to day operations are managed by the operator and employees readily take instructions from the operator's senior employees.

Difficulties tend to arise where the HMA is terminated. At that stage, the question of responsibility in relation to the employees inevitably comes to the forefront. Until that point, the employees themselves often do not realise that they are not necessarily employees of the operator but of the owner. This is not helped by the fact that employment contracts are often issued on operator letterhead which is misleading.

As set out, hotel employees who are sponsored and therefore employed by an owner will continue to be employed by the owner even in the event of a change in operator. The employees may then be retained to continue working for any new operator (of course, then branded as employees of the new operator). Alternatively, an owner could decide to dismiss the employees, particularly if a new operator is not quickly identified.

Where employees are retained by the owner, it continues to be responsible for the payment of salaries and the provision of benefits. Employees who will be dismissed as a result of termination of the HMA (in all likelihood including the operator's executive staff), are also entitled to termination benefits payable by the owner. The scope and quantum of those benefits will depend upon the employment contract executed by the owner and the employees.

At this stage, questions are likely to arise in relation to which party is responsible for termination benefits owing to the operator's staff (sponsored by the owner) who are dismissed on termination of the HMA. Strictly speaking, in the event of a dispute, the owner will be responsible for all amounts since it is the sponsor and employer at local law level. However, the HMA will often detail the costs which will ultimately be borne by the operator, which is likely to include termination payments which arise in relation to the operator's staff, paid in the first instance by the owner and reimbursed by the operator.

In some scenarios, it is conceivable that the HMA could be terminated as a result of the owner's breach of key terms or, although not lawfully terminated, the provisions of the HMA are no longer being applied. Clearly, this situation is most likely to arise where the parties are in dispute, most controversially where the owner seeks to eject the operator unilaterally and assume control of the hotel's operation. In those circumstances, confusion is likely to be rife amongst the employees who often see themselves as being employed by the operator particularly where the operator has previously been in control of the hotel for a lengthy period and the recruitment and employment of the individuals included references to the operator's brand.

Further difficulties could also stem from employees who would rather remain employed by the operator than the owner, particularly where the operator's brand is well recognised. Clearly, this may not be feasible where the operator does not operate a number of hotels in the UAE and the employee is unwilling or unable to relocate. Even if the employees are able to remain with the operator, the dissolution of the relationship between the owner and operator is unlikely to be quickly resolved and employees will inevitably be impacted by any changes to hotel operation.


Due to local law considerations, the owner of a hotel is in most cases likely to be the legal employer of a hotel's personnel in the UAE and is therefore legally responsible for the hotel's employees irrespective of the contractual relationship between the owner and operator.

In order to limit difficulties on termination of a HMA, it is important for the HMA to clearly document which party is responsible for employees in the event of certain scenarios, including where there are breaches to the agreement and where the HMA is fully terminated. It is also imperative that employees are aware of which entity they are engaged by in order to avoid confusion in the event of difficulties between the owner and operator.

Ultimately, owners should be conscious of their legal obligations in relation to their employees and ensure that adequate provisions are included in the HMA to deal with those obligations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions