His Excellency Dr. Abdulrahman Abdulmannan Al Awar, UAE Minister of Human Resources and Emiratisation, has emphasised that the Ministry will continually support UAE’s efforts in achieving global leadership in business while supporting key national objectives, with a primary focus on promoting Emiratisation programs and empowering UAE talents.
His Excellency Dr. Al Awar highlighted that the new classification of companies and its pertinent resolutions are aimed at meeting business owners’ demands and protecting workers’ rights, while encouraging innovation and promoting the SME sector. The classification offers rewarding incentives to companies that commit to the prescribed laws and policies on promoting cultural and demographic diversity, in line with the UAE society’s values, which are based on tolerance and equal opportunities for all.
His Excellency Dr. Al Awar provided details about the new classification system for companies according to Cabinet Resolution No. 18 of 2022, and its pertinent ministerial resolutions at a media briefing organised today by the Ministry of Human Resources and Emiratisation (MOHRE) at its headquarters in Dubai.
He explained that the general policy for developing the UAE labor market is inspired by the principles of “the next 50”, which targets “building the world’s best and most dynamic economy” in the country.
In this context, His Excellency Dr. Al Awar underlined MOHRE’s comprehensive outlook on the UAE business sector, based on four pillars: supporting and empowering national talents and competencies, maintaining the labor market’s attractiveness for global talents and highly qualified people, protecting workers and employees, and providing maximum guarantees for their rights, and enabling and promoting companies’ capabilities to achieve sustainable growth.
Three categories with top-level governance
His Excellency Dr. Al Awar explained that the new classification of companies in the UAE, which will take effect on June 1, 2022, splits existing companies into three distinct categories. The classification criteria meet the clients’ demands for simplifying transactions, with top-level governance supported by smart solutions provided by MOHRE’s digital ecosystem. The companies will be categorised using an interactive automated system that allows changing a company’s classification transparently, based on the procedures carried out by each company or the transactions undertaken.
The Minister noted that the classification provides incentives and exemptions for companies in accordance with the national economic priorities and Emiratisation programs, while boosting priority sectors. It also takes into account the value system on which any successful global economy must be based, namely equality and justice in employment opportunities, alongside promoting tolerance and inclusiveness, without inhibiting employers’ freedom to choose the talents and competencies they wish to recruit. The classification sets new fees for services in a manner that is practically tied to the choices employers will make.
His Excellency Dr. Al Awar stated that the classification of new companies “depends on the extent of their commitment to the law and wage protection system, workers’ rights protection, and their compliance with the policy of promoting cultural and demographic diversity in the UAE, along with the resolutions that regulate the labor market. Most existing companies in the country that fulfill all these commitments will be in the second category.
Some companies will be promoted to the first category, and these companies will enjoy significant exemptions from fees based on their fulfilling various criteria. Meanwhile, the classification of other companies will drop to the third category in case of non-compliance with the policies, laws and resolutions regulating the labor market, he said.
His Excellency Dr. Al Awar discussed the criteria by which companies can promote to the first category, once they meet at least one criterion. These include raising their Emiratisation rate at least three times above the target, cooperating with the “Nafis” program to train at least 500 citizens annually, or being a venture owned by a young citizen according to approved standards in this regard, or being one of the training and employment centres that support implementing the Workforce Planning Policy by promoting cultural diversity in the UAE, or being active in the targeted sectors and activities determined by the Council of Ministers based on the proposal presented by MOHRE.
Companies that do not meet any of these criteria, while committing to the law and the policy of promoting cultural and demographic diversity in the UAE, will be automatically classified in the second category. The third category will encompass all other companies found by the Ministry to be violating Federal Law No. 33 of 2021 regarding the organisation of labor relations and its executive regulations, and the resolutions regulating the labor market, or standards for protecting labor rights, or lack of commitment to promoting cultural and demographic diversity in the UAE labor market.
Companies can also be classified in Tier 3 if they commit other violations stipulated in Ministerial Resolution No. 209 of 2022, including the issuance of a final ruling that the facility committed a crime of human trafficking, used or recruited workers without obtaining work permits, provided incorrect data, documents or information to the ministry, violated obligations on workers’ wages, housing and safety standards, resorted to fake Emiratisation practices, or committed other serious violations.
The classification will be accompanied with updates on service fees for work permits and transfer fees in line with the classifications of companies. Fees will not exceed AED 250 for Tier 1 companies for two years, while Tier 2 companies will be charged AED 1200 for two years. Tier 3 companies will not be able to benefit from any fee rebates, and the fees for issuing or renewing work permits will amount to AED 3450 for two years. The employment of UAE and GCC citizens is exempted from these fees.
Legislative Integration to support business environment
His Excellency Dr. Al Awar explained that the new classification, in conjunction with all other pillars of the legislative system, achieves a number of vital goals that serve the national economy, noting that the new categories will enhance economic diversity and support the development of employment mechanisms to create fair and equal opportunities in the private sector in a way that enhances the values of tolerance and cultural and demographic diversity in the country.
This step is in response to UAE’s direction for the next 50 years and it enhances its position as a capital of talent, companies and investments, and an upcoming capital for the future. It also supports a knowledge economy that is based on experience exchange, capacity building, and launching new sectors that align with the future economy and help boost socioeconomic development.
Through the decision, the Ministry of Human Resources and Emiratisation seeks to enhance integration with the local and federal government entities to support policies that boost the labor market’s efficiency and stability. This is the key factor upon which company classification criteria and their classification promotion or demotion have been based.
The ministry will provide a clear roadmap for companies operating in the country to upgrade their classification and increase the predictability of investors. It also works on the basis of partnership with the private sector to support companies that have 50 or more workers in their transformation journey with the new decision on cultural and demographic diversity, through a transitional period that can be used to carry out development operations.
The legislative system related to the labor market and Emiratisation in the UAE has witnessed the adoption of a number of decisions that help business development and support the Emiratisation of national capacities and the protection of workers and employees, through the new federal law on unemployment insurance, in addition to the decision to raise the current Emiratisation rates by 2% annually for skilled jobs in private sector companies that have 50 or more employees, and an overall increase rate of 10% by 2026.
The decision to raise annual Emiratisation levels in private sector companies is accompanied by unprecedented advantages, including reducing the fees of the Ministry of Human Resources and Emiratisation by up to 80% for private sector companies for achievements in hiring and training citizens in partnership with the Nafis program. The unemployment insurance system that is provided through insurance packages will offer a unique model for protection umbrellas through insurance companies’ products that aim to ensure the availability of income for workers during their unemployment until alternative job opportunities are available.
In the medium and long terms, the ministry’s decisions support the UAE’s strategic economic security by enhancing the economy’s ability to attract global competencies and skills and launching new economic sectors that contribute to diversifying sources of income while providing worker protection and establishing the foundations of a flexible business environment that aligns with global changes and transformations, leading towards a sustainable and diversified economy.