UAE: New classification system for private sector will determine cost of work permits

Starting June 1, the UAE’s Ministry of Human Resources and Emiratisation (MoHRE) will implement a new classification system for private sector companies on the basis of their compliance with directives.

Dr Abdulrahman Al Awar, Minister of Human Resources and Emiratisation, said on Tuesday that the new classification of companies splits existing companies across one of three distinct categories.

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, along with the resolutions that regulate the labour market”.

The companies will be categorised using an automated system that facilitates changing a company’s classification transparently, based on the procedures carried out by each company or the transactions undertaken. The classification provides incentives and exemptions for companies under the national economic priorities and Emiratisation programmes while boosting the priority sectors, according to state news agency WAM.

It considers the value system namely equality and justice in employment opportunities, alongside promoting tolerance and inclusiveness, without inhibiting employers’ freedom to choose the talent they wish to recruit.

The classification sets new fees for services tied to the choices employers make. The classification will be accompanied by updates on service fees for work permits and transfer fees in line with the classifications of companies.

For Tier 1 companies, fees will not exceed Dhs250 for two years, while Tier 2 companies will be charged Dhs1,200 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 Dhs3,450 for two years. Activities involving the employment of UAE and Gulf Cooperation Council citizens are exempt from these fees.

The new classification for companies is divided into 3 categories to meet customers’ requirements in facilitating transactions. Companies will be classified correctly through an automated interactive system that transparently enables a classification change of companies. #UAE pic.twitter.com/P9LGqZMIN6

— MOHRE_UAE وزارة الموارد البشرية والتوطين (@MOHRE_UAE) May 24, 2022

Most of the existing companies in the country that fulfil their 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 labour market, noted the Minister.

Dr Al Awar explained how companies can be promoted to the first category, once they meet at least one standard. These include raising their Emiratisation rate at least three times above the target; cooperating with the “Nafis” programme to train at least 500 citizens annually; being a venture owned by a young citizen according to approved standards in this regard; being one of the training and employment centres that support implementing the Workforce Planning Policy by promoting cultural diversity; or being active in the targeted sectors and activities determined by the Council of Ministers based on the recommendation submitted by the MoHRE.

Companies that do not meet any of these criteria, while committing to the law and the policy of promoting cultural and demographic diversity will be automatically classified in the second category.

The third category will encompass all other companies found by the ministry to be in violation of Federal Law No. 33 of 2021 regarding the organisation of labour relations, its executive regulations, resolutions regulating the labour market, or standards for protecting labour rights, or lack of commitment to promoting cultural and demographic diversity in the labour market.

Companies may 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.

Dr. Al Awar said that the new classification system falls under Cabinet Resolution No. 18 of 2022. The minister, earlier this month, highlighted the Cabinet’s adoption of a federal law on the unemployment insurance scheme through insurance packages, which aims to ensure the availability of income for unemployed workers until an alternative job opportunity are made available.

The UAE Cabinet adopted resolutions and an incentives package to enhance the participation of Emirati workers within the private sector. The incentives include reducing the service fees of the Ministry of Human Resources and Emiratisation by 80 per cent for private sector establishments, which accomplish major achievements in terms of recruitment and training of Emiratis.

The Cabinet approved increasing the Emiratisation rate to 2 per cent annually from high-skilled jobs in establishments that employ 50 workers or more. The step aims at creating more than 12,000 job opportunities annually for UAE citizens. Non-compliant companies will have to pay Dhs6,000 monthly, starting from January 2023, for every citizen who has not been employed.

The ministry hopes to achieve an increase in the overall rate of Emiratisation of 10 per cent by 2026.

Read: UAE’s unemployment benefits scheme applicable to all public and private sector employees