The UAE Government’s initiative to increase the numbers of UAE nationals employed in the public and private sectors is referred to as Emiratization. The push for Emiratization was recently reinforced by the introduction of new rules setting additional requirements aimed at the private sector.
The new rules are addressed in (i) the Ministerial Resolution No. (279) of 2022, related to the Emiratisation in the private sector (2% Emiratisation Law); (ii) the Cabinet Decision No. (18) of 2022 (Classification Law); and (iii) a set of new rules beneficial under the NAFIS program (the “Resolutions”).
The Resolutions are part of NAFIS federal program (launched in September 2021), which aims to increase the private sector employment of UAE nationals.
Who is affected by the Resolutions and what do they need to do?
The Resolutions apply to the private sector companies and businesses who fall within the jurisdiction of the Ministry of Human Resources and Emiratization (“MOHRE”). Therefore, offshore entities (free zones businesses) that are not under the jurisdiction of MOHRE will be exempt. The relevant entities are required to take the necessary measures to increase the Emiratization of skilled jobs by a minimum annual quota of 2%, with the aim of reaching 10% increase in UAE skilled workforce by 2026 and creating a minimum of around 12,000 jobs on an annual basis for UAE skilled workers.
For the purposes of the Resolutions, only UAE nationals hired starting from September 2021 will be included when determining if the requisite number of UAE nationals is met. As per the Resolutions, companies must hire one UAE national for every 50 skilled employees, 2 UAE nationals for every 51-100 skilled employees, 3 UAE nationals for every 101-150 skilled employees, and for entities with over 150 skilled employees, one UAE national for every 50 skilled employees. Entities with up to 49 skilled employees will not be impacted by the Resolutions.
In this context, an employee is considered a skilled worker if the employee:
When will the Resolutions be in force?
The deadline for compliance with the new targeted increase is 1 January 2023. This means that the private sector businesses concerned by the Resolutions must have started the process of recruitment of UAE nationals to meet the Resolutions requirement prior to this deadline.
What are the Applicable Penalties for Non-Compliance?
From 1 January 2023, non-compliant companies should expect to be subjected to a monthly fine up to AED 6,000 for every position short of the Emiratization requirements. The fines are scheduled to increase by AED 1,000 per year until 2026.
In case of default on the payment of applicable fines, the MOHRE may suspend the issuance and renewal of work permits of the concerned employers.
If non-compliance with the Resolutions continues for 2 consecutive years, the company will be demoted to the third category under the Classification Law, and as a consequence will lose certain benefits (work permit fees would be increased, the company’s reputation will be affected).
The Ministry of Human Resources issued a warning ahead of the end-of-year deadline stating that that a minimum fine of AED 20,000 and a maximum of AED 100,000 may be levied from companies for forging hiring documents to meet the requisite quota for Emiratis working in the private sector. In such cases, all the benefits given to the company under NAFIS (the government programme aimed at increasing Emirati hiring in the workforce) would be stopped and any benefits already distributed would have to be returned.
An AED 20,000 ,000 administrative fine for each candidate may be applicable, if:
Are there any incentives in parallel to the Resolutions?
Certain additional benefits will be given to private sector businesses that exceed their Emiratisation targets in terms of recruitment and training. In such instances, the MOHRE can apply 80% discount on service fees. Other incentives under the NAFIS programme, such as as a 5-year Government subsidized pension plan for Emirati employees on behalf of the company, salary support for Emirati employees, and a monthly grant for children of Emirati employees in the private sector.
Emiratization of UAE jobs aims mainly to enhance the participation of UAE nationals in the skilled professions in the private sector and ensure their stability in work..
Emiratization in the private sector will boost the UAE’s labor market’s efficiency and stability, by encouraging experience and knowledge sharing and gradually integrating the skilled UAE workforce in the labor market in strategic sectors.
The tools put at the service of Emiratization plan and the incentives and penalties provided in the recent Resolutions for non-compliant businesses, demonstrate the seriousness of the Government in its endeavor in meeting its target of making the UAE a leading knowledge economy of the world.
We will continue to monitor this subject and update you on any developments as they occur.
If you have any further questions relating to this article, please feel free to contact Zainab Aziz.
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