Latest employment regulatory developments in the UAE

In this update, we look at the latest developments in the UAE within the employment space, including the introduction of new regulations on Emiratisation, an extension for unemployment insurance subscription and further detail on distribution of employee dues on death.

1. Unemployment Insurance scheme

The deadline to register with the unemployment insurance scheme has been extended to end of September 2023, therefore any employee registered under the Ministry of Human Resources and Emiratisation (MHRE) should be registered by 1 October 2023 otherwise fines from MOHRE of up to AED 400 for non-registration would apply.

By way of reminder the main categories for subscription and compensation are:

1. Category 1: Basic salary up to AED16,000, the subscription premium will cost AED 5 per month (AED 60 per annum). The monthly compensation will not exceed AED10,000. 
2. Category 2: Basic salary above AED16,000, the subscription premium will cost AED 10 per month (AED 120 per annum). The monthly compensation will not exceed AED20,000.

Our preferred way of subscription is through the ILOE website.

2. New sectors impacted by the new Emiratisation rules

The MHRE has reported that about 79,000 UAE nationals are now working in the private sector, the highest rate of Emiratisation recorded to date and a 57% increase on end of 2022. In view of continuing an increase in the Emiratisation rate, the MHRE announced on 11 July 2023 further changes to the Emiratisation requirements. It was announced that private sector establishments with 20-49 employees, across 14 key economic sectors, will be subject to Emiratisation targets from 2024. This broadens the scope of Emiratisation regulations immensely.

The targeted establishments under the new rules will be required to hire at least one UAE National in 2024 and another one in 2025. Non-compliant establishments in 2024 will be subject to fines. The fines for non-compliance are AED 96,000 for 2024 (imposed in January 2025) if no UAE national is appointed in 2024 and AED 108,000 (imposed in January 2026) if the required number of UAE nationals is not appointed in 2025.

The targeted sectors include, amongst others, Financial and Insurance Activities, Real Estate Activities and Education.

3. New fines for Emiratisation

The government of the UAE has introduced new administrative fines for violation of regulations related to Emiratization, these fines include:

1. AED20,000 to AED100,000per employee for False Emiratization, or if an employer has filed invalid documents or information to receive salary support from the government, or to evade or circumvent Emiratization regulations.
2. AED20,000 if a company did not take any action when an Emirati employee has failed to report to work despite being issued a work authorization and after the employer has received salary support from the government, or if the employee does not report to work regularly (as per the employment contract) or has abandoned work without the employer officially reporting this.

4. Training for UAE nationals

The MHRE has issued a Ministerial Decision no. 240 of 2023 on the creation of an employment contract of a studying citizen. Another initiative from the MHRE to encourage and promote the participation of UAE nationals in the private sector. This allows Emirati students to receive a paid training with an employer while they are completing their studies.

The aim of this training program is to train the Emirati students for their future job and secure employment with a private sector company upon their graduation. There is a minimum salary requirement of AED4,000 that must be paid for the Emirati students during the training period.

This initiative would also be beneficial for employers as these Emirati students would count toward their Emiratisation quota and at the same time employers will have the chance to train these future employees as the business requires so they are ready to take on the job on their graduation.

The MHRE has even made it easier for companies to enter into these training contracts by providing a template training contract attached to the Ministerial Decision.

5. Preserving dues in the event of an employee’s death

The MHRE has now issued a Ministerial Decision no. 496 of 2023 providing more clarity about the mechanism of preserving an employee’s entitlements in the event of death. Whilst the Federal Law no 33. 2021, as amended (the Labour Law) includes general obligations for an employer to make any payments due to the deceased family, it was ever clear what steps should an employer take in order to ensure that they have complied with such obligation. 

This Decision supplements the provision of the Labour Law and provides more clarity on the steps for an employer to follow when faced with similar situation. 

• The employer will be able to cancel the work permit of a deceased employee through the MHRE channels.
• The employer has an obligation to make the payments of a deceased employee’s entitlements to concerned person from their family and within 10 days from the date of death of the employee or from the date when the employer become aware of such death.
• There is an obligation on the employee to specify their beneficiary in case of death, it is therefore important for employers to ensure that this information is recorded at the beginning of an employee’s employment.
• In the event the employer is not able to hand over the entitlements to the deceased family member, they are able to deposit the amount to the court’s treasury.

Failure to comply with such obligation could lead to the MHRE suspending a company’s file administratively which means that a company may not be able to renew work permits, or make new application etc.