Understanding the UAE’s Emiratisation Law and Its Impact on Businesses

The UAE government has reaffirmed its commitment to integrating Emirati talent into the private sector workforce by setting strict penalties for companies failing to meet their Emiratisation targets for 2024. Under these updated rules, firms that do not meet the required quotas will face fines of AED 96,000 for each unfulfilled Emirati position, with penalties enforced starting January 2025. This initiative aims to increase Emirati representation in various industries, ensuring their active participation and fostering a more inclusive workforce. These measures emphasise the UAE's strategic push toward sustainable growth through balanced workforce diversification.

What is Emiratization?

Emiratization is a national workforce policy in the UAE designed to boost the employment of Emirati nationals in the private sector. It is a cornerstone of the We the UAE 2031 strategy, which aims to significantly grow the country’s economy by doubling its GDP from AED 1.49 trillion to AED 3 trillion within the next decade. This initiative is not just an employment drive but a strategic vision to create a more sustainable and inclusive economy.

The UAE’s unique demographic structure amplifies the importance of Emiratization. With a population of 10.17 million, Emiratis account for only 11.48% of the population, while expatriates dominate at 88.52%. This significant disparity highlights the need for Emiratization to address the workforce imbalance and reduce reliance on foreign labour. By prioritising Emirati talent, the policy seeks to integrate nationals into critical sectors, ensuring they play a more prominent role in shaping the UAE’s economic future.

Emiratisation Law & Policies

The Emiratization law, introduced through Ministerial Decision No. 279 of 2022, mandates private sector companies to employ a minimum of 2% Emirati employees within their skilled workforce annually. This law, enforced by the Ministry of Human Resources and Emiratisation (MoHRE), is designed to ensure a steady integration of Emirati talent into sectors traditionally dominated by expatriates, contributing to the UAE's long-term goal of a more diversified economy.

The NAFIS program plays a significant role in supporting companies that adhere to the Emiratization law. It offers a range of benefits to private sector companies employing Emiratis, including reduced pension contributions for Emirati employees and salary support for those hired under the NAFIS initiative. This helps alleviate some of the financial burdens companies may face when hiring Emirati talent. Additionally, companies that excel in Emiratisation are eligible for the NAFIS Award, which recognises outstanding contributions to the workforce integration of UAE nationals.

Objectives of Emiratisation

The Emiratization program is not just about increasing the number of Emiratis in the private sector but about empowering them to actively contribute to the nation’s economic growth. Here are the key objectives driving this policy:

• Increases employment opportunities for Emiratis by ensuring private companies allocate specific quotas, giving them access to meaningful and competitive roles.
• Reduce the reliance on foreign workers by prioritising the inclusion of Emiratis in key sectors, addressing workforce imbalances in the economy.
• Promotes skill development and professional growth through structured training programs, enabling Emiratis to excel in their roles and contribute effectively to the nation’s economy.
• Foster economic sustainability by integrating local talent into the workforce, ensuring that UAE nationals play an active role in shaping the country’s development.
• Maintain a diverse and balanced labour market, preventing any single nationality from dominating and ensuring equitable representation in the workforce.

Updates to Emiratisation Laws in 2024

The UAE government has introduced significant updates to Emiratisation laws in 2024 to enhance workforce participation by Emirati nationals.

Private companies with 50 or more employees must ensure a 2% annual increase in Emirati employment for skilled roles. This is part of a broader plan to achieve a 10% Emiratisation rate by 2026, with companies expected to split this annual target into a 1% increase in the first half of the year and another 1% in the second half.

Smaller businesses, specifically those with 20 to 49 employees, are now also required to meet quotas. In 2024, these companies must hire at least one Emirati, with an additional Emirati hire required by 2025. This new requirement spans over 20,000 companies in 14 critical sectors.

Additionally, a tiered quota system has been introduced for larger companies based on their number of skilled workers:

• Companies with 50 skilled workers must hire at least one Emirati employee.
• Companies with 51-100 skilled workers need to hire a minimum of two Emirati employees.
• Companies with 101-150 skilled workers must employ at least three Emiratis.
• Companies with 151 or more skilled workers must maintain a ratio of one Emirati per 50 workers.

