Impact of New Emiratisation Rules & Tips Toavoid Penalties

The introduction of Emiratisation marks a pivotal juncture for UAE businesses with 50 or more employees. 

The rules signify the need to meet the 1% Emiratisation quota for skilled jobs. The stakes are steep, with potential penalties of up to AED500,000 ($136,000) for non-compliance.

In this comprehensive blog, we will look at the multifaceted impact of the new Emiratization rules and offer valuable tips that businesses can implement to stay prepared and avoid penalties in the future.

But before we go there, let’s take a closer look at the new Emiratisation rules –

What Are The New Emiratisation Rules?

Emiratisation is a UAE government initiative that encourages hiring UAE nationals within private sector companies. The goal is to boost Emirati participation in the workforce, ensuring their representation across various industries. The quotas for Emiratisation differ based on the type of business –

• Commercial entities with over 50 employees - 2% Emiratisation targets
• Banks - 4% Emiratisation targets
• Insurance companies - 5% Emiratisation targets

While the banking and insurance sectors adhere strictly to these targets, the rules for other commercial entities were less enforced in the past.

These rules became effective on January 1, 2023, affecting employers under MOHRE's jurisdiction (onshore or mainland UAE companies). The rules, however, do not apply to companies operating in free zones.

For private sector companies with 50 or more employees, a new requirement emerged: an annual 2% increase in their UAE national workforce. These rules aim to ensure that at least 10% of the private sector workforce is comprised of UAE nationals by 2026.

Decoding The Emiratisation Categories

Defining skilled workers is crucial in these rules. An employee qualifies as skilled if they meet these criteria:

Belongs to one of five categories –

• Level 1 - Legislators, managers, and business executives
• Level 2 - Professionals in scientific, technical, and human fields
• Level 3 - Technicians in scientific, technical, and humanitarian fields
• Level 4 - Writing professionals
• Level 5 - Service and sales occupations
• Holds a certificate higher than a high school certificate, attested by competent authorities
• Earns a monthly salary (excluding commission) of no less than AED 4,000

With these new rules, the UAE strives for a more robust and diverse workforce. The intent is to cultivate a thriving job market that includes talented UAE nationals across various sectors. As companies adjust their hiring practices to meet the new quotas, the UAE takes a step closer to realizing its Emiratisation goals.

Understanding Emiratisation Penalties

Violating the Emiratization rules could lead to strict penalties. It can include penalties in the form of a reduction in the workforce or alteration in employee classifications to circumvent the law.

Other than that, companies can face a fine of AED100,000 ($27,000). If there are additional violations, the penalty for the second offence will be increased to AED300,000 ($82,000). It can even go up to AED500,000 for companies that continue to fall short.

The Positive Impact of Emiratisation

As we reflect on the importance of the new rules, it's evident that compliance is more than a regulatory obligation – it's a path to broader socioeconomic development. The push for increased Emirati representation in the private sector by the UAE government aims to nurture local talent, foster diversity, and drive economic growth.

It is evident from the success stories of businesses that have been successful in meeting their quotas. The increase in Emiratisation by 11% during the first quarter of 2023 highlights the success of the new Emiratisation rules. Over 10,500 Emiratis joined the private sector, pushing the total Emirati employee count beyond 66,000. These figures show how effective the Emiratisation rules have been in driving change.

Tips For Businesses ToAvoid Penalties

Here are a few strategies that companies should keep in mind to not only meet Emiratisation expectations but also to thrive in this landscape –

• Proactive Workforce Planning– Businesses should take a more active approach to workforce planning. It would mean carefully looking at employees they already have on their payroll and figuring out which jobs could be done by Emirati people.
• Reflect & Rectify– Some companies may have missed the deadline. Those who have should take a moment to assess their approach. Start by identifying gaps and creating a concrete plan to ensure compliance moving forward.
• Strategic Alliance WithNafis- The Emirati Talent Competitiveness Council, known as Nafis, can greatly help Emiratisation compliance. By working closely with Nafis, companies can get a lot of support. Their support isn't just about hiring Emiratis; it also includes training them properly.
• Holistic Retention Approach- While bringing in new Emirati talent is essential, taking care of the people already working for you is also crucial. Making a plan to keep them in the company, helping them grow, and creating a positive work environment can help reduce employees leaving.
• Plan For TheFuture- Emiratisation is a long journey. So, businesses should make both short-term and long-term plans. These plans should match the increasing Emiratisation targets over time. It shows a real commitment to following the rules for the long run.
• Embrace Diversity- Emiratisation is not just about obeying rules; it's about welcoming diversity. By changing how you see Emiratisation, it becomes a chance for creativity and fairness.
• Transparency & Reporting– It’s essential to maintain transparent records of your Emiratisation efforts. The documentation not only aids in compliance but also showcases your commitment to transparency.

By following these essential steps, businesses can be prepared to avoid penalties and make the most of the new rules.

Meet Your Emiratisation Targets With TASC

For businesses, the new Emiratisation rules are an ongoing commitment that has the potential to uplift the socioeconomic fabric of the UAE. Moving forward, business owners have to be extremely mindful of understanding and complying with the new Emiratisation rules by taking the consequences of non-adherence into careful consideration.

At TASC, we specialise in a wide range of hiring and employee management services. From localised hiring and Emiratisation to international hiring and C-level recruitment, our experts are masters of end-to-end hiring services. We have 15+ years of experience in the MENA region, providing complete hiring, HR, and PEO solutions to businesses of all scales. And so, we are the best Emiratisation recruitment agency out there.

So, don't wait anymore. Get in touch with our Emiratisation recruitment experts and ensure seamless business operations, higher retention, and successful establishment for your business.