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Are you worried about how the latest Emiratisation law might impact your job security? With stringent new laws in place, understanding how these regulations impact job security is crucial for both employers and employees. This blog explores the implications of the new emiratisation law in UAE, detailing compliance requirements, penalties for non-compliance, and what it means for the future of jobs in sectors ranging from finance to hospitality.
Ministerial Resolution No. (663) of 2022
The new resolution is part of a series of legislative efforts to increase the employment of Emiratis in the private sector. This move is in line with several federal laws and cabinet resolutions aimed at empowering national employees and ensuring fair practices in the workplace. Key elements of the resolution include:
False Emiratisation: Strict penalties for companies that falsely employ nationals to meet quotas or obtain government benefits.
Fair Compensation: Ensuring that national employees receive wages on par with their expatriate counterparts.
Employer Obligations: Requirements for obtaining work permits, registering employees in the pension system, and adhering to the wage protection system.
Employee Obligations: National employees must comply with labor laws and report any violations of the Emiratisation process.
Overview of Emiratisation Targets and Requirements
The new legislation mandates that private sector companies with 50 or more employees achieve an annual Emiratisation rate of 2% for skilled positions. This requirement is part of a broader goal to achieve a cumulative increase of 10% in Emiratisation by 2026. To incentivize compliance, companies failing to meet these targets face financial penalties starting at AED 6,000 per month per unfulfilled Emirati position, escalating annually until the target year.
Starting in 2024, smaller companies with 20 to 49 employees must hire at least one Emirati national, with the mandate increasing to two Emiratis by 2025. Failure to adhere to these requirements will result in substantial penalties, highlighting the government’s commitment to expanding Emirati participation across all business sizes and sectors.
Observance of Emiratisation Regulations
The resolution emphasizes fairness in compensation. Article 4 states that paying national employees less than their expatriate colleagues for similar roles is a violation. Employers must not reduce the wages of national employees due to government support programs. This policy ensures that Emiratis are not disadvantaged and are fairly compensated for their contributions.
Employer Obligations
Employers must adhere to several critical steps when hiring Emirati employees, as outlined in Article 5:
1. Obtain a work permit from the Ministry of Human Resources and Emiratisation.
2. Conclude an employment contract in accordance with ministry regulations.
3. Ensure payment of the agreed wage via the Ministry’s wage protection system.
4. Register the employee in the pension and social security system and make the necessary contributions.
5. Cancel the work permit immediately upon termination of the employment contract.
6. Report any changes to the employment contract that might affect eligibility for the Nafis program.
These obligations are designed to protect national employees and ensure that their employment is genuine and in line with the legal requirements.
Article 6 outlines the responsibilities of national employees, emphasizing compliance with labor laws and the Nafis program’s regulations. Emirati employees are also required to report any violations of the Emiratisation laws, ensuring that the system remains transparent and effective.
Fines and Penalties
To enforce these regulations, Article 7 prescribes fines and penalties for non-compliance. Establishments and individuals who violate the provisions of this resolution will face legal consequences as outlined in the Labor Relations Regulation Law and other relevant legislation.
Conclusion
For expatriates, these regulations could mean a shift in job opportunities, as companies may prioritize hiring Emiratis to avoid penalties under the new Emiratisation Law in UAE. However, businesses must provide adequate training and fair wages to national employees. This approach could lead to a more skilled and competitive workforce overall. The new Emiratisation Law in UAE aims to create a balanced and equitable job market in the UAE. For further guidance on complying with the new Emiratisation regulations, reach out to Dubai lawyers or top law firms in Dubai.