Emiratisation Law – New Policies, Requirements and Penalties For Private Sector in UAE

Emiratisation is the UAE government’s initiative to increase the employment of UAE nationals in the private company. The government aims to build a competitive knowledge economy by training Emiratis in various fields and reserving jobs for them. The Emiratisation law program has different requirements depending on the size and sector of the company.

In this article we will explain you what does that law bring to the table. This legislation also uses rewards, subsidies and penalties to achieve its goals. Also, we will discuss how much money do Emiratis get from the government.

New Changes in the Emiratisation Law 2023 For Businesses

New Changes in the Emiratisation Law 2023

One of the main changes in the UAE Emiratisation Law 2023 is the introduction of a new quota system for private sector Emirati employers. The quota system requires employers to hire a certain percentage of UAE nationals based on the size and activity of their business. The quota ranges from 2% to 60%, depending on the sector and the number of employees.

Another change is the introduction of a new Emiratisation Certificate, which is a document that certifies that a business complies with the Emiratisation Law in UAE. The certificate is mandatory for all UAE private company businesses and must be renewed every year. Businesses that fail to obtain or renew the certificate will face penalties, such as fines, suspension or cancellation of their trade license, or exclusion from government contracts. The Emiratisation Law 2023 also introduces new incentives for business set up in Abu Dhabi or the UAE that exceed their quota or hire nationals in high-demand occupations.

These incentives include tax law exemptions, subsidies, preferential treatment in government tenders, and access to training and development programs.

This is also why more employers living in the UAE are starting to see the benefits of Emirati citizenship. Therefore, they look for legal ways to stay in the country as a citizen.

Sectors Affected by the Emiratisation Law?

The new Emiratisation rule applies to all private sector businesses in the UAE, regardless of their ownership or legal form. However, some sectors are more affected than others by the quota system. The sectors with the highest quota are:

  • Banking and financial services
  • Insurance
  • Trade
  • Industry
  • Construction
  • Hospitality
  • Education
  • Health

However, the sectors with the lowest quota are:

  • Agriculture
  • Oil and gas
  • Transport
  • Media

The Emiratisation Law in UAE also identifies some occupations that are reserved for citizens only. These include:

  • Human resources managers
  • Public relations officers
  • Administrative assistants
  • Receptionists
  • Security guards
  • Drivers

Workforce Requirements for Private Sector in UAE

According to the UAE Emiratisation Law, private sector employers must ensure that at least 10% of their workforces are Emirati nationals. This percentage will increase to 15% by the end of 2023 and 20% by the end of 2024. The law applies to all UAE private company entities. Regardless of their size, nature or activity, except for those that is exempted by the Ministry of Human Resources and Emiratisation (MOHRE).

The law also specifies that Emirati employees must receive a minimum salary of AED 5,000 per month. And, that they must be provided with adequate training and development opportunities. Emirati employers who fail to meet these requirements will face penalties ranging from AED 10,000 to AED 50,000 per violation. As well as suspension or cancellation of their work permits.

MOHRE Criteria For Hiring Employees

To facilitate the implementation of the Emiratisation Law 2023, MOHRE has issued a set of criteria for hiring employees in the private sector. These criteria include:

  • Employers must first advertise the vacancy on the MOHRE portal and give priority to Emirati candidates. Those who meet the qualifications and experience required for the job.
  • The employer must conduct a fair and transparent recruitment process. Therefore, select the most suitable candidate based on merit and competence.
  • Employers must obtain a work permit from MOHRE for the selected candidate and submit the necessary documents and fees.
  • The employer must register the employee in the MOHRE database. Furthermore, issue a contract that complies with the UAE Labour Law and the new Emiratisation rule.

Benefits of Emiratisation for Businesses

Benefits of Emiratisation for Businesses

Emiratising the private sector is not only beneficial for the national economy and society, but also for the most profitable businesses themselves. Some of the Emiratisation benefits include:

  • Accessing a pool of talented, skilled and qualified candidates who can bring different skills. Such as, local knowledge, cultural awareness and linguistic diversity to the workplace.
  • Enhancing the reputation and image of the business as a socially responsible and patriotic entity that supports the UAE’s vision and values.
  • Reducing the reliance on expatriate workers and the costs. Those payments associated with their recruitment, visa, health insurance and end-of-service benefits.
  • Improving the retention and loyalty of Emirati employees who tend to stay longer in their jobs than expatriates, especially if they receive adequate training, development and career progression opportunities.
  • Receiving financial incentives and subsidies from the government for meeting or exceeding the Emiratisation targets, as well as avoiding fines and penalties for non-compliance.

