What is Emiratisation?
Emiratisation is an initiative being advanced by the UAE Government that mandates the employment of UAE nationals within both, the public and the private sectors. The main aim is to enhance the local contribution to the national economy by raising the number of UAE nationals within the UAE workforce. This programme has been largely advanced by the public sector, while the private sector has yet to make huge strides in onboarding Emiratis into their workforce. To improve the situation, a cabinet decision was made recently mandating the hiring of UAE nationals in the private sector.
What is Nafis?
“Nafis’ will lead to building new generation of talented national competencies: H.H. Sheikh Abdullah bin Zayed”
On 13 September 2021, H.H. Sheikh Abdullah bin Zayed Al Nahyan, Minister of Foreign Affairs and International Cooperation and Chairman of the Education and Human Resources Council, has chaired a virtual meeting of the council.
Coinciding with the launch of the second package of “Projects of the 50”, Sheikh Abdullah said that the government programme “Nafis” (which means “Compete” in English), meant to support the employment of Emirati nationals in the private sector, will lead to building a new generation of talented national competencies characterised by competitiveness, flexibility, and diversity of professional experiences.
He stated, “The private sector is a partner in the development process, and makes up a large share of the country’s economic output.”*
“Nafis” is among the UAE’s ‘Projects of the 50’ where Emiratisation has been brought in as a key part of the initiative. It is a governmental federal program which aims to build a new generation of talented Emirati nationals and to increase the competitiveness of Emirati human resources and empower them to occupy jobs in the private sector. “Nafis” aims to support the Emirati nationals to pursue their professional careers in the private sector. Various initiatives have been announced as part of the Nafis Scheme such as career counselling, apprenticeship program support, Emirati salary support scheme, and merit programs to name a few.
What are the rules governing Emiratisation?
The rules governing Emiratisation law are the Ministerial Decision No.279 of 2022, Cabinet Decision No. 18 of 2022 and other rules governing benefits under the Nafis Scheme.
What are the requirements of the Emiratisation law?
All employers with more than 50 employees are mandated to annually raise their Emiratisation rate by 2% of overall skilled workers.
Effective from January 2023, and as per the requirement of the 2% Emiratisation law, companies in the private sector must apply the following scheme.
- 50 skilled workers – the minimum target is to recruit one UAE national employee.
- 51 – 100 skilled workers – the minimum target is to recruit two UAE national employees.
- 101 – 150 skilled workers – the minimum target is to recruit three UAE national employees.
- More than 151 workers – one UAE national employee to be recruited for every 50 workers.
Where does this Emiratisation law apply?
The 2% Emiratisation law applies to the private sector and, more specifically, to companies registered across the mainland UAE. Therefore, companies based in the freezones, including ADGM and DIFC, will not be obliged to apply these laws but are free to contribute to the overall objectives of the law should the companies find suitable Emirati talent for their respective organizations.
What does ‘skilled workers’ mean?
The Ministry of Human Resources and Emiratisation (“MoHRE”) has defined ‘skilled workers’ as an employee who fulfils any of the following qualifications:
– To have a certificate higher than the secondary or equivalent to secondary;
– To have a worker certificate that has to be attested by a competent authority;
– To have a salary which is no less than AED 4,000 per month;
– To be under one of the following categories:
- Legislators, business executives and managers;
- Writing professionals
- Professionals in technical, scientific, and human fields
- Technicians in technical, scientific, and humanitarian fields
- Service and sales occupations
What are the penalties for not following the 2% Emiratisation law?
Starting January 1, 2023, companies who fail to comply with the Emiratisation targets will have to pay hefty fines as stated below:
- A fine of Dh6,000 per month for each UAE national who is not employed.
- A minimum fine of Dh20,000 and a maximum fine of Dh100,000 may be applicable, if:
- After acquiring a work permit, a company does not hire a UAE national but still receives support from Nafis
- Employees benefitting from this program exhibit a lack of dedication to their jobs, and if the company neglects to inform Nafis
- Employees benefitting from the programme fails to come to work and the company fails to notify this to Nafis
- If the company terminates an employee’s benefits without providing a legitimate explanation and without notifying Nafis
- If the company refuses to hire a UAE national after they complete their training, without providing a legitimate explanation
A failure to pay the fines may lead to the suspension of the company when it comes to the company’s ability to apply for or renew the work permits. When terminating a UAE national, both commercial and public sectors’ employers should consider the repercussions and potential financial penalties.
How are companies classified?
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. The effective date for commencement of this classification was 1 June 2022.
Under this law, classification of a particular company will depend on several various factors, including Emiratisation, general labour law compliance and promotion of workforce diversity. The companies that employ more UAE nationals are classified in the higher categories and are eligible for certain benefits.
Reference: Ministry of Foreign Affairs & International Cooperation – www.mofiac.ae
If you have any questions about this or any other query related to Emiratisation or corporate and commercial laws, please get in touch with the authors of this article, Suneer Kumar directly on [email protected], Vida Grace Serrano on [email protected] and Mariam Hassan on [email protected].