Legal Overview of Emiratisation Policy in UAE Labour Law

Emiratisation Policy in UAE Labour Law

The UAE's labor market has undergone significant transformations with the introduction of a revamped Emiratisation policy embedded in the new UAE Labour Law. This policy, which came into effect on February 2, 2022, aims to enhance the employment of UAE nationals in the private sector. This article delves into the details of the Emiratisation policy, its objectives, the regulatory framework, and its implications for employers and employees.

Objectives of the Emiratisation Policy

The Emiratisation policy is part of the UAE government's broader vision to diversify the economy and reduce dependency on expatriate labor by integrating more Emirati nationals into the private sector workforce. The key objectives of the policy are to increase Emirati participation, enhance competitiveness, and foster economic diversification. By mandating specific national employment ratios for private sector organizations, the policy ensures a steady increase in Emirati representation in the workforce. This not only provides UAE nationals with opportunities for skill development and career advancement but also supports the UAE's goal of diversifying its economy, reducing its reliance on oil, and fostering sustainable economic growth.

Key Provisions of the Emiratisation Policy

The new labor law outlines several provisions to ensure the effective implementation of the Emiratisation policy. Private sector companies registered with the Ministry of Human Resources and Emiratisation (MoHRE) are required to start with a minimum of 2% Emiratisation and increase this annually until reaching 10%. This gradual increase aims to seamlessly integrate more Emirati nationals into the private sector without disrupting business operations. Companies that meet or exceed Emiratisation targets are eligible for various incentives, including financial rewards and preferential treatment in government contracts. Conversely, non-compliant companies face penalties, such as financial contributions to the government and restrictions on future business operations. Starting in January 2023, companies that fail to meet the targets must pay AED 6,000 monthly for each Emirati not employed, with the amount increasing by AED 1,000 annually until 2026. Smaller companies with 20 to 49 employees are also subject to penalties. They must hire at least one Emirati by 2024 and two by 2025, or face fines of AED 96,000 and AED 108,000, respectively.

Implications for Employers

HR professionals in the private sector must adapt their recruitment strategies to align with the new Emiratisation requirements. This involves actively seeking and promoting the employment of UAE nationals, offering competitive salaries, career development opportunities, and creating a supportive work environment for Emirati employees. MoHRE monitors the implementation of Emiratisation targets and ensures compliance through regular audits and inspections. Companies are required to report their progress and any challenges faced in meeting the targets. Employers must familiarize themselves with the new legal requirements and ensure their HR policies and practices comply with the Emiratisation targets. This includes developing effective strategies for attracting and retaining Emirati talent. Additionally, employers need to invest in training and development programs to enhance the skills and capabilities of their Emirati employees. This not only helps in meeting the Emiratisation targets but also contributes to building a skilled and competitive workforce. Non-compliance with the Emiratisation targets can result in significant financial penalties. Therefore, employers must budget for potential fines or invest in recruitment and training programs to avoid these penalties.

Implications for Employees

The Emiratisation policy also brings opportunities and responsibilities for Emirati nationals. Emirati nationals have increased opportunities to join the private sector workforce, supported by government initiatives and incentives aimed at promoting their employment. With the emphasis on skill development and career advancement, Emiratis employed in the private sector can expect better training opportunities and pathways for professional growth. Emiratis must be aware of their rights and obligations under the new labor law. This includes understanding their entitlements to leave, working hours, and end-of-service benefits, as well as their responsibilities towards their employers and adherence to employment contracts.

Conclusion

The Emiratisation policy embedded in the new UAE Labour Law represents a significant step towards integrating Emirati nationals into the private sector workforce. By mandating specific national employment ratios, offering incentives for compliance, and imposing penalties for non-compliance, the policy aims to enhance the competitiveness of Emiratis and promote economic diversification. As employers and employees adapt to these changes, the successful implementation of the Emiratisation policy will be crucial in achieving the UAE's vision of a diversified and inclusive economy.