Emiratization requirements expanded to small businesses

IMPACT — MEDIUM

The Emirati government has announced that it will expand its Emiratization requirements to small businesses in 2024.

Key Points:

• Beginning Jan. 1, 2024, businesses in certain industries with 20 to 49 employees must meet the semiannual Emiratization requirement to avoid penalties. Industries impacted by the requirement include:
  • Administrative and support services.
  • Arts and entertainment.
  • Construction.
  • Education.
  • Financial and insurance activities.
  • Formation and communications.
  • Healthcare and social work.
  • Hospitality and residency services.
  • Mining and quarrying.
  • Professional and technical activities.
  • Real estate.
  • Transformative industries.
  • Transportation and warehousing.
  • Wholesale and retail.
• Companies with 20 to 49 employees who fail to employ at least one Emirati in 2024 will face a fine of 96,000 AED (about US$26,000). The fine will increase to 108,000 AED for businesses that do not hire at least two Emiratis in 2025.
• Further violations include reducing the number of employees or modifying their classification or any other method to circumvent the Emiratization targets.

Background: Previously, Emiratization targets only required employers with 50 employees or more to increase the number of its Emirati employees in skilled positions by 1% every six months, ultimately achieving a 2% Emiratization by the end of each year. Employers are expected to achieve a 10% Emiratization rate by the end of 2026.

BAL Analysis: The Emirati government announced the Emiratization program expansion to increase the number of Emirati nationals employed in the private sector. Employers should plan ahead to ensure they meet the new employment requirements to avoid applicable fines.

This alert has been provided by the BAL Global Practice Group. For additional information, please contact berryapplemanleiden@bal.com.

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