In a significant move to enhance citizen employment and bolster the UAE’s workforce, the Cabinet has introduced new Emiratization policies that will impact private sector establishments. Here’s what you need to know about these changes and how they affect your business.
Key Changes to Emiratization Rates
Beginning January 2023, private sector companies with 50 or more employees will see localization rates increase by 2% annually, aiming for a total increase of 10% by 2026. This initiative encourages companies to prioritize hiring and training Emirati citizens, with incentives available for those that excel in these areas.Financial Penalties for Non-Compliance
To ensure compliance, the Ministry of Human Resources and Emiratization has established financial penalties for businesses that fail to meet their citizen employment targets. Companies will be required to pay AED 6,000 monthly for each unutilized citizen, starting in January 2023. This penalty will increase by AED 1,000 each year until 2026, making it crucial for businesses to engage Emirati Employees.Expanding Emiratization Goals for Smaller Companies
Starting in 2024, private sector companies with 20 to 49 employees will be mandated to hire at least one Emirati citizen. By 2025, this requirement will increase to the employment of more than one Emirati citizen. Previously, these obligations applied only to companies with 50 or more employees.
Affected Sectors
These requirements will impact companies in 14 key sectors, including:- Information and Communications
- Financial and Insurance Activities
- Real Estate Activities
- Professional, Scientific, and Technical Activities
- Administrative and Support Services
- Education
- Health Care and Social Work Activities
- Arts and Entertainment
- Mining and Quarrying
- Manufacturing
- Construction
- Wholesale and Retail Trade
- Transportation and Storage
- Hospitality Services
Financial Contributions for Non-Compliance
Starting January 2025, companies that do not meet their Emiratization requirements will incur annual financial contributions. Establishments will need to pay AED 96,000 for each citizen not employed for the year 2024. If companies fail to employ two citizens by January 2026, the contribution will rise to AED 108,000.Conclusion
These new Emiratization regulations mark a significant shift in how businesses in the UAE approach workforce development. With increasing localization rates and stringent penalties for non-compliance, it’s essential for companies to reassess their hiring strategies and focus on integrating Emirati talent into their workforce.At Omam Legal Consultancy, we are dedicated to helping you navigate these changes and ensuring your business remains compliant. For more information or assistance, please contact us. Together, we can foster a prosperous future for Emiratis in the private sector.
