AED 400 Million Fines for Companies Failing Emiratisation Targets

In 2022, UAE’s Ministry of Human Resources and Emiratisation (MoHre) announced that companies with more than 50 employees need to meet the Emiratisation targets of 2% of their total workforce.

In 2023, MoHRE announced that AED 400 million was fined to the companies that failed to meet the criteria. Furthermore, the ministry has literally doubled down on the targets, calling for hiring 4% Emiratis in 2023.

In line with the UAE Cabinet Resolution to raise Emiratisation rates, #MoHRE started applying financial contributions to private sector companies for failing to achieve the 2% Emiratisation targets stipulated for 2022, to reach 10% by the end of 2026. pic.twitter.com/WgmONVz7Hx

— وزارة الموارد البشرية والتوطين (@MOHRE_UAE) January 6, 2023

Why is Emiratisation quota important?

Emiratisation is a government-led initiative in the United Arab Emirates (UAE) that aims to increase the number of UAE nationals in the workforce. One of the main ways that emiratisation is being achieved is through the implementation of quotas for UAE nationals in the private sector. These quotas require companies to hire 2% national of their total workforce incrementally from 2023, which means it’s 4% this year.

Fines and penalties for not meeting Emiratisation targets

• The Emiratisation target for companies is to increase their Emirati workforce by 10% of their total workforce. This target is to be achieved by the year 2026 (2% incrementally each year).
• Companies that do not meet these quotas have faced and will face significant fines.
• The fines are based on the number of UAE nationals that a company is short of the required quota.
• For 2023, the quota is doubled from to 2% to 4%.
• The annual fine per Emirati not hired is increased from AED 72,000 to AED 84,000.
• Starting 2023, MoHRE will monitor the emiratisation targets on a monthly basis. Therefore, companies will have to maintain their quota percentage throughout the year.
• Fines for not meeting these quotas can be significant and increase in severity if a company is found to be consistently not meeting their quotas.
• The fines are not the only penalty. Companies may also face administrative penalties like suspension of their commercial registration or revocation of their license.
• Companies that fail to meet quotas for 2 consecutive years will be demoted to third category in Classification Law.
• Furthermore, companies that fail to meet their emiratisation targets will not be eligible for government tenders or contracts.

Overall, Emiratisation is a key initiative for the UAE government to support its citizens and diversify its economy. Still, it’s important for companies to comply with the quotas and regulations set by the government to avoid penalties.

What does this mean for employers in the MENA region?

Employers in the MENA region are facing increasing pressure to hire more locals in order to meet their quotas and avoid penalties. Hiring needs for UAE nationals vary depending on the sector. Some sectors like oil and gas, finance and banking are more attractive to UAE citizens than construction, retail and hospitality. Hence, the government is actively working on developing the education and training programs to prepare UAE citizens to work in different sectors.

It is important for companies to understand their hiring needs and develop strategies to attract and retain UAE nationals. Moreover, it’s essential to meet their quotas and comply with the regulations set by the MoHRE.