Setting Up a Recruitment Marketplace or HR-Tech Company in the UAE

Founders say "recruitment marketplace" for at least four different companies.

A job board charges employers to post vacancies and never touches the hiring decision. A recruitment or executive search agency takes a brief, finds candidates and earns a fee when one is hired. An HR software vendor sells applicant tracking or workflow tools to employers who do their own hiring. A manpower or outsourcing business hires workers itself and places them with customers.

The same website, brand and engineering team can sit behind more than one of these. The legal analysis does not. It follows what the company actually does, whatever it calls itself. A product called a marketplace that in practice selects, contracts and pays the workers is likely to be treated as temporary employment or outsourcing, which carries the higher AED 1 million bank guarantee.

For the first three models the question is usually the activity description on the trade licence and whether MOHRE's mediation licence applies. For the fourth, MOHRE's temporary employment and outsourcing licence applies, and your contracts must also say who is the employer, who holds the visa and who answers for the worker on the customer's site. MOHRE lists 10 working days for the licence service and asks for a business address, unless it lets you recruit electronically. Ask MOHRE which licence fits the flow you describe, and get the answer in writing.

Charging employers is the familiar model. Charging candidates is where founders need to stop and check. Federal Decree-Law No. 33 of 2021 prohibits the employer from charging the worker the fees and costs of recruitment and employment, directly or indirectly. Because that rule is addressed to employers, a platform that wants a candidate-facing price should get MOHRE's written view on its model first.

The cleaner design for most platforms is to charge the employer or the software user and keep the candidate side free. It also makes the product easier to explain to a bank: one paying customer type, one clear invoice.

If your plan includes paid candidate services, such as CV improvement or interview coaching, separate them from any promise of a job. Selling training or career tools is different from selling access to employment.

A hiring platform holds CVs, contact details, work histories and sometimes salary expectations. Federal Decree-Law No. 45 of 2021 on personal data protection came into force on 2 January 2022. It covers personal data processed electronically in whole or in part, inside or outside the UAE, and it generally rests on the consent of the person the data belongs to. People can ask for inaccurate data to be corrected and can ask for processing to be restricted or stopped. The UAE Data Office is the federal regulator.

Practical consequences for a platform:

The federal data law sets requirements for the cross-border transfer and sharing of personal data, so check the current text and any UAE Data Office guidance before you choose hosting. If you serve clients in the Dubai International Financial Centre, its own Data Protection Law (DIFC Law No. 5 of 2020) may also apply to what they send you.

Ranking, scoring and filtering candidates by software is the feature that sells. It also gives a rejected candidate something to dispute: under the federal data law the data owner can ask for inaccurate data to be corrected and for processing to be restricted or stopped. The employer will then ask you what the system did.

Keep a record of what inputs the model uses, what it ignores, and when a person reviews the result. Do not describe the tool as making hiring decisions. Describe it as ordering a list for a recruiter who decides. That description should be true, not a line in the terms.

Avoid inputs that stand in for protected characteristics. A system trained on past hiring data can learn to prefer the profile of the people already hired, which is not a neutral result. Test the output on sample profiles before launch and again when you change the model.

Once the model is clear, the corporate question is narrower. A software-only business, with no placement and no employment, fits many of the technology and commercial licence routes that free-zone company setups offer. A business that places or supplies people usually has to look more carefully at the activity wording and the authority behind it, which can push it towards a mainland company or to a zone whose rules explicitly cover the activity.

Do not choose on formation price. If you later add placement to a software licence, you may need to amend the activity or form a second company, and customer contracts signed by the first entity may need to be moved. Residence visas for the founding team and the number of staff you plan to hire early are also easier to plan once the licence is chosen.

Velarozone's approach, set out in how Velarozone works, is to test each route against your model first: who the employer is, who pays and what candidate data you hold. The licence then follows the business rather than the other way round.