New UAE classification system for private companies: how it works

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New UAE classification system for private companies: how it works

  The UAE has recently implemented a new classification system for companies in the private sector. The new system took effect beginning June 1. The new system classifies companies into three categories. The classification depends on the companies’ compliance with the law and the Wage Protection System, workers’ rights protection and their compliance with the policy of promoting cultural and demographic diversity.

First category

Companies in the first category need to meet at least one criterion in the new system. The criteria include raising the company’s Emiratisation rate at least three times above the target, cooperation with Nafis programme (federal programme to increase the competitiveness of Emirati human resources and empower them to occupy jobs in the private sector) to train at least 500 Emiratis annually or being a venture owned by a young citizen according to approved standards in this regards. Other criteria are being one of the training and employment centres that support implementing the workforce planning policy by promoting cultural diversity in the UAE or being active in the targeted sectors and activities determined by the cabinet. According to the ministry, the Emiratisation rate is two percent annually from high-skilled jobs in establishments that employ 50 workers or more, until achieving the 10 percent target by 2026.

Second category

Companies that do not meet any of the aforementioned criteria, while committing to the law and the policy of promoting cultural and demographic diversity in the UAE, will be automatically classified in the second category.

Third category

Companies that show a lack of commitment to protecting workers’ rights or not promoting cultural and demographic diversity in the UAE labour market will be in category three. Companies may also be classified in Tier 3 if they commit other violations stipulated in Ministerial Resolution No. 209 of 2022, including the issuance of a final ruling that the facility committed a crime of human trafficking; used or recruited workers without obtaining work permits; provided incorrect data, documents or information to the ministry; violated obligations on workers’ wages, housing and safety standards; resorted to fake Emiratisation practices; or committed other serious violations.

Fees

The classification will be accompanied by updates on service fees for work permits and transfer fees in line with the classifications of companies. Fees will not exceed Dh250 for Category 1 companies for two years, while Category 2 companies will be charged Dh1,200 for two years. Category companies will not be able to benefit from any fee rebates, and the fees for issuing or renewing work permits will amount to Dg3,450 for two years. Activities involving the employment of UAE and Gulf Cooperation Council citizens are exempt from these fees.

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