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The Ministry of HR and Emiratisation issues Ministerial Decisions on the new UAE Labour Law
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Top workplace issues
Emiratisation was and continues to be one of the hot topics in the UAE, particularly in light of the promotion of foreign investment into the UAE and the relaxation of restrictions on foreign ownership.
Recently, following the introduction of the new UAE Federal Labour Law on 2 February 2022, the Ministry of Human Resources and Emiratisation (MHRE) issued a new Ministerial Decision in relation to Emiratisation in the UAE. In this article, we take a closer look at the new Emiratisation requirements which go hand in hand with the UAE’s ambitious target of creating 75,000 new jobs in the private sector by 2025.
The UAE has boosted Emiratisation drastically in the past decade. Whereas Emiratisation quotas have always been a requirement in the banking and insurance sector (year on year 4% for banks and 5% in the insurance sector), January 2017 saw the introduction of a greater enforcement mechanism for employers with the introduction of a form of labour market testing for employers with headcounts of 50 plus. Initiatives such as “Tawteen” and the Nafis Scheme were launched with the aim of increasing Emiratisation and requiring employers to meet a benchmark of employing 2% Emirati nationals upon achieving a workforce of 50 employees or more, which in practice meant a headcount of 1 Emirati national for every 50 employees. The Nafis Scheme went further and reinforced the UAE’s aim to reach an Emiratisation quota of 10% by 2025 as part of the UAE’s “Projects of the 50”.
The new Emiratisation requirements apply to all employers who fall under the jurisdiction of the Ministry of Human Resources and Emiratisation (i.e. outside of the free zones).
Private sector companies with 50 or more employees are required to increase their Emirati workforce in excess of their current quota through a 2% year on year increase until they reach 10% in 2026. The actual number of Emiratis required will be calculated according to the overall number of skilled workers in the company.
|Skilled workers at the establishment having 50 workers or more||Minimum target for recruitment of national employees|
|From 0 to 50 skilled workers||One national|
|From 51 to 100 skilled workers||Two national|
|From 101 to 150 skilled workers||Three national|
|151 workers or above||One national for every 50 workers or less than 50|
Another factor to consider is that within the five skillset categories (5 being the lowest) skill set category 4 is now a level which requires certification; an example of a role which falls within category 4 is security guard.
In order for Emirati nationals to be counted against the quota, employers need to ensure that they comply with all labour regulations, and that they have furnished each UAE national with a work permit and employment contract, registered them with the applicable pension authority, and paid them through the Wages Protection System. Companies should bear in mind that existing Emirati employees pre-January 2023 will be disregarded when calculating the quota (although this may be subject the employer’s existing number of Emirati employees and the composition of their workforce).
The new Emiratisation requirements stipulate fines for non-compliance with the quotas. Each employer who does not comply with the relevant Emiratisation rate will be fined AED 6,000 per month per Emirati employee falling short of the quota. This fine will be increased by AED 1,000 per month per year.
In addition to the new Emiratisation requirements, the Ministry of Human Resources & Emiratisation has announced amended conditions for the Platinum membership of the Tawteen Partners Club. To receive the Platinum membership, employers must now increase their Emiratisation quota by at least three times the prescribed annual ratio (if the number of Emirati employees is at least 30) or participate in the Nafis programme and train at least 500 Emirati nationals per year.
The new Emiratisation decree that mandates companies with 50 or more employees to increase their Emiratisation quota by 2% annually will challenge many employers. Not only because it currently appears that any existing Emirati employee population (dependent on employee headcount) will not be taken into account when determining the quota, but also because it remains a challenge in the UAE labour market to attract and retain Emirati talent. Companies may wish to consider introducing a variety of measures to tackle the achievement of these targets, such as short term and long term incentive programmes, training schemes and international secondment initiatives, in an effort to attract and retain talent.