VAE: Emiratisation

published on 12 February 2024 | reading time approx. 3 minutes

The government of the United Arab Emirates (UAE) highlights Emiratisation as one of its highest priorities. In January 2024 the UAE’s Human Resources and Emiratisation Ministry (MoHRE) has announced it has found 995 companies guilty of violating Emiratisation rules. The government calls private sector companies on the mainland with 50 or more employees to achieve a 1 per cent growth of semi-annual Emiratisation targets in skilled jobs before the deadline on 30 June 2024.

Emiratisation means employment of UAE citizens as an initiative by the government of the United Arab Emirates to employ its citizens in a meaningful and efficient manner in the public and private sectors. By encouraging businesses to hire and train local talent, the UAE aims to reduce reliance on foreign workers and bolster its economic development. Its goal is to integrate more than 75,000 citizens into the private sector over the next 5 years.

The Emirati Human Resources Competitiveness Council divides between private sector companies with 20 to 49 and with 50 or more workers.

Private Sector Companies with 20 to 49 workers

Since 2024, listed private sector companies with a workforce of 20 to 49 workers are required to hire at least one UAE citizen, otherwise, they will face a financial contribution of AED 96,000. The prescribed contribution may be paid in monthly installments as of January 2025. From 2025, UAE private sector companies with 20 to 49 workers are required to hire at least two Emirati citizens – otherwise, a fine of AED 108,000 will be due. Other penalties and sanctions could also follow.

After the end of the targeted year, if the establishment reduces the number of its national employees, it shall be required to appoint an alternative national within a maximum period of two months or to pay the contributions described before.

This incentive is estimated to create around 12,000 jobs annually for UAE nationals in various economic sectors. The rules are applicable to companies operating in the following 14 sectors: information and communications; financial and insurance activities; real estate activities; professional, scientific and technical activities; administrative and support services; education; healthcare and social work activities; arts and entertainment; mining and quarrying industry; manufacturing; construction; wholesale and retail trade; transportation and warehousing; hospitality services.

Target establishments will be notified via MoHRE’s digital channels that they have been chosen to comply with this decision. MoHRE has indicated that criteria – such as types of jobs; work environment; geographical location; the nature of growth in a given economic sector; and Emiratisation priorities – will be considered when it selects the targeted establishments.

Private Sector Companies with 50 or more workers

For private sector establishments registered with MoHRE with 50 or more employees an Emiratisation quote of 2 per cent annually gradually raising as of 2023 applies. This means a target of 6 per cent for the end of 2024. The ultimate goal is to achieve an overall rate of increase by 10 per cent by 2026. This is accompanied by granting incentives to institutions that perform qualitatively in the training and employment of citizens.

As per the regulations the prescribed Emiratisation percentage shall be calculated based on the total number of UAE nationals working in the establishment in relation to the total number of skilled workers, provided that at least one citizen shall be employed against every 50 skilled workers or part whereof, for each year of implementation. This means that the minimum employment rate of UAE nationals amounts one citizen for every 50 skilled workers in establishments employing more than 50 workers.

Non-compliant companies will have to pay an amount of AED 6,000 monthly, starting from January 2023, for every citizen who has not been employed – the amount of the monthly contribution shall increase progressively by AED 1,000 each year. The establishment shall be considered non-compliant if the required number of employed citizens is not maintained until the following year, whereby there is a grace period of two months from the date of its decline to reachieve the Emiratisation percentage and the required numbers of employed citizens. The amount has to be paid through the digital systems of MoHRE.

Penalties for violations regarding the above outlined requirements

The foregoing quotas are accompanied administrative penalties on anyone who commits any of the violations. Violations include for example reducing the number of employees or modifying their classification to circumvents the targets. In this case, a fine of AED 100,000 will be imposed by MOHRE for the first violation. Violating the Emiratisation targets 2 years straight will cause an increase in penalty to AED 300,000. For the third or subsequent violation of the Emiratisation targets, the penalty will be AED 500,000.

Moreover, there are obligations set by MoHRE to ensure compliance with the Emiratisation system and to avoid fraudulent Emiratisation practices as for examples rules for advertising for Emiratisation jobs and obligations when it comes to hiring Emiratis.

Based on the above regulations, we recommend that all companies take proactive measures to ensure compliance with those regulations and mitigate the risk of violations and the resulting, sometimes devastating, fines.