Emiratisation Compliance for Small Companies in the UAE

Emiratisation, also previously known as “Tawteen,” is one of the UAE government’s policies to promote the employment of Emirati nationals in both the public and private sectors in line with their constitutional and legal rights.

Some of the milestones surrounding Emiratisation were the UAE Cabinet of Ministers Resolution No. 202/2 for 2023 and Cabinet of Ministers Resolution No. 259/1 for 2004, which required private sector companies to employ a certain percentage of Emiratis for select sectors, typically around 4-5%.

For more information on the UAE's current Emiratisation processes, read our blog series here

Mandatory Quotas

Since May 2022, the regulation has evolved to include mandatory quotas for companies in the private sector based on employee population size. Initially, this was mainly applicable to larger companies on the mainland. For instance, companies with 50 or more employees were required to hire at least one UAE national by 31 December 2022.

Currently, medium to large UAE-based private companies (not registered in a free zone) with 50 or more skilled employees are required to increase their Emiratisation rates by 2% annually (1% every six months), to reach an increment of 10% by 2026.

Recent Expansion

The recent change in the law, which took effect on 1 January, is a significant development. It has lowered the threshold to include smaller companies with 20 to 49 employees from a specific list of 14 key sectors, marking a more inclusive approach.

The targeted establishments in this sector will be chosen based on criteria such as types of jobs, work environment, geographic location, nature of growth in these sectors and prevalent Emiratisation priorities.

14 Sectors: A Closer Look

The 14 key sectors are divided into primary and secondary economic activities in accordance with the International Standard Classification of Economic Activities, which is updated by the Ministry of Human Resources and Emiratisation (MOHRE) regularly. The below table illustrates select examples of the respective activities:

 

Primary Economic Activity	Secondary Economic Activity
Information and Communication	Information and Technology, and other computer service activities (e.g., setting up the infrastructure for information technology)
	Computer programming activities
Financial and Insurance Activities	Financial brokerage services including securities and commodities and insurance activities
Real Estate Activities	Activities related to the leasing or purchasing/ownership of real estate property
Professional, Scientific and Technical Activities	Architecture, engineering, and related technical advisory services
	Legal activities and service
	Accounting, auditing, and tax consultancy activities
Administrative and Support Services	Temporary employment agency services
Education	Education services, including vehicle driving institutes and other supporting services
Health and Social Welfare Activities	Medical and dental clinic activities
	Social work activities including nurseries, social counseling, and rehabilitation services.
Arts and Entertainment	Creative, arts and entertainment activities
	Sports facilities and clubs
Mining and Quarrying Industry	Oil and natural gas extraction support activities
	Mining and quarrying support activities
Manufacturing	Manufacturing generators, transformers, and distribution and control devices for electricity
	Basic chemicals industry
Construction	Electrical installations
Wholesale and Retail Trade	Trading in textiles, garments, and footwear
	Retail sale of pharmaceutical, medical, and cosmetic products as well as electronics
Transportation and Storage	Cargo handling
	Activities related to maritime transportation
Accommodation and Hospitality Services	Hospitality activities for special events or occasions

Quotas for small companies

Affected employers will need to hire at least one Emirati national in 2024 and another in 2025. The goal is to boost Emirati participation in the workforce and shape the nation’s future.

The updated law also provides a detailed breakdown of the required Emirati hires based on the company’s size, making it more specific and actionable.

Penalties

Further details are expected to be provided, including the enforcement criteria, but one thing is clear: employers that do not meet these requirements will face monthly contributions for unfilled Emirati worker positions up to AED 96,000 in 2025 and AED 108,000 in 2026.

The MoHRE has acted against 441 private establishments that violated Emiratisation since 2022. 436 establishments were fined for false Emiratisation, while five establishments were fined for circumventing Emiratisation targets.

To avoid fines and support the UAE government’s Emiratisation program, joining the “Nafis” partnership and exploring initiatives to hire eligible Emirati job candidates is recommended.

Need to know more?

For further information on Emiratisation requirements, please contact Senior Manager Shoaib Khaleeli at [email protected].

This blog was published on 8 February 2024, and due to the circumstances, there are frequent changes. To keep up to date with all the latest updates on global immigration, please subscribe to our alerts and follow us on LinkedIn, X, Facebook and Instagram.