What happens if firms don’t pay penalties for not meeting Emiratisation target in UAE?

What happens if firms don’t pay penalties for not meeting Emiratisation target in UAE?

The ministry imposed “financial contributions” of Dh72,000 on companies for each Emirati not appointed during 2022, it said in a statement on Saturday. The MoHRE had earlier said that non-compliant institutions would need to pay the penalty in a single installment.

A ministerial resolution issued by the MoHRE* details the actions the authority would take if the establishment fails to pay the fines:

  • On the due date: The establishment shall be placed under e-follow-up to ensure its compliance with the payment of assessed contributions.
  • The day following the due date: MoHRE may suspend the issuance and renewal of work permits for the establishment, and the employer will be advised about the reason for the same.
  • The third, 10th, and 17th day after due date: MoHRE shall send notices and reminders to the non-compliant establishment, prompting it to recruit citizens and pay the assessed contributions.
  • Two months after the due date: The MoHRE shall suspend issuing and renewing work permits for all sole establishments or companies owned exclusively by the owner of the violating establishment, taking into consideration the unity of partners.
  • If the establishment fails to abide by the required Emiratisation rates for two consecutive years: The establishment shall be reclassified and downgraded to Category (3) according to the applicable criteria of classification approved by the Ministry.

(*Source: Ministerial resolution no. 279 of 2022: Monitoring mechanisms of Emiratisation rates in the private sector and contributions imposed on non-compliant establishments)

How Emiratisation rates are calculated

Saif Al Suwaidi, undersecretary for Emiratisation Affairs at MoHRE, said establishments must now work to raise their Emiratisation rate by 4 per cent by the end of 2023, to avoid fines by the beginning of 2024. The value of the monthly fines will increase progressively at a rate of Dh1,000 annually until 2026.

The aim is to increase the Emiratisation rate to 10 per cent by the end of 2026.

According to the resolution, the Emiratisation percentage shall be calculated based on the total number of UAE nationals working in the establishment against the total number of skilled workers.

Calculations are based on the following requirements:

  • The UAE national must possess a valid work permit.
  • Emiratis’ wages shall be paid through the Wages Protection System or any other system approved by the competent authorities in the country.
  • The employee must be registered with one of the approved pension funds in the country.
  • The relationship between the UAE national and the establishment shall be a contractual one, in line with all the terms and conditions of Labour Relations Regulation Law.

News Source: Khaleej Times

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