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UAE Private Sector Update: Introduction of a New Company Classification Scheme

November 8, 2022

Previously categorised as A, B & C, the new classification guidelines implement a new tier-based system judged on the basis of compliance with legislative directives set by the UAE’s Ministry of Human Resources and Emiratisation (MoHRE).

Category 1 (Highly Compliant)
Companies that are are fully committed to the various labour laws and demonstrate excellent compliance and inclusion. Whilst doing this, they meet at least one of the below:
-Raising their Emiratisation rate well above the set target
-Abiding by the ‘Nafis’ or Emiratisation programme to train at least 500 citizens annually
-Being a venture owned by a young citizen according to approved standards
-Being a training and employment centres that support implementing the Workforce Planning Policy by promoting cultural diversity in the UAE

Category 2 (Compliant)
Establishments that commit to general mandates and regulations set by the Federal Law No 33. It is the category every company falls into in the beginning by default.
-All employees have the correct work permits and contracts
-Every employee is paid through the Wages Protection Scheme
-Adherence to the skilled manpower policy by promoting cultural and demographic diversity in the workplace

Category 3 (Non-compliant)
If a company is seen favouring a particular nationality for employment, not paying all employees through the Wages Protection Scheme and not cooperating with Nafis, it falls into the third category.

Work Permit Fee
An employer in the first category is charged a fee of AED 150 for the issuance or renewal of a labour permit AED 250 to AED 1,000 for second-category companies Fee increases to AED 2,500 for the third-category companies

Other Penalties
From January 2023, non-compliant companies will be fined AED 6,000 per month in respect of each Emirati employee not hired, with fines increasing on a monthly basis
-MOHRE may suspend the issuance and renewal of work permits for employers who do not pay prescribed fines
-Non-payment of the penalty for two months after the due date would result in suspension of the labour file

CBD have a dedicated labour and compliance team to help keep your company in check with the latest regulations. To know more about your category status, email enquiries@cbdcorporateservices.com or reach us on +971 4 551 0677

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