These updates align with the government’s broader workforce strategy, which includes bringing 75,000 Emiratis into the private sector within five years.

To align with these updates, MOHRE has defined skilled workers as individuals meeting specific criteria, such as:

• Holding a certificate higher than a secondary education level or its equivalent.
• Possessing an accredited professional certification attested by relevant authorities.
• Earning a salary of AED 4,000 or more per month.
• Belonging to specific job categories, including:

Key Industries Under Focus

The updated laws target 14 key economic sectors critical to the UAE's growth and development. These include:

• Information and Communication
• Financial and Insurance Activities
• Real Estate
• Professional, Scientific and Technical Activities
• Administrative and Support Services
• Arts and Entertainment
• Mining and Quarrying
• Transformative Industries
• Education
• Healthcare and Social Services
• Wholesale and Retail Trade
• Transportation and Warehousing
• Hospitality and Food Services
• Construction

By prioritising these industries, the Emiratisation initiative ensures that Emirati nationals have access to diverse and meaningful opportunities, contributing actively to the UAE's economic sustainability and workforce balance.

Penalties for Non-Compliance

The UAE government enforces strict penalties on companies failing to meet Emiratisation targets, emphasising accountability and compliance.

• Fines for Non-Compliance The fine for non-compliance with Emiratisation requirements is AED 96,000 annually for companies that fail to hire at least one Emirati in 2024. If the company does not meet the target of hiring at least two Emiratis by 2025, the fine increases to AED 108,000 annually. This fine applies to all companies, regardless of their size, and will be enforced uniformly across the board.
• Work Permit Suspension Companies unable to meet Emiratisation targets may face suspension of work permit applications, limiting their hiring capabilities.
• Demotion in Category Non-compliance for two consecutive years results in demotion to the third category under the Classification Law, which can increase business costs and restrict operational privileges.
• Penalties for Fake Emiratisation Engaging in fraudulent Emiratisation practices leads to fines ranging between AED 20,000 and AED 100,000 per employee involved, with additional reputational and operational consequences.
• Increased Penalties for Repeat Offenders Persistent non-compliance can result in penalties up to AED 500,000, alongside stricter enforcement measures.

These penalties emphasise the UAE's commitment to strengthening its national workforce and ensuring that companies play a role in this initiative. Non-compliance will not only result in financial consequences but also hinder a company's ability to operate smoothly in the UAE market.

The UAE’s Push for Emiratisation: A National Imperative

Emiratisation is a key priority for the UAE government as it seeks to ensure that Emiratis play an active role in the nation’s economy, especially within the private sector. The influx of expatriates into the UAE led to a disproportionate number of foreign workers filling skilled positions, which left many Emiratis, particularly the youth, underrepresented in key industries.

The government’s initiative aims to provide Emiratis with more opportunities to develop the skills needed to compete professionally and to help reduce the country’s reliance on expatriates. This policy ensures that locals are contributing to the economy and strengthens their presence across diverse sectors. Emiratisation seeks to empower Emiratis by offering them professional development opportunities and allowing them to build careers that are globally competitive. This shift towards local participation ensures that the UAE’s economic growth is supported by a skilled and qualified Emirati workforce, thus promoting both national pride and long-term stability.

As Emiratisation continues to gain momentum, the UAE government is taking deliberate steps to integrate Emiratis into the workforce, reinforcing their role as essential contributors to the nation’s future.

Conclusion

As the UAE continues to open its doors to foreign investments, it is crucial for businesses to stay aligned with the country’s evolving regulatory framework, particularly the Emiratisation laws. Ensuring compliance with these laws is essential for avoiding penalties and maintaining smooth business operations in the UAE. Companies that fail to meet Emiratisation targets risk financial penalties and disruptions to their work permits, which could hinder their growth and operations.

Vista Business Setup offers comprehensive guidance on all compliance matters, helping businesses meet Emiratisation requirements, manage legal obligations, and navigate the regulatory landscape in the UAE. By working with our expert consultants, you can ensure compliance, avoid penalties, and focus on growing your business in a thriving environment.