UAE Announces Major Reform in Emiratisation Rules

On July 11, the Ministry of Human Resources and Emiratisation (MoHRE) announced a new update to the rules and a major expansion of the UAE’s Emiratisation Drive.  

Previously, only private companies with 50 or more employees were subject to Emiratisation rules. Those businesses in free zones were exempt from the ruling.  

The Emiratisation rate is based on the number of skilled workers in the company. The MoHRE states that for companies with more than 20 employees but fewer than 50, one Emirati must be on staff in a skilled position by January 1, 2024, while another must be employed by January 1, 2025. 

What would constitute skilled workers? 

MOHRE defines “skilled workers” as an employee who satisfy any of the following qualifications: 

1. Belong to any of the below five worker categories: 

Managers, Legislators, and Business Executives 

Professionals in scientific technical, and human fields; 

Technicians in scientific, technical, and humanitarian fields; 

Writing professionals; 

Service and sales occupations.

2. Possess a certificate higher than the secondary or equivalent to secondary;

3. Possess a worker certificate attested by a competent authority;

4. Receives a monthly salary of no less than AED 4,000 per month; 

The aim is to ensure that by 2026, 10% of the workforce in the private sector are Emirati nationals. 

Emiratization target depends on the company size, the rate is calculated as follows:

1. 0-50 skilled workers – minimum to have hired 1 Emirati;

2. 51-100 skilled workers – minimum to have hired atleast 2 Emiratis;

3. 101-150 skilled workers – minimum to have hired three UAE nationality employees;

4. More than 151 skilled workers – 1 Emirati for every 50 workers or less. 

Those failing to hire an Emirati citizen as mandated will be subject to a fine of AED 96,000 in 2024. The penalty increases to AED 108,000 for the subsequent year, 2025.

The new rules now apply to companies across 14 economic sectors, which are the following: 

   **Please refer to appendix for supplementary information. 

The law includes several exemptions from the Emiratisation requirements. These exemptions encompass companies situated in free zones, companies engaged in specific activities, and companies facing challenges in finding suitably qualified Emirati employees. 

Taking measures like  

1. reducing the numbers of employees under employment (e.g. transferring several employees from one entity into another) or  
2. reclassifying workers from skilled to unskilled to avoid paying fines for not fulfilling the quota is not advisable.  

Employers should be mindful that any attempt to circumvent the Emiratisation requirements risks penalties being imposed. Fines start at AED 100,000 increasing to AED 500,000 for a third offense. 

To ultimately avoid fines and penalties, it is imperative that companies in the UAE monitor the situation and keep up to date with developments. We ask you to please be guided accordingly. 

**Companies should seek advice and confirmation as to the applicability to their business 

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