United Arab Emirates: Update on Emiratization Rate Calculation in Mainland Private Sector

• Calculation of Emiratization Rate. Affected employers must increase their current Emiratization rate in skilled positions by 2% annually. The rate is calculated after considering the number of Emirati workers in relation to the total number of skilled employees, ensuring that at least one Emirati national is employed for every 50 skilled employees for each year of implementation, as indicated below:

• Mandatory conditions. In addition to applying the correct Emiratization rate, employers must ensure that they comply with all applicable labor regulations, and that each Emirati employee holds a valid work permit and employment contract; is registered with the General Pensions and Social Security Authority; and is paid through the Wages Protection System.

Effective January 2023, each affected employer that does not comply with the prescribed Emiratization rate will face a monthly penalty fee of AED 6,000 for each vacancy that has not been filled with an Emirati worker — to be increased by AED 1,000 annually.

Companies will be considered non-compliant if the prescribed number of employed Emiratis has not been maintained by the following year. The applicable fees will be incurred unless the employer attains the prescribed nationalization rate within two months of the date of non-compliance.

Any payments due will reflect in the company’s MOHRE portal at the beginning of each following year. For example, fees incurred during 2023 will be due in January 2024.

• Nafis program. In 2021, the government of the United Arab Emirates first announced the launch of a federal program, Nafis, to support the training and recruitment of Emirati citizens in the private sector due to their relatively high level of unemployment in this sphere. This ongoing Emiratization regulation is one of the key initiatives of the program.
• Nationalization trends. The introduction and update of this program is in line with the regional trend of reserving fixed quotas for local workers in the private sector.

If current patterns continue, the government will consistently monitor the implementation of Emiratization in the private sector of mainland United Arab Emirates to support the vision of the Nafis program.