All about   Emiratisation                               

What is Emiratisation?

It is an initiative of the UAE government to increase the participation of Emirati citizens in the workforce, particularly in the private sector. The aim is not only to enhance the role and participation of Emiratis in various sectors of the economy but also to enable and train them to take on leading roles in the country’s economy.

Brief History:

According to the old labor law (Federal decree law number 8 of 1980), priority for jobs was given to citizens, followed by other nationals if citizens were not available. According to new labor law article 4(Federal decree law number 33 of 2021), rules and regulations that aim to enhance the participation of UAE citizens in the labor market shall not constitute discrimination.

Emiratisation law is supported by two major Ministerial Resolutions.

1. Ministerial Resolution number 279 of 2022
2. Ministerial Resolution number 455 of 2023

Categories of Emiratisation:

There are two categories of Emiratisation,

1. Mainland private companies with a workforce ranging from 20 to 49 employees are required to hire at least 1 national in 2024 and another in 2025. Fourteen targeted economic activities are identified as compliant with this requirement, as per Ministerial Resolution 455 of 2023.
2. Mainland private companies with 50 or more employees are required to hire national employees at least 2 percent annually of their skilled employees till 2026 as per ministerial decree number 279 of 2022.

Conditions for achieving Emiratisation target when hiring a national:

Four conditions are required to meet the Emiratisation target when you hire a national employee.

• The UAE national must possess a valid work permit.
• UAE nationals’ wages must be processed through the Wages Protection System or by any other government-approved system.
• The UAE national must be registered with one of the approved pension funds in the country.
• The relationship between the UAE national and the establishment shall be contractual, satisfying all the terms and conditions of the Labor Relations Regulation Law

Replacement of an Emirati national:

In case of resignation or termination of a national employee, companies must bring the replacement within two months to avoid any fine and company block.

Deadlines to achieve the Emiratisation targets:

Companies with 20 to 49 employees are required to hire one national before January 2025 and a second one before January 2026.

Companies with 50 or more employees must achieve half of their Emiratisation target between January 1st and June 30th, and the other half between July 1st and December 31st, every year until 2026

 Contribution in case of non-compliance:

If companies with 20 to 49 employees fail to hire a national by December 31st, 2024, they will incur a contribution of AED 96,000 on January 1st, 2025. Similarly, if they do not hire a second national by January 1st, 2026, the contribution increases to AED 108,000.

Companies with 50 or more employees are required to pay AED 6,000 per employee per month starting from 2022 in case of non-compliance, with an increase of AED 1,000 every year until reaching AED 10,000 per employee per month in 2026.

Penalties in case of violations of Emiratisation:

In case of any violation of Emiratisation law, fines can range from AED 20,000 to AED 100,000, depending on the nature of the violation (Resolution 95 of 2022).

The penalty for circumventing the Emiratisation target by reducing the number of employees is AED 100,000, AED 300,000, and AED 500,000 respectively for the first, second, and third offenses (Resolution no.44 of 2023). The fine is increased up to 1 million as per Federal Decree-law no.9 of 2024.

 Financial impacts of Emiratisation:

Companies are required to register a national employee with the pension department. According to the new pension law, the total contribution is 26% with employees contributing 11% and employers contributing 15%. If an employee earns a salary of less than twenty thousand dirhams, NAFIS will contribute 2.5 %.  A national employee will not receive gratuity from the company instead, it will come from the pension department.

Benefits of Emiratisation:

• With full compliance, companies can be nominated for the Emiratisation award and become eligible for financial benefits from the government.
• Companies can achieve category one by ensuring 100% legal compliance and meeting the three times of the Emiratisation hiring target with a minimum of 30 nationals or by training 500 national trainees annually.
• Companies can achieve and maintain category two by ensuring 100% legal and Emiratisation compliance.