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.
Emiratisation 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:
| 14 Economic Sectors | |
| Information and communications | Transformative industries |
| Financial and insurance activities | Education |
| Property | Health care and social work |
| Professional and technical activities | Construction |
| Administrative and support services | Wholesale and retail |
| Arts and entertainment | Transport and warehousing |
| Mining and quarrying | Hospitality and residency services |
**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
- reducing the numbers of employees under employment (e.g. transferring several employees from one entity into another) or
- 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.
| 14 Economic Sectors With Indicative Examples | |
| Information and communications | Telecommunications Computer, AI, and IT Services Satellite Systems Broadcasting and Media Companies Publishing Houses Motion Picture Theatres Libraries & Archives |
| Financial and insurance activities | Banks Insurance Companies Investment Companies Consumer Finance Companies Real Estate Investment Trusts Cryptocurrency |
| Property | Real Estate Property, Home, and Office Leasing Property Management Companies Real Estate Brokerage |
| Professional and technical activities | Legal / Law Firms Accounting, Bookkeeping and Auditing Activities; Tax Consultancy Management consultancy Architectural, Engineering, and Related Services Consulting Services Technical Testing and Analysis Advertising and Related Services Market Research and Public Opinion Polling |
| Administrative and support services | Employment, Recruitment, and Manpower Agencies Outsourcing Companies PRO Services Commercial Cleaning Companies Call Centres Gardening Services Pest Control |
| Mining and quarrying | Mining Companies |
| Transformative industries | Technology Innovators Inventors |
| Construction | Building Contractors / Developers Carpentry |
| Arts and entertainment | Performing Artist Groups Exhibition Organizer & Companies Production House Cultural Museums Historical Sites Recreation Facility Arcades, Theme Parks and Attractions Zoos and Botanical Gardens Performing & Visual Arts Gaming and Animation Sports Teams & Clubs Golf Courses and Country Clubs |
| Education | Schools/ Service Providers Supplemental Education Service Providers Educational Products & Publishing Sector Education Support Services Sector |
| Health care and social work | General Medical and Surgical Hospitals Healthcare Clinics Nursing Facilities Retirement Homes Home health care services Wellness Centre Medical Equipment and Drug Manufacturers Pharmaceuticals & Biotechnology Companies |
| Wholesale and retail | Wholesalers Retailers Supermarkets and Hypermarkets Department and General Merchandise Stores Pharmacies and Healthcare Stores Gasoline Stations Motor Vehicles and Part Dealers Convenience Stores Sporting Goods, Hobby, Musical Instrument, and Book Stores |
| Transport and warehousing | Car and Bus Rentals Air and Cruise Lines Warehousing and Logistics Companies Cargo Shipping Companies Courier Services |
| Hospitality and residency services | Hotels, Resorts & Casino F&B Travel and Tourism Agencies Meeting and Event Management Companies Salon & Spas Pet Care and Services |
**Companies should seek advice and confirmation as to the applicability to their business
How We Help Clients
Tax laws and regulations are evolving, and certain industries or sectors may have specific rules or requirements. Therefore, consulting with an experienced tax professional and labor law professional will ensure you mitigate risks under UAE taxation and labour laws.
At SimplySolved, we provide the necessary assistance and guidance to ensure the complete optimization of tax strategies and obligations, assure compliance and minimize risks of administrative penalties.
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