In Brief:
- Emiratisation (or Emiratization) is a United Arab Emirates (UAE) government initiative to ensure employment of citizens in a meaningful and efficient manner in both the public and private sectors.
- The UAE government recently approved measures to increase the Emiratisation rate for private sector employers by 2% annually, in respect of skilled jobs within private sector companies, with the aim to meet an overall target of a 10% increase by 2026.
- The deadline for compliance with this new targeted increase is 1 January 2023 and non-compliant companies will be subject to fines of AED 6,000 per month, per UAE National who has not been employed in accordance with the initiative. Other sanctions are available to be levied against non-compliant employers.
Body:
Emiratisation (or Emiratization) is a United Arab Emirates (UAE) government initiative to ensure employment of citizens in a meaningful and efficient manner in both the public and private sectors to accelerate the UAE’s development journey and boost the economy through homegrown talent.
The UAE government recently approved measures to increase the Emiratisation rate for private sector employers by 2% annually, in respect of skilled jobs within private sector companies, with the aim to meet an overall target of a 10% increase by 2026.
The increase applies to any UAE Nationals employed from September 2021, meaning any UAE National employed prior to that date, will not qualify to be considered in the new Emiratisation rate quota mandate. The new measures apply only to companies based onshore UAE and governed by the Ministry of Human Resources and Emiratisation (MOHRE). Companies operating within free zones are currently exempt.
How does it work?
Essentially each employer must include one (1) UAE National employee within each consecutive grouping of 50 ‘skilled’ workers employed. Emirati’s employed before September 2021 do not qualify for use to achieve this target.
An employee is deemed a skilled worker if they fulfil the following conditions:
- The employee must be at a professional level within the top 5 categories as classified by MOHRE in accordance with the International Standard Classification of Occupations;
- The employee has obtained a certificate of education higher than a secondary education certificate or any equivalent certificate – all education certificates must be attested by the competent authorities; and
- The employee must earn a monthly salary (excluding commission) of not less than AED 4,000.
No mandated quota applies to employers that do not have a headcount in excess of 49 skilled workers.
|
Number of skilled workers |
Target number of nationals to be employed each year |
|
From 1 to 50 |
One UAE National |
|
From 51 to 100 |
Two UAE Nationals |
|
From 101 to 150 |
Three UAE Nationals |
|
151 and above |
One UAE National for every 50 Skilled Workers |
What does this mean for your business?
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The deadline for compliance with this new targeted increase is 1 January 2023 with government officials indicating no leniency will be given for noncompliance. From January 2023 non-compliant companies will be subject to fines of AED 6,000 per month, per UAE National who has not been employed in accordance with the above table. This is scheduled to increase annually by AED 1,000 per month.
MOHRE may suspend the issuance and renewal for work permits for employers who do not pay prescribed fines.
The measures are supported by the Nafis initiative, a federal program providing a number of government-funded incentives to support the implementation of Emiratisation including the provision of a large recruitment platform where prospective employers may access the CVs of potential hires from registered job seeking UAE national candidates. Employers are also encouraged to register with Nafis in order to qualify as a “Nafis partner” to benefit from Nafis programs and benefits. Other incentives are available for compliance, including a reduction in MOHRE service fees and subsidized pension contributions for UAE nationals who are employed.
Conclusion/Recommendation:
Historically, Emiratisation existed yet was rarely enforced outside of the banking, insurance and financial sectors, however, the newly implemented Ministerial Resolution No 279 of 2022 should not be ignored. MOHRE has invested substantial time and expense in advertising and promoting this new government drive ensuring that all affected are well informed. In addition, extensive complimentary training sessions have been offered to all establishments. Therefore, employers should not expect leniency for noncompliance when the initiative comes into effect in January 2023.
While the initiative is understood and largely welcomed by the private sector, the practical implementation may prove difficult considering the expansive sectors of businesses operating in the region where varying skillsets are required in large numbers. Employers will need to compete for the relatively limited number of potential UAE Nationals available to fulfill such roles. Progression is expected to be closely monitored by MOHRE and perhaps amended and adapted over the coming years to ensure successful collaboration and implementation of the Emiratisation initiative.
Employers should now budget and plan for the identification and onboarding of UAE national employees, building this prospective employment into business development plans, organisational structures and considering new innovative ways to involve, utilise and embrace increased Emirati headcount.
The UAE’s vision to ensure a labour market in the UAE that empowers Emiratis and attracts talent from around the world is thriving and the country’s vision will continue to adapt to the modern day requirements of the global workforce.
Should you have any question in respect of the new Emiratization increase mandate or the employer classification changes under the new Labour Law, please do not hesitate to contact Rachel Hill or any of our employment team.