Emiratisation: How Businesses in the UAE with Teams of 20+ Employees Can Avoid Fines

Heard About Emiratisation but Think It Doesn't Affect You? Or Planning to Start a Business in the UAE and Have No Idea What It’s About? Then This Article Is for You.

In this article, we provide links to laws outlining requirements and penalties, share a case study on an arrest for fake Emiratisation and give tips on finding qualified Emirati employees.

Historically, the UAE relied on expatriates, which has led to foreigners holding 90% of private-sector jobs. To change this, in 2021, the UAE government launched a policy to support local employment. By 2022, Ministerial Decision No. 663 of 2022
Compliance with Emiratisation regulations in the Private sector was published, and a federal NAFIS program for employment of young professionals and experienced Emiratis was initiated.

Emiratis were offered a range of benefits and incentives to support private-sector employment, including government wage subsidies, child allowances, pensions and more. For example, UAE nationals with a bachelor's degree working in the private and banking sectors can receive a salary bonus of up to AED 7,000 under the Emiratisation program.

By 2025, 10% of private-sector jobs in the UAE are expected to be held by Emiratis. As of January 2024, more than 90,000 UAE nationals are employed in the private sector — a 157% increase compared to 2021, when the Emiratisation program was first introduced.

The UAE government incentivizes not only citizens but also employers, including through fines. By the way, in the law, they are referred to as contributions, but in essence, they are fines, so we will use both terms interchangeably.

In February 2022, the UAE Cabinet of Ministers announced that private companies in the country with 50 or more employees must comply with Emiratisation targets. Ministerial Decision: Ministerial Decision No. 279 of 2022 Monitoring Mechanisms of Emiratisation Rates in the Private Sector and Contributions Imposed on Non-compliant Establishments (as amended on 15.12.2022).

Companies with 50+ employees must increase the percentage of Emirati workers by 1% every six months. This means that within a year, the number of Emirati employees in such companies must increase by 2%, and the percentage will continue to grow progressively.

Companies in free zones with 50+ employees were an exception — such obligations were not introduced for them.

In January 2024, the Emiratisation policy was expanded. The Ministry of Human Resources and Emiratisation (MoHRE) began implementing the Ministerial Resolution on Emiratisation for companies employing between 20 and 49 workers — Ministerial Decision No. 455 of 2023 Process for Implementing the Emiratisation Targets for Private Sector Establishments that employ between 20 and 49 employees in selected Economic Activities.

According to the resolution, companies with 20 to 49 employees operating in key economic sectors are now subject to the updated Emiratisation requirements.

MoHRE has identified the following 14 key economic sectors:

• information and communication,
• finance and insurance,
• real estate,
• professional and technical activities,
• administrative and support services,
• education,
• healthcare and social work,
• art and entertainment,
• mining,
• manufacturing industries,
• construction,
• wholesale and retail trade,
• transportation,
• hospitality and hotel industry.

Companies that meet these criteria are required to hire at least one UAE national in 2024 and another one in 2025.

Companies will be allowed to pay these contributions in installments upon agreement with MoHRE.

In addition to financial penalties, companies that do not comply with the Emiratisation program will have the issuance of their work permits suspended until they meet the required targets. Companies that fail to meet Emiratisation requirements for two consecutive years will be downgraded to the third category under the Classification Law.

MoHRE’s legislative acts include the concept of False Emiratisation — an attempt to falsely employ a local worker to avoid fines. This violation falls into two categories:

• obtaining a work permit and registering a local employee in a company for a purpose other than that for which the permit was issued;
• signing employment contracts that include only formal elements but do not regulate fundamental aspects of the employment relationship (such as salary, job type, etc.).

Violations are detected during MoHRE inspections.

Between mid-2022 and March 2024, over 1,200 private companies were fined for engaging in False Emiratisation.

For example, in February 2024, a company executive was fined AED 100,000 for using fake contracts to falsely claim compliance with Emiratisation rules. The hired Emiratis participated in the fraudulent scheme to receive AED 5,000 in monthly government support — the court ordered them to repay the full amount received from the government.

Depending on the severity of the offense, cases may be referred to the Public Prosecution. There have already been arrests. In late 2022, the UAE Public Prosecution issued an arrest warrant for the director of a private company who falsified the employment of UAE nationals. He fraudulently added more than 40 UAE citizens to his company’s staff.

The Emiratization program also includes goals to improve the education level of UAE nationals: professional training and development programs, as well as internship programs. The government is actively investing in the education system and the upskilling of its citizens, leading to an increase in the number of highly educated individuals. Many wealthy nationals also study abroad.

To find qualified UAE nationals, you can use the following approaches and resources:

1. National Employment Platforms: These platforms are aimed at increasing employment among UAE nationals. They provide access to databases of qualified citizens looking for work. For example, Tawteen in the UAE.
2. LinkedIn: A popular social network in the UAE with over 5 million users. You can use filters to search by location and citizenship, targeting candidates who are UAE nationals.
3. Collaboration with UAE Universities: You can contact career centers at universities such as the American University of Sharjah, Zayed University, and others. They can help connect you with graduates looking for employment.
4. Local Job Fairs and Career Events: Participating in these events is a great way to meet potential candidates in person and conduct on-site interviews.
5. Industry and Professional Associations: Joining industry and professional associations, such as the UAE Engineers Association, can help you find specialists in a specific field.
6. Specialized Job Portals: Websites like Bayt.com and GulfTalent allow you to filter resumes to show only those of UAE nationals.