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Emiratisation in the UAE Private Sector : New Rules and Penalties

Dubai

Emiratisation remains a significant topic of discussion in the UAE, particularly with the ongoing efforts to attract foreign investments and the recent easing of restrictions on foreign ownership.

In February 2022, the UAE Federal Labour Law was updated, and in response, the Ministry of Human Resources and Emiratisation (MHRE) released a new Ministerial Decision that outlines new Emiratisation regulations. These regulations are in line with the UAE’s goal of generating 75,000 fresh job opportunities in the private sector by 2025. In this article, we delve into the new Emiratisation criteria and their implications.

Past initiatives to promote Emiratisation in the UAE

Over the last decade, the UAE has made significant strides in increasing Emiratisation. While quotas for Emiratisation have long been mandatory in the banking and insurance industries (4% for banks and 5% for insurance companies annually), in January 2017, a stricter enforcement mechanism was introduced for employers with 50 or more employees. Initiatives like “Tawteen” and the Nafis Scheme were launched to raise Emiratisation rates and require companies with over 50 employees to meet a benchmark of hiring at least 2% Emirati nationals, which equated to employing one Emirati national for every 50 employees. The Nafis Scheme went even further and reinforced the UAE’s goal of achieving a 10% Emiratisation quota by 2025, as part of the UAE’s “Projects of the 50” initiative.

New Emiratisation Laws for Private Sector in UAE

The UAE government has long been committed to boosting Emiratisation in the country’s workforce, with a focus on increasing the participation of UAE nationals in private sector jobs. To this end, new laws have been introduced requiring private sector companies to hire at least 2% Emirati employees annually, as outlined in Ministerial Decision No. 279 of 2022. These regulations will have a significant impact on the recruitment strategies and organizational policies of businesses operating in the UAE.

These laws are part of the Nafis program, a federal government initiative aimed at enhancing the competitiveness of Emirati human resources and empowering them to occupy jobs in the private sector over the next five years. The program aims to create over 12,000 job opportunities annually for Emirati citizens across all economic sectors.

UAE Introduces Changes to Boost Emiratisation in Private Sector

The UAE Government Introduces New Legislation to Increase Emiratisation in Private Sector Jobs

  1. Ministerial Decision No. 279 of 2022 introduces a new Emiratisation law for the private sector, requiring companies to recruit 2% Emirati employees per year.
  2. Cabinet Decision No. 18 of 2022 introduces a new Classification Law for companies in the UAE.
  3. New rules have been introduced to govern benefits under the Nafis scheme, a governmental program that aims to increase the competitiveness of Emirati human resources and empower them to occupy jobs in the private sector.

Effects of new Emiratisation laws on UAE companies

The new Emiratisation laws that companies under the jurisdiction of the Ministry of Human Resources & Emiratisation (MOHRE) in the UAE are required to follow. The regulations state that at least 2% of a private company’s workforce must be Emirati, provided that the company has a minimum of 50 employees. These laws will be applicable throughout the UAE mainland, but certain free zones such as DIFC and ADGM will be excluded.

UAE’s 2% Emiratisation Law Requirements

The UAE’s Emiratisation regulations require private companies with 50 employees or less to have at least one Emirati on their payroll, while companies with a headcount of 51 to 100 employees must have at least two Emiratis. To simplify the process, companies can calculate their Emiratisation rate based on the number of skilled workers they employ.

  • 50 skilled workers: minimum 1 Emirati employee
  • 51-100 skilled workers: minimum 2 Emirati employees
  • 101-150 skilled workers: minimum 3 Emirati employees
  • 151 & above: 1 Emirati employee for every 50 or less workers.

MOHRE defines skilled workers as employees who belong to one of the following categories:

  1. Legislators, managers, and business executives
  2. Professionals in scientific, technical, and humanitarian fields
  3. Technicians in scientific, technical, and humanitarian fields
  4. Writing professionals
  5. Service and sales occupations

In addition to the above categories, skilled workers must meet the following criteria:

  1. Having a secondary school certificate or its equivalent or higher
  2. Possessing a relevant authority attested worker’s certificate
  3. Receiving a monthly salary of no less than AED 4,000

Penalties of Non-Compliance with Emiratisation Laws in the UAE

The UAE government has set strict guidelines for companies to employ a certain percentage of Emirati citizens in their workforce, known as the Emiratisation program. Companies that fail to comply with these regulations will face penalties and consequences. Here are the consequences of non-compliance with Emiratisation laws in the UAE:

  1. Fines: Companies that do not fulfill their Emiratisation quota will be fined a minimum of AED 6,000 per month for each Emirati employee not hired. These fines will begin to be issued from January 1, 2023, and will be increased annually. Failure to pay the fines can lead to the suspension of work permit applications by the company.
  2. Demotion: Companies that do not comply with their Emiratisation quotas for two consecutive years will be demoted to the third category under the Classification Law. This will result in stricter regulations and monitoring of the company’s activities, making it more difficult for them to operate in the UAE.
  3. Blacklisting: Companies that continuously fail to comply with the Emiratisation program may be blacklisted and prohibited from conducting any business in the UAE. This will have severe consequences for the company, including the loss of potential clients, partners, and customers in the region.

Compliance with the Emiratisation laws is important for companies operating in the UAE, as it helps them to integrate with the local community and fulfill their social responsibilities. In addition, adherence to the laws will enable them to avoid penalties and fines, which could potentially harm their business. It is essential for companies to stay updated with the latest laws and regulations to ensure they are operating within the legal framework of the UAE.

FAQs on Emiratisation laws

Here are some frequently asked questions (FAQs) on Emiratisation laws in the UAE:

What is Emiratisation?

Emiratisation is a national policy initiative in the UAE aimed at increasing the participation of Emirati citizens in the private sector workforce.

What is the 2% Emiratisation Law?

The 2% Emiratisation Law mandates that private sector companies in the UAE must employ a minimum of 2% Emiratis in their workforce.

What are the penalties for non-compliance with Emiratisation laws?

Penalties for non-compliance with Emiratisation laws include fines, suspension of work permits, and demotion to lower categories under the Classification Law.

Who is considered a skilled worker under Emiratisation laws?

Under Emiratisation laws, skilled workers are those who belong to certain job categories, possess specific educational qualifications, and receive a minimum monthly salary.

How can companies calculate their Emiratisation rate?

Companies can calculate their Emiratisation rate by dividing the number of Emirati employees by the total number of employees and multiplying the result by 100.

What is the role of the Ministry of Human Resources and Emiratisation (MOHRE) in enforcing Emiratisation laws?

The MOHRE is responsible for enforcing Emiratisation laws and monitoring compliance by private sector companies.

How can companies attract and retain Emirati talent?

Companies can attract and retain Emirati talent by offering competitive salaries, benefits, and opportunities for career growth and development. They can also implement Emiratisation strategies and initiatives, such as training and development programs, mentorship, and internships.

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Written by Saleh wasim

Blogger who writes topics such as Employment, News, travel, sports, events and life in Gulf.

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