Advantages of the NAFIS Scheme

One of the most recent and comprehensive programs launched by the UAE government to boost Emiratisation is the NAFIS scheme. Which stands for The Emirati Talent Competitiveness program. NAFIS was announced in September 2021 as part of the “Projects of the 50”, a series of initiatives to celebrate the UAE’s 50th anniversary and prepare for the next 50 years.

NAFIS aims to create 75,000 new jobs for Emiratis in the private sector by 2025, Also, it aims to increase their share to 10% of the total private sector workforce by then. To achieve this ambitious target, NAFIS offers a range of reforms and financial incentives for both employers and employees, such as:

  • Providing subsidies for employers who hire Emiratis, ranging from AED 5,000 to AED 30,000 per month per employee, depending on their skill level and salary.
  • Offering training programs for Emiratis to enhance their skills and competencies in high-demand sectors. Such as, technology, health care, education, finance and tourism.
  • Establishing a national database of Emirati job seekers and vacancies in the private sector to facilitate matching and placement.Introducing a flexible work system that allows Emiratis to work remotely or part-time in the private sector while retaining their benefits in the public sector.
  • Creating a career guidance platform that provides Emiratis with information and advice on various career paths and opportunities in the private sector.

Access to Government Contracts

Another incentive for private sector companies to hire more Emiratis is the access to government contracts. The UAE government has made it mandatory for private sector companies to meet certain Emiratisation quotas. This is done in order to be eligible for bidding on public projects and contracts.

According to Ministerial Resolution No. 279 of 2022, private sector companies with 50 or more employees must increase their Emirati workforce by 2% every year until they reach 10% by 2026. The actual amount of Emiratis nationals or citizens required will be calculated according to the general number of proficient employers in the company.

Companies that fail to comply with these requirements will face penalties such as:

  • Paying a contribution fee of AED 300 per month per employee for each percentage point below the target.
  • Being excluded from government tenders and contracts until they meet the target.
  • Having their work permits suspended or cancelled until they meet the target.

On the other hand, companies that exceed the target will be rewarded with Emiratisation benefits such as:

  • Receiving priority in government tenders and contracts.
  • Getting discounts on fees and charges related to work permits, visas and labour cards.
  • Being recognized as members of the Tawteen Partners Club, a prestigious network of private sector companies that support Emiratisation.

Long-term Sustainability

The ultimate goal of Emiratisation is to ensure the long-term sustainability and competitiveness of the UAE’s economy and society. By increasing the involvement of Emiratis in the private sector, the UAE aims to:

  • Diversify its income sources away from oil and gas revenues.
  • Reduce its dependence on foreign labour and enhance its self-reliance.
  • Develop its human capital and nurture its innovation potential.
  • Preserve its national identity and culture while embracing globalization.

UAE Emiratisation law is not only a duty but also an opportunity for employers and employees in the private sector. By working together, they can contribute to the UAE’s vision and achieve mutual benefits and growth.

Penalties for Failure to Comply

The Ministry of Human Resources and Emiratisation (MOHRE) issued a new Ministerial Decision in relation to Emiratisation in September 2022. The decision is introducing new Emiratisation law targets and monitoring mechanisms for private sector companies that fall under the jurisdiction of the MOHRE (i.e. outside of the free zones). Therefore, the Emiratisation will help the economy by making employers develop successful market strategies in the UAE.

According to the decision, private sector companies with 50 or more employees require to increase their Emirati workforce by 2% every year until they reach 10% in 2026. The actual number of Emiratis will be calculated according to the overall number of workers with skills in the company. Proficient workers are those who have a certification or a diploma in their field.

The decision also imposes contributions on non-compliant establishments. These contributions come into calculation with basis on the difference between the actual number of Emirati employees and the required number of Emirati employees. The contributions range from AED 300 to AED 5000 per month for each missing Emirati employee. Depending on the skill level and the size of the company.

The MOHRE will monitor the compliance of the private sector companies with the Emiratisation targets through its online portal. The companies will have to submit their data and documents on a quarterly basis. The MOHRE will also conduct inspections and audits to verify the accuracy of the data and documents.

Conclusion

The Emiratisation program is part of the UAE’s vision to create a sustainable and diversified economy that empowers its citizens. The private sector companies that operate in the UAE have to comply with the new Emiratisation rules and regulations to avoid hefty fines and penalties. The companies can also benefit from the incentives and subsidies that the government offers to support Emiratisation.

The Emiratisation Law is a key initiative of the UAE government to promote economic diversification, social inclusion, and national identity. The law aims to create more opportunities for UAE nationals in the private sector and reduce their dependence on the public sector. The law also aims to enhance the competitiveness and productivity of the private sector by attracting and retaining qualified and skilled UAE nationals. However, if you need more information about the Emiratisation Law, you can contact us today.

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