The UAE is set to introduce new rules on Emiratisation requirements for all companies
The UAE cabinet recently approved measures to increase the rate of Emiratisation in the country to 2% annually. The ruling will come into effect from January 2023 and has implications for all private sector businesses not complying with the quota on minimum numbers of Emiratis employed in accordance with the guidelines.
In this article we provide guidance on the new rulings in order to understand where your business lies within the requirements and how to plan ahead to mitigate risk, and to ensure you are compliant with the new guidelines. In June, 2023, they introduced the requirement for Emiratisation quotas to be met by establishments with 20 or more employees where previously this only applied to establishments with 50 staff or more.
What is Emiratisation?
Emiratisation is a UAE government initiative mandating the employment of Emiratis in a meaningful manner in both the public and private sectors. Its aim is to raise the number of Emiratis in the UAE workforce and therefore increase their contribution to the national economy.
The programme has been in place for more than a decade and its success can be seen in the public sector. However, the private sector is still falling short, with Emiratis making up only 0.34% of the private sector workforce.
This latest cabinet decision will raise Emiratisation rates to 2% annually for skilled private sector jobs in order to reach the goal of 10% Emirati private sector employment by 2026.
How will this be achieved?
In order to reach the desired rate of 10%, a quota system will be imposed on private sector employers, requiring them to recruit and retain a certain number of Emirati nationals as a percentage of their overall staff. These thresholds are as follows:
- 2% for commercial entities (where the entity has more than 20 employees)
- 4% for banks
- 5% for insurance companies (where the entity has more than 20 employees)
To further facilitate these goals, a government federal programme, named NAFIS, was recently launched as a partnership hub to connect Emirati jobseekers with private sector companies operating in the UAE.
How will NAFIS contribute to the UAE’s Emiratisation goals?
NAFIS was conceived as a way to link the Emirati job-seeking public with private sector employers and enable the UAE’s developmental goal of creating 75,000 job opportunities for Emiratis in the private sector over the next five years.
The website serves as an employment portal for the Emirati public and an advertising board for the private sector companies, who can post job vacancies and training opportunities.
What are the consequences for companies who fail to meet their Emirati employment quota?
From January 2023, when the new rules come into effect, any companies that fail to meet their employment quota, will have to pay AED 6,000 for each Emirati that hasn’t been employed. This must be paid via the Ministry of Human Resources and Emiratisation’s (MOHRE) digital system.
The MOHRE has established a three-tier system which classifies companies according to their contribution to the Emiratisation programme.
- Tier 1 – Applies to companies that exceed their Emiratisation target rate by 3% and cooperate with the NAFIS Training programme.
- Tier 2 – Applies to companies that meet their Emiratisation target and are compliant with all UAE policies on cultural and demographic diversity.
- Tier 3 – Applies to companies that fail to meet their Emiratisation target or show commitment to UAE policies on cultural and demographic diversity
It is important to find out which tier your business is currently in and how you can increase recruitment of Emirati nationals to mitigate any potential fines when the rules come into force.
- Are the new rules on Emiratisation applicable to free zone companies?
No, free zone companies are exempt from the new ruling.
- Is registration on the NAFIS system compulsory?
While companies are highly encouraged to be part of the NAFIS system. Registration is not compulsory.
- What incentives are offered to companies that join the NAFIS programme?
NAFIS offers a number of incentives which reduce the financial burden of taking on new employees and aid in the selection of the right talent. These include:
- A subsidised five-year government paid contribution towards the cost of pension plans for Emirati staff and full support for the Emirati’s contribution for the first five years of their employment.
- A child allowance scheme consisting of a monthly grant made to the Emirati staff of up to AED 800 per child up to a maximum of AED 3,200 per month.
- An apprentice programme and salary support scheme.
- Upskilling Emirati nationals with educational degrees to meet the private sector’s skill requirements
How can PRO Partner Group help?
PRO Partner Group can advise you on your company’s obligations vis-à-vis the new Emiratisation rules and whether you fall within the required thresholds. We can help you determine which tier your company is currently in and what steps will need to be taken to ensure you are fully compliant with the latest legislation.
If you need assistance with the new Emiratisation rules or any other related onshore or offshore company setup, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, Oman, Qatar or KSA, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at firstname.lastname@example.org or complete the contact form below and we will be delighted to assist you.