Legal Update - CLASSIFICATION OF PRIVATE SECTOR ESTABLISHMENTS

CLASSIFICATION OF PRIVATE SECTOR ESTABLISHMENTS, CATEGORIES, SERVICE FEES, STRUCTURE TO ISSUE WORK PERMITS


Starting 1st June 2022, the UAE’s Ministry of Human Resources and Emiratisation (MoHRE) will implement a new classification system for private sector companies based on their compliance with directives. The new classification of companies splits existing companies across one of three distinct categories.


CLASSIFICATION OF PRIVATE SECTOR ESTABLISHMENTS (Cabinet resolution # 18 of 2022)

The classification of new companies “depends on the extent of their commitment to the law and wage protection system, workers’ rights protection, and their compliance with the policy of promoting cultural and demographic diversity, along with the resolutions that regulate the labour market”.

For Tier 1 companies, fees will not exceed Dhs250 for two years, while Tier 2 companies will be charged AED 1,200 for two years. Tier 3 companies will not be able to benefit from any fee rebates, and the fees for issuing or renewing work permits will amount to Dhs3,450 for two years. Activities involving the employment of UAE and Gulf Cooperation Council citizens are exempt from these fees.


According to the provisions Establishments are classified into three categories:

1. Category (1)

2. Category (2)

3. Category (3)


Category (1)

is subject to compliance with all procedures related to Federal Decree-Law No. 33 of 2021 and its executive regulations and all decisions issued by MoHRE regarding work permits, employment contracts for nationals and expatriates, Wage Protection System, at a rate of 100%, in addition to achieving one of the following criteria:

  1. Increasing the annual Emiratisation rate in the establishment

  2. Cooperating with the Emirati Talent Competitiveness program (Nafis) in hiring and training Emiratis of at least 500 citizens each year

  3. Classified under Small and medium-sized enterprise (SME) at the local or federal level or projects of an innovative nature.

  4. Training and employment centers

  5. One of the targeted economic activities and sectors determined by the Council of Ministers based on the proposal of the MoHRE

  6. One of ZONE CORP establishments.

Category (2)

Most of the existing companies in the country that fulfil their commitments will be in the second category. Some companies will be promoted to the first category, and these companies will enjoy significant exemptions from fees based on their fulfilling various criteria. Meanwhile, the classification of other companies will drop to the third category in case of non-compliance with the policies, laws and resolutions regulating the labour market

Establishments under Category (2), comply with all procedures related to the Federal Decree-Law No. 33 of 2021 and its executive regulations and all decisions issued by the MoHRE concerning work permits, employment contracts for nationals and expatriates and the Wage Protection System. All new establishments, regardless of their size, shall be classified under category (2),


Category (3)

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.


The Transition Period

establishments with 50 or more workers are classified under Category (2) in the transitional period. The Ministry may, in coordination with the Ministry of Finance, determine the time frame for the expiration of the transitional period.

MoHRE may move establishments from one category to another and from one level to another, as long as they satisfy the requirements of the category or level.


Incentives

The incentives include reducing the service fees of the Ministry by 80 per cent for private sector establishments, which accomplish major achievements in terms of recruitment and training of Emiratis.

The Cabinet approved increasing the Emiratisation rate to 2 per cent annually from high-skilled jobs in establishments that employ 50 workers or more. The step aims at creating more than 12,000 job opportunities annually for UAE citizens. Non-compliant companies will have to pay Dhs6,000 monthly, starting from January 2023, for every citizen who has not been employed.


Protection of Worker’s Rights

Establishments are obligated to pay a bank guarantee of AED 3000 for each worker to ensure each worker, in accordance with the schemes approved by the Ministry.


Establishments that are classified by the Ministry of Human Resources and Emiratisation as high-risk are obligated to ensure all workers are in accordance with the schemes approved by the Ministry.


CLASSIFICATION OF ESTABLISHMENTS UNDER CATEGORY 3 CABINET RESOLUTION NO. (209) OF 2022


The Undersecretary for Human Resources shall issue procedures manual for implementing the provisions of this resolution.

if the establishment classified under Category (3) commits one or more violations listed in the violations table.

The establishment will be reclassified into its deserved Category according to the classification criteria approved by the Ministry, only after the expiry of the period of “stay in category (3)” and once the violations are remedied and the fines are settled.

The Minister may issue a decree to keep a violating establishment under category (3) for an extended period of time according to the gravity of the violation committed or its recurrence.


SERVICE FEES, STRUCTURE TO ISSUE WORK PERMITS AND ADMINISTRATIVE FINES IN THE MINISTRY OF HUMAN RESOURCES AND EMIRATISATION TO ISSUE WORK PERMITS CABINET RESOLUTION NO.(37) OF 2022


MoHRE has announced new service fees for renewing, issuing work permits, amending contracts, and transferring workers.

It is worth noting that the charges for the juvenile work permit and freelancers with a valid permit for two years have also been revised.

MoHRE will introduce revised costs for renewing or amending work licenses and contracts, as well as transferring employees from one company to another sooner.

- The following fees for services provided by the Ministry contained in the schedules attached hereto pursuant to this decision will be adopted:

  1. Work permits from outside the country

  2. Work permits renewal, modifying employment contracts, and employees transferring from one establishment to another

  3. Recruitment and mediation activity



Schedules Annexed to Cabinet Resolution No. 37 of 2022

Regarding the Amendment of Some Provisions of Cabinet Resolution No. 21 of 2020 Concerning Service Fees & Administrative Fines in the Ministry of Human Resources & Emiratisation



*For holders of valid work permits issued by the Ministry.






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