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Introduction of new classification law of the private establishments

UAE – Introduction of new classification law of the private establishments 

The Ministry of Human Resources and Emiratisation (MOHRE) of the UAE Federal Government has introduced new Cabinet Resolution No. 18 of 2022. It is concerning classification into 3 Categories i.e., Category 1, Category 2 and Category 3 of private sector establishments/Companies, which are governed by the provisions of labour relations regulation law, depending upon certain criteria as enumerated below. The effective date for commencement of this classification is June 1, 2022. 

The criteria for the private establishments/Companies to fall in Category 1 is as follows: 

Category 1

This Category will comprise Companies which works 100% towards:

  1. following the law.
  2. following wage protection system.
  3. protection of workers’ rights.
  4. complying with the policy of promoting cultural and demographic diversity in the UAE.
  5. promoting resolutions that regulate the labour market.
  6. raising Emiratisation rate at least three times above the target.
  7. cooperating with the ‘Nafis’ – a federal government programme aimed at increasing the competitiveness of Emirati human resources and empowering them to occupy jobs in the private sector over the next 5 years. The aim of Nafis programme is to train at least 500 citizens annually.
  8. being a venture owned by a young citizen according to approved standards.
  9. being one of the training and employment centres that promote cultural diversity in the UAE.
  10. being active in the targeted sectors and activities determined by the Council of Ministers based on the Ministry’s decision.

Category 2

For this Category 2, classification of new companies is dependent on the extent of their commitment to:

  • the law.
  • wage protection system.
  • workers’ rights protection.
  • complying with the policy of promoting cultural and demographic diversity in the UAE.
  • promoting resolutions that regulate the labour market.

Interestingly, in view of the provisions of Article 7 all new private establishments/Companies, regardless of their size, shall be classified under Category 2 subject to compliance with the policy of skilled workers and cultural diversity when issuing work permits. The private establishment/Company will be classified as Category 3 if any of the criteria mentioned in Article 4, which lays down criteria for category 3, of this resolution are met.

Category 3

The criteria for classification of private establishments/Companies in this Category is as follows:

1.Companies found violating:

  • the Labour Law and executive regulations.
  • the resolutions regulating the labour market.
  • standards for protecting labour rights.

2. Companies lacking in commitment to promoting cultural and demographic diversity in the UAE labour market.

3. A company committing other violations stipulated in Ministerial Resolution No. 209 of 2022, including:

  • human trafficking,
  • 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,
  • resorting to fake Emiratisation practices,
  • committing other serious violations.

Penal provisions

The stay of private establishment/Company in Category 3 may vary from 3 months to 2 years and may also be extended depending upon the gravity of the violations committed or their reoccurrence by the Company. The Company would be required to provide remedy to the violations and also pay related fines to move up the category.

Conclusion

The new regulations governing categorisation of the private establishments/Companies is a step in the right direction. It will help Category 2 and 3 private establishments/Companies to improve upon their functioning by providing remedies for violations, if any and move up their category ratings. Overall, the private establishments/Companies are likely to take serious approach and aim towards fully fulfilling all the criteria. This way they are likely avoid any violations of laws and regulations in the first instance enabling them to meet the required standards of corporate governance under the UAE law and thus be categorized under Category 1.

If you have any questions about this or any other query related to Trademarks Law, please get in touch with the author Rajiv Suri directly on r.suri@alsuwaidi.ae 

Rajiv Suri is a senior associate in the intellectual property and corporate and commercial team at Alsuwaidi & Company. Rajiv advises clients on strategies involving a wide range of intellectual property matters and has been involved in managing corporate portfolios across various industries.