If you are a business operating in the UAE then you might already have some idea about Emiratization and its impacts. And if you don’t then don’t worry because this is what this blog is all about.
Emiratisation is basically a policy in the UAE that aims to create more job opportunities for local Emirati citizens both in the public and private sectors.
As of July 2024, the UAE authorities have started the evaluation of companies from the private sector to make sure they are meeting the Emiratization targets for the year.
Businesses failing to meet the targets will have to pay hefty fines and that is why you need to stay on top of the latest Emiratization rules and regulations to be on the safe side.
- Emiratization: An Overview
- Objectives of Emiratization
- Emiratization Laws and Regulations
- Employment Quotas
- Training and Development
- Salary and Benefits
- Emiratization Point Systems and Tiers
- Reporting and Compliance Obligations
- Key Changes in The Emiratization Law in 2024
- Increased Scope
- Diverse Economic Sectors
- Salary Threshold
- Education and Certification Requirements
- Fines or Penalties for Non-Compliance
Emiratization: An Overview
The UAE is a region with a booming economy and unparalleled infrastructure. So, naturally, millions of expatriate workers and businessmen are attracted to the place every year.
This great inflow of expats over time started to dominate the workforce leaving very few jobs for the locals. By 2004, there were about 80% expatriates in the UAE workforce. The percentage went up to 99.57% in 2009 in just 5 years. This meant out of 3 million private sector employees only 13,000 were Emiratis.
This situation urged the UAE government to create a robust policy that will prevent the isolation of local citizens in the private sector. This initiative is called Emiratisation which aims to generate more career opportunities for Emiratis in the public and private sectors so that they too can play their part in the economy and reap the benefits as well.
The UAE’s Ministry of Human Resources and Emiratisation (MoHRE) is responsible for monitoring and enforcing the Emiratisation implementation.
Objectives of Emiratization
The following are the main objectives of the Emiratisation program:
- Make sure the number of local Emiratis increases in the workforce.
- Decrease the complete dependency on expatriates across all major sectors.
- To make sure the Emiratis get opportunities to develop skills and do meaningful work.
- Make sure the Emiratis can play their part in the country’s growing economy.
- To create a workforce that is more diverse and balanced so that a single group or nationality doesn’t dominate a particular sector.
Emiratization Laws and Regulations
According to the law of Emiratisation in UAE, all private sector businesses that have a workforce comprising at least 50 people must increase their Emirati workforce by 1% over the last six months.
Moreover, these companies need to increase their Emirati workforce by 2% each year leading to a total of 10% increase by 2026. The main goal here is to add more local talent to the workforce. However, the Emiratisation rules are not the same for all sectors and there are certain variations that you need to take into account.
Following are some general Emiratisation laws and regulations that every business operating in the UAE needs to follow
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Employment Quotas
Every business is required to meet the required quota target to ensure compliance. The UAE authorities state that businesses with 50 or more employees need to increase their Emirati workforce by 2% every year.
Following employment quotas have been set under Emiratisation law for the locals in the region:
- At least one Emirati worker if your workforce comprises 50 skilled individuals.
- At least two Emirati workers if your workforce comprises 51-100 skilled individuals.
- At least three Emirati workers if your workforce comprises 101-150 skilled individuals.
- At least one Emirati worker for every 50 skilled workers if your business has more than 150 professionals.
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Training and Development
Companies must train Emirati employees and help them develop both soft and hard skills. Companies are encouraged to use the Nafis platform to hire or train locals and to offer them necessary support and incentives. This is done to enhance the competitiveness of the locals in the UAE job market.
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Salary and Benefits
Emirati workers will be offered competitive salaries where the lowest amount should not be below AED 4000. Other benefits like transportation, health insurance, and housing allowance should also be provided.
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Emiratization Point Systems and Tiers
There is a point-and-tier system to encourage more private companies to hire and train Emiratis. As these companies hire more locals, they get higher tiers and more points.
These companies can then redeem these points for incentives like sponsorships as well as fewer government fees.
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Reporting and Compliance Obligations
The companies must provide their Emirati employees with appropriate workplaces as well as equipment along with the necessary training.
Moreover, they need to
- Acquire a work permit for the Emirati employee from MoHRE
- Finalize the Emirati employment contract of the candidate
- Pay salaries per the WPS (Wages Protection System)
- Register the Emirati employees in pensions as well as social security systems. They need to do so within a month of the issuance of their work permit.
- Report all amendments to the employee contract that might affect the Nafis program eligibility requirements.
Key Changes in The Emiratisation Law in 2024
Here are a few significant changes that were suggested and approved in the Emiratisation law in 2024:
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Increased Scope
In 2024, the MoHRE has expanded the scope and number of companies that must comply with Emiratisation law. Now almost 12,000-20,000 companies from the 14 specific sectors with 20-49 employees must hire at least one Emirati by the end of 2024 and two by the end of 2025. This is significant as previously companies with 50 or more employees were only subjected to this law.
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Diverse Economic Sectors
The criteria of the policy were revised for 14 sectors in 2024. All the companies from these sectors must add 2% Emirati workers to their operations every year.
These sectors include:
- Transportation and warehousing
- Real estate activities
- Professional, scientific, and technical activities
- Administrative and support services
- Services
- Education
- Healthcare and social work activities
- Manufacturing
- Construction
- Arts and Entertainment
- Mining and quarrying industry
- Wholesale and retail trade
- Financial and insurance activities
- Hospitality
- Information and communications
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Salary Threshold
Every skilled Emirati worker must be paid a minimum of AED 4,000 per month.
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Education and Certification Requirements
The worker must have at least a secondary school certification or some higher qualification to become eligible for the jobs. They also need to have their qualifications and certifications attested by the relevant authorities.
Fines or Penalties for Non-Compliance
The UAE government plans to strictly implement Emiratisation and if a company is found guilty of non-compliance it will have to face serious repercussions.
- If a company with a workforce of 50+ shows non-compliance they will be fined AED 8,000 in 2024 and AED 9,000 in 2025 every month.
- If fines are not paid in full the company’s work permits may be suspended.
- Company demotion to the third category is another consequence of non-compliance which will create several issues down the line.
- There is a fake Emiratisation fine of AED 20,000 to AED 100,000 for each employee who engages in the fake Emiratisation program.
Conclusion
As a private company operating in the UAE adhering to the Emiratization laws and meeting all the targets can lead to several benefits. It makes such businesses eligible for government incentives like grants or subsidies. Moreover, you are also given preferential treatment when it comes to government projects or contracts if you follow Emiratization guidelines.
On the other hand, failure to show compliance can lead to fines, operational restrictions, as well as potential legal suits.
This is why it should be your top priority to learn more about the latest Emiratization requirements to be on the safe side.
And if you need assistance in your HR operations or you need someone to help you navigate the complexities of the Emiratization rules then you can rely on HRSG. Our cloud-based HRMS platform (Octofy) offers a comprehensive suite of services to streamline and enhance business operations. From AI-powered HR and payroll solutions to tailored talent consulting and rewards strategies, Octofy optimizes workforce and financial management. With additional services in financial accounting and outsourcing, businesses gain reliable support in compliance, efficiency, and operational performance.
