Emiratisation Law: What to Know About the New Rules for UAE’s Private Sector

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Updated July 2023

Working in the UAE’s private sector is an increasingly attractive proposition for many expats around the world. They come to the country by way of the UAE employment visa provided by the government and are ready to fill the available positions.

With many skilled workers and employees flying to the UAE, the government feels the need to regulate the employment quota in private sector companies to accommodate UAE nationals looking for employment opportunities.

Thus, the government passed the Emiratisation law as an instrument to supervise private-sector companies. Keep reading to find the details about the law.

The latest news on Emiratisation law 2023

Important announcement impacting small business owners in the UAE: The Ministry of Human Resources and Emiratisation (MOHRE) in the UAE has issued a significant update. Effective from Tuesday, July 11, private sector companies in the country will be subjected to expanded Emiratisation targets. This expansion specifically includes private companies employing 20 to 49 individuals, who will now be required to meet the Emiratisation targets. Previously, these regulations exclusively applied to private sector companies with over 50 employees.

In an effort to enhance Emirati employment in specific roles, small businesses operating in 14 different sectors are now obligated to hire at least one Emirati employee in 2024, followed by an additional hire in 2025. Non-compliance with these regulations will result in penalties for companies. Failure to employ an Emirati in 2024 will incur a fine of Dhs96,000, which will escalate to Dhs108,000 for companies that have not hired two Emiratis by 2025.

The following are the 14 sectors impacted by the updated Emiratisation rules:

1. Information and Communications
2. Financial and Insurance Activities
3. Real Estate
4. Professional and Technical Activities
5. Administrative and Support Services
6. Arts and Entertainment
7. Mining and Quarrying
8. Transformative Industries
9. Education
10. Healthcare and Social Work
11. Construction
12. Wholesale and Retail
13. Transportation and Warehousing
14. Hospitality and Residency Services

What is Emiratisation law?

Emiratisation law is the rule implemented on UAE-based private sector companies to raise the participation of UAE nationals in the workforce. The law is a new Ministerial Decision (No. 279 of 2022), issued by the Ministry of Human Resources and Emiratisation (MoHRE).

The law is also a part of the NAFIS program — a government program to make Emirati human resources more competitive and provide them with the skills they need to work in the private sector. Companies that fall under the jurisdiction of the Ministry of Human Resources & Emiratisation have to compulsorily follow this law. 

The requirement of Emiratisation law

The rule stated that it is mandatory for private-sector companies to recruit Emirati employees with a minimum of 2% of the total skilled workers per year. This means that the company should have at least one Emirati worker for every 50 skilled workers (or less). An illustration of the requirement is as follows:

• 0-50 skilled workers: has at least 1 Emirati employee
• 51-100 skilled workers: has at least 2 Emirati employees
• 101-150 skilled workers: has at least 3 Emirati employees
• more than 150 skilled workers: has 1 Emirati employee for every 50 employees or less

Skilled workers criteria

Skilled workers, according to MoHRE, are workers who:

• belong to any of these 5 categories:
  • legislators, managers, business executives
  • professionals in scientific, technical & humanitarian fields
  • technicians in scientific, technical and humanitarian fields
  • writing professionals
  • service & sales occupations
• have a secondary school certificate, its equivalent or higher
• have certificates attested by relevant authorities
• have a monthly salary of no less than AED 4,000

Penalties for non-compliance

• Companies that fail to meet the Emiratisation targets for the first time will face a fine of AED 100,000.
• If a company violates the Emiratisation targets again, the penalty will increase to AED 300,000.
• For the third or subsequent violation of the Emiratisation targets, the penalty will be raised to AED 500,000.

Company classification in regard to Emiratisation law

The Ministry of Human Resources and Emiratisation (MoHRE) classifies companies into three categories. The categories will affect the incentives that the company receives in lieu of their compliance with the rules. The categories are:

Category 1

Companies are required to achieve at least one of the following objectives to fall under this category:

• Raise the Emiratisation rate at least three times above the target.
• Cooperate with the ‘Nafis’ programme to train at least 500 citizens annually.
• Categorised as a training and employment centre that supports implementing the Workforce Planning Policy by promoting cultural diversity in the UAE.
• Being active in the targeted sectors and activities determined by the Council of Ministers based on the ministry’s decision.
• Being a venture owned by a young citizen according to approved standards.

The MoHRE will set work permit fees at a maximum of AED 250 for two years as a reward. Employees from the UAE and the GCC will not be charged these fees.

Category 2

Similarly to tier 1, the classification of companies within this category depends on the extent of their commitment to the labour law, wage protection system, resolutions that regulate the labour market, workers’ rights protection, and the policy promoting diversity in the UAE. 

This tier is broken down into smaller classification categories of A, B, C, or D. This will be decided according to the ratio of skilled workers and to the extent of that company’s commitment to multicultural diversity when issuing work permits. 

If the company does not satisfy this criterion, it will then be classified in tier 3.

The MoHRE will set work permit fees for this category at AED 1,200 for two years. Employees from the UAE and the GCC will not be charged these fees.

Category 3

Companies that fail to comply with the Emiratisation quota fall under this category.

Companies that are found committing other violations stipulated in Ministerial Resolution No. 209 of 2022, such as using or recruiting workers without obtaining work permits, providing incorrect data, documents or information to the Ministry, violating obligations on workers’ wages, housing and safety standards, conducting fake Emiratisation practices, or committing other serious violations also fall under this category.

The penalties mentioned above will be imposed on the companies under this category.

NAFIS scheme benefits

Since Emiratisation law is a part of the NAFIS program, any registered employer who supports the program will be eligible for:

• a reduction of employer pension contribution for UAE nationals, and
• salary contribution of up to AED 8,000 for each UAE national employed under the NAFIS scheme.

NAFIS Award

In addition to the above benefits, private-sector organizations are also eligible for the NAFIS Award. The Nafis Award is given to private-sector establishments that excel in hiring UAE nationals. It also honours talented Emiratis in the private sector who prove to be an effective force in various economic sectors.