The UAE to Introduce Fines for Failure to Comply with the Emiratisation Quota: Key Information

The UAE government recently announced a change to its Emiratisation programme whereby incentives will be provided to employers who reach the Emiratisation quota whilst fines will be imposed on those that do not comply. The country has set a minimum Emiratisation rate of 2 percent annually for the private sector. The aim is that by 2026 the private sector workforce will be at least 10% UAE national.

This applies to employers registered with Ministry of Human Resources and Emiratisation (“MOHRE”) so it does not apply to free zone companies and MOHRE exempt companies (who are free to join NAFIS on a voluntary basis).

Background

Emiratisation is an initiative by the UAE government which promotes the employment of UAE nationals in the private sector. The current Emiratisation quotas are:

• 2% for commercial entities where the entity has over 50 employees;
• 4% for banks; and
• 5% for insurance companies

These are cumulative figures so in year 1 of operation a commercial entity with more than 50 employees should have 2% Emiratisation, in year 2 it should be 4% and so on. Up until now the quotas were not enforced for the commercial sector but are substantially enforced for banks and insurance companies.

New Rules

From January 2023, private sector companies with more than 50 employees that do not reach the Emiratisation quota will be subject to fines. These new guidelines were authorized as part of the NAFIS programme, which is a federal government programme aimed at increasing UAE national participation in the private sector.

MOHRE will categorise employers as follows:

NAFIS

It was originally understood that NAFIS enrolment and subsequent compliance was elective.  This is not the case and NAFIS enrolment and compliance is mandatory for MOHRE registered companies.

The NAFIS programme will help companies to source UAE nationals by means of a portal that they maintain.

Next steps

Private sector companies will now need to ensure that they are:

• meeting the Emiratisation targets or alternatively have made provision in their accounts for the imposition of penalties; and
• registered with NAFIS.

Registration with NAFIS can be done through this link here.

If you have any queries on this topic please do not hesitate to reach out to us.