How the New Work Permit Rules Impact UAE Employers?

According to the data revealed by the Ministry of Human Resources and Emiratisation (MOHRE) in June, over 141,000 fines were issued for incomplete work permit registration or late renewal against employers in the UAE’s private sector. Almost 53,000 entities were fined, which constitutes 15 percent of all companies registered with the Ministry. The announcement comes right after the introduction of Cabinet Resolution 15/2017 that reduces the administrative fines for selected work permit-related violations.

A New Set of Administrative Fines

The level of the penalties in the UAE is regulated by the Cabinet Resolution No. 40 of 2014, but some of its provisions have now been amended. According to the new rules, employers that fail to submit a fully executed employment contract within 60 days of a foreign employee’s arrival or change in immigration status will be fined AED 100 per month of delay. Those holding back work permit renewals beyond 60 days of expiry will be fined AED 200 per employee. In both cases, the penalty has been reduced from the previous AED 500.

But the most significant change for companies is that the maximum amount of fines for these violations is now capped at AED 2,000 per employee, which makes it less burdensome for the employers to pay the fines back to the Ministry.

Is Mission Visa Renewal Possible?

The amended law states that failure to renew an employment contract for a holder of a mission work permit which allows for short-term work activities will attract a fine of AED 100 for each day, beyond 7 days of the expiry date. The fact that the new resolution actually refers to the renewal process may suggest that the UAE Authorities are considering reinstating the possibility of renewing mission visas. Although technically possible, renewal is currently not practical, given that the immigration authorities do not extend mission entry permits (both mission entry permit and mission work permit are essential for a legal residency and employment in the UAE and are commonly referred to as a ‘mission visa’). In fact, the foreign national is required to depart within 90 days of entry, regardless of whether the employer has managed to renew the mission work permit at the MOHRE or not.

Deadline for Employment Contract Signature

Sixty days to submit a fully executed work contract feels like a long time, but the employers often overlook another deadline that they have to stick to, which is stated in the annex to the MOHRE’s job offer. Introduced in the beginning of 2016, the annex defines the rights and the obligations of both parties, complementing the UAE’s Federal Labour Law. In its third paragraph, the annex stipulates that the employer must enable the candidate to sign the employment contract within two weeks of arrival or change of immigration status. So in practice, employers must ensure a swift turnaround of applications to meet the 14-day obligation. However, it appears that the Ministry will not impose the administrative fines unless the 60-day deadline has been surpassed.

The reduction of fines should have a positive impact on businesses as settling any outstanding dues will now cost less. The MOHRE’s move shows that the UAE authorities are serious about employers’ compliance with relevant laws, especially when it comes to work contracts. It is therefore prudent that employers who are still behind in paying back their fines rectify them immediately to facilitate obtaining new work permits. Currently, those with outstanding fines are blocked from recruiting new foreign workers.