Emiratization Rules in the UAE: The new requirements

The UAE government has boosted Emiratisation regulations considerably in the past years. The fundamental objective has always been to increase the participation of UAE national's aka Emiratis in the private sector workforce. Therefore, the Ministry of Human Resources and Emiratisation (MHRE) has issued a new Ministerial Decision concerning Emiratisation in the UAE, following the introduction of the new UAE Federal Labour Law in?2022. ?

The authorities have initiated the implementation of new Emiratisation rules in UAE wherein private companies are required to recruit 2% Emirati employees on an annual basis. These updated rules are expected to influence the organizational policies as well as recruitment strategies of the private sector.?

Basically, these modernized laws are a part of Nafis, a government-centralized program aiming to increase the efficiency of Emirati human resources and also empower them to occupy jobs in the UAE’s private sector. Hence, it targets to create over 12000 annual job opportunities for UAE citizens that would eventually cover all the economic sectors.?

Amendments in the Emiratisation law?

As per the UAE government’s revised laws, the below changes would be coming into force in the legislation:?

• Ministerial Decision No, 279 of 2022 – Emiratisation in the private sector (2% Emiratisation Law)??

• Cabinet Decision No. 18 of 2022 (Classification Law)??

• New laws leading benefits under the Nafis scheme?

NAFIS:?

It is a government scheme designed to increase the volume of the Emirati workforce in the private sector. Therefore, all the MOHRE registered companies are mandated to enroll themselves in the Nafis program. Moreover, Nafis also operates a portal that encourages the recruitment of UAE nationals, wherein job applicants can connect with companies or vice versa, thereby assisting them in finding Emirati employees.?

In addition, Nafis also offers several other benefits to its registered members, such as reduced employer pension contributions for Emiratis, and a monthly salary of up to AED 8,000 to each Emirati hired under the scheme.?

Impact of Emiratisation rules in UAE?

The new Emiratisation law mandates companies with 50 or more employees to raise their Emiratisation quota by 2%. This may be quite a challenge for private employers. Firstly, it might be a possibility that the existing Emirati population in the company will not be taken into account while determining the quota. ?

Secondly, it could be challenging to attract and retain Emirati talent in the UAE labor market, although there are a variety of measures for the companies to tackle with the accomplishment of these quotas, such as incentive programs, training systems,? international initiatives, etc.?

Requirements of 2% Emiratisation law in UAE?

The new Emiratisation rules will take effect from 1 January 2023 and are compulsorily applicable to employers falling under the jurisdiction of the Ministry of Human Resources and Emiratisation. In simple words, those who work outside the free zones.?

As per the new Emiratisation law in UAE, private companies need to increase the number of Emirati workers to 2% every year depending on the overall number of skilled workers in the company. For instance, companies with 50 or less employees on their payroll need to have one Emirati. Similarly, if the headcount is 51 to 100 employees, they need to have 2 Emiratis, for 101 to 150 employees, 3 Emiratis, and lastly, for 151 & above, one Emirati employee for every 50 or less employees.??

The new Emiratisation rules in UAE aim to ensure that the private sector comprises a minimum of 10% of UAE nationals in their workforce. The Emiratisation quotas for the banking and insurance sectors are 4% and 5% respectively.?

According to MHRE, an employee would be considered a skilled worker only if he meets the below conditions –?

• The employee belongs to any of the below categories:?

• legislators, managers, and business executives?

• professionals in scientific, technical, and humanitarian fields?

• technicians in scientific, technical, and humanitarian fields?

• writing professionals?

• service and sales occupations?

• Must have a secondary school certificate, either higher than that or equivalent.?

• The certificate must be well-attested by the relevant authorities?

• Must earn a monthly salary of not less than AED 4,000, excluding commission?

In addition, another consideration must be given to the five skillset categories where 5 being the lowest, category 4 would also require certification. For example, security guards.?

Categorization of Companies in compliance with the Emiratisation requirements?

Additionally, employers in UAE must ensure to comply with all labor regulations, including equipping UAE nationals with work permits and employment contracts and registering them with the concerned authority for a pension through the Wages Protection System.?

The MHRE categorizes the UAE companies in the private sector into three tiers:?

Category 1:?

Companies under this category must fulfill any of the following objectives –?

• Raise their annual Emiratisation quota three times above their actual target.?

• Employ as well as train up to 500 Emiratis on an annual basis.?

• Either an SME owned by a young Emirati,?

• Or a qualified training and employment center.?

For penalty/incentive, the companies will have to pay a maximum of AED 250 for two years, set by the MoHRE. Nonetheless, the employment of Emiratis or GCC nationals would be exempted from this fee amount.?

Category 2:?

Companies that may not meet any of the above criteria of category 1,but fulfill the condition of a 2% annual Emiratisation quota.?

Companies that fall under this category will have to pay AED 1200 for two years. Again, the employment of Emiratis or GCC nationals would be exempted from this fee amount.?

Category 3:?

Entities that fail to meet the Emiratisation quota or Emiratisation law in UAE .?

Penalties for non-compliance to Emiratisation rules in UAE?

The companies failing to abide by the requirements of the Emiratisation program will have to withstand the following penalties:?

• A minimum fine of AED 6,000 per month must be paid in place of each non-hired Emirati employee, which would be further increased every year. Nevertheless, if the company fails to pay these fines, it might lead to the suspension of their work permits.?

• If the company fails to abide by its Emiratisation quotas for two consecutive years, then it would be relegated to the third category under the Classification Law.???

Since the UAE authorities are stringent with their laws and policies, the non-compliant entities would have to suffer financial & reputational implications if they show consistent negligence towards following the Emiratisation rules in UAE.?

Conclusion?

The United Arab Emirates has now opened its doors to a steady inflow of foreign investments. Hence, it is imperative for them to keep up with the necessary laws and regulations to make sure that business operations run smoothly.

Therefore, all companies registered with the Ministry of Human Resources and Emiratisation are required to take prompt action to ensure that they are meeting the Emiratisation targets as well as abiding by the Emiratisation rules in UAE by January 1, 2023. This will further liberate them to not just pursue their commercial interests but also gain access to the inner sanctum of UAE’s national community.?

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