Emiratisation Law in UAE
HLB UAE Payroll Team
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Throughout the last decade, the United Arab Emirates (UAE) has made efforts to boost the proportion of Emirati people working in the nation’s workforce. The goal of the government-led Emiratisation effort is to provide possibilities for Emirati citizens to contribute to the economy. The strategy makes use of a number of rewards, subsidies, and penalties to accomplish this. Businesses who hire Emiratis will get subsidies, while those that do not adhere to the Emiratisation plan will pay fines.
The New Emiratisation Standards in UAE
In the United Arab Emirates (UAE), a new Emiratisation plan has been implemented to address the employment gap between Emirati and foreign workers. All employers who fall within the purview of the Ministry of Human Resources and Emiratization are subject to the new Emiratisation criteria.
Businesses outside of free zones with 50 skilled employees or more are required to have a minimum of 2 percent of their workforce in the country must be Emiratis by January 2023. After every year till 2026, the target percentage increases by 2%, requiring that 4 percent of the workforce consist of Emiratis by 2024. In 2025, the target percentage increases to 6 percent, in 2026 to 8 percent, and by 2027 January , the required percentage of Emiratis at companies is 10 percent.
To break it down further, for establishments with 50 skilled workers, only one national employee is required. For those with 51 to 100 skilled workers, two national employees are required. For establishments with 101 to 150 skilled workers, the minimum target for recruitment of national employees increases to three. Finally, for establishments with 151 workers or more, one national employee is required for every 50 workers or less.
What is the Impact on Emiratisation in UAE businesses?
Companies that fall under the jurisdiction of Ministry of Human Resources & Emiratization (MOHRE) have to compulsorily follow the new Emiratisation laws. At least 2% of a private company’s workforce are to be Emirati, on the provision that they have at least 50 members of staff on their payroll.
What are the penalties for not following the 2% Emiratisation law?
Starting January 1, 2023, companies who fail to comply with the Emiratisation targets will have to pay hefty fines as stated below:
- A fine of Dh6,000 per month for each UAE national who is not employed.
- A minimum fine of Dh20,000 and a maximum fine of Dh100,000 may be applicable, if:
- After acquiring a work permit, a company does not hire a UAE national but still receives support from Nafis.
- Employees benefitting from this program exhibit a lack of dedication to their jobs, and if the company neglects to inform Nafis.
- Employees benefitting from the programme fails to come to work and the company fails to notify this to Nafis.
- If the company terminates an employee’s benefits without providing a legitimate explanation and without notifying Nafis.
- If the company refuses to hire a UAE national after they complete their training, without providing a legitimate explanation.
Does Emiratisation applicable to Free zone?
Emiratisation law applies to main land companies across UAE. Therefore companies based in free zones are exempted from Emiratisation rules.
What does ‘skilled workers’ mean in Emiratisation program?
Skilled workers’ as an employee who fulfils any of the following qualifications:
- To have a certificate higher than the secondary or equivalent to secondary;
- To have a worker certificate that has to be attested by a competent authority;
- To have a salary which is no less than AED 4,000 per month;
- To be under one of the following categories:
- Legislators, business executives and managers;
- Writing professionals.
- Professionals in technical, scientific, and human fields.
- Technicians in technical, scientific, and humanitarian fields.
- Service and sales occupations.
How companies will be monitored in Emiratisation program for compliance?
As per MoHRE guideline the requirements are:
- UAE national must possess a valid work permit.
- Salaries shall be paid through the Wages Protection System
- Must be registered with one of the approved pension funds in the country.
- The relationship between the Emirati and the establishment shall be a contractual one.
How HLB HAMT can help with Emiratisation to Promote EOR Services?
Talent acquisition is a critical component of the Emiratisation initiative. Companies that are successful in attracting and retaining Emirati talent will be more likely to meet their Emiratisation targets and avoid the new fines. However, there are challenges in recruiting and retaining Emirati talent, including a lack of qualified candidates and competition from other employers.
Businesses must collaborate with universities and fund training and development initiatives in order to address these challenges. The creation of a varied and friendly workplace is another essential component in luring Emirati employees. Employers who provide flexible work hours, chances for professional growth, and competitive pay packages are more likely to attract Emirati job seekers.
Emiratization presents both challenges and opportunities for employers in the UAE. The new Emiratisation plan is a significant step towards addressing the employment gap between Emirati and foreign workers in the UAE. While it may pose challenges for some companies, it is an opportunity for others to diversify their workforce and promote a more inclusive and equitable work environment. Companies that prioritize Emiratisation and invest in their employees’ development will not only comply with the Emiratisation plan but also position themselves for long-term growth and success.
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