May 26th, 2022
Credit: HiDubai UAE announces new classification system for companies starting 1st June
The Minister highlighted that the new classification of companies, which will come into effect on 1st June, 2022, and its relevant resolutions meet business owners' demands and protect workers' rights while encouraging innovation and promoting the SME sector.
Dr. Al Awar provided details about the new classification system, which falls under Cabinet Resolution No. 18 of 2022, and relevant ministerial resolutions at a media briefing today at the MoHRE headquarters in Dubai.
He explained that the general policy for developing the labour market is inspired by the 'Principles of the 50', which targets "building the world's best and most dynamic economy".
In this context, Dr. Al Awar underlined MoHRE's comprehensive outlook on the business sector, based on 4 pillars:
- Supporting and empowering national talent and competencies
- Maintaining the labour market's attractiveness for global talents and highly qualified people
- Protecting workers and employees, and providing maximum guarantees for their rights
- Enabling and promoting companies' capabilities to achieve sustainable growth
Dr. Al Awar explained that the new classification of companies splits existing companies into three distinct categories. The classification criteria meet the clients' demands for simplifying transactions, with top-level governance supported by smart solutions provided by MoHRE's digital ecosystem. The companies will be categorized using an interactive automated system that facilitates changing a company's classification transparently, based on the procedures carried out by each company or the transactions undertaken.
The minister noted that the classification provides incentives and exemptions for companies under the national economic priorities and Emiratisation programmes while boosting the priority sectors. It also considers the value system on which any prosperous global economy must be based, namely equality and justice in employment opportunities, alongside promoting tolerance and inclusiveness, without inhibiting employers' freedom to choose the talents and competencies they wish to recruit. Finally, the classification sets new fees for services in a manner that is practically tied to the choices employers will make.
Dr. Al Awar stated that the classification of new companies.
Most existing companies in the country that fulfil all these 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, he said.
Dr. Al Awar discussed how companies can be promoted to thefirst category, once they meet at least one standard. These include:
- Raising their Emiratisation rate at least three times above the target
- Cooperating with the "Nafis" programme to train at least 500 citizens annually
- Being a venture owned by a young citizen according to approved standards in this regard
- Being one of the training and employment centres that support implementing the Workforce Planning Policy by promoting cultural diversity
- Or being active in the targeted sectors and activities determined by the Council of Ministers based on the recommendation submitted by the MoHRE
Companies that do not meet any of these criteria, while committing to the law and the policy of promoting cultural and demographic diversity will be automatically classified in the second category.
The third category will encompass all other companies found by the ministry to be in violation of Federal Law No. 33 of 2021 regarding the organisation of labour relations and its executive regulations, and the resolutions regulating the labour market, or standards for protecting labour rights, or lack of commitment to promoting cultural and demographic diversity in the labour market.
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 classification will be accompanied by updates on service fees for work permits and transfer fees in line with the classifications of companies.
Dr. Al Awar explained that the new classification achieves a number of vital goals that serve the national economy in conjunction with all other pillars of the legislative system. The new categories will enhance economic diversity and support the development of employment mechanisms to create fair and equal opportunities in the private sector to enhance the values of tolerance and cultural and demographic diversity.
This step is in response to the country’s vision for the next 50 years, and it enhances its position as a global hub for talent, companies and investments. It also supports the goal of developing a knowledge economy based on experience exchange, capacity building, and launching new sectors that align with the future economy and help boost socio-economic development.
Through the decision, MoHRE seeks to enhance integration with the local and federal government entities to support policies that boost the labour market’s efficiency and stability. This is the key factor on which company classification criteria and their promotion or demotion have been based.
The ministry will provide a clear roadmap for companies operating in the country to upgrade their classification and increase the predictability of investors. It will also work through on its partnership with the private sector to support companies that have 50 or more workers in their transformation journey, under the new decision on cultural and demographic diversity, within the framework of a transitional period that can be used to conduct developmental operations.
The legislative system related to the labour market and Emiratisation in the UAE has witnessed the adoption of several decisions that help business development and support the Emiratisation of national capacities and the protection of workers and employees, through the new federal law on unemployment insurance, in addition to the decision to raise the current Emiratisation rates by two percent annually for skilled jobs in private sector companies that have 50 or more employees, and an overall increase rate of 10 percent by 2026.
The decision to raise annual Emiratisation levels in private sector companies is accompanied by unprecedented advantages, including reducing the fees of MoHRE by up to 80 percent for private sector companies for achievements in hiring and training citizens in partnership with the Nafis programme. In addition, the unemployment insurance system provided through insurance packages will offer a unique model for protection umbrellas through insurance companies’ products that ensure the availability of income for workers during their unemployment until alternative job opportunities are available.
In the medium and long terms, the ministry’s decisions will support strategic economic security. They also enhances the economy’s ability to attract global competencies and skills and launch new economic sectors that contribute to diversifying sources of income while providing worker protection and establishing the foundations of a flexible business environment that align with global changes and transformations, leading toward a sustainable and diversified economy.
News Source: Emirates News Agency
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Benjamin F. Jones