The UAE’s Ministry of Human Resources and Emiratisation (MOHRE) has recently announced a new classification system for companies in the UAE, in which they will now be categorised in 3 tiers. This new classification system will be coming into effect from June 1, 2022. 

This classification depends on the extent of companies’ compliance with the new UAE labour laws, in addition to the wage protection system, workers’ rights protection, and promoting cultural diversity. 

The UAE Diversity Rule - 20% Nationality Quota 

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Furthermore, under the system, new work permit fees will be applied depending on the level of skill of the worker, whether they are outside or inside the country, and the category of the company. The fees list has changed significantly, and companies will need to get a good understanding of the changes. 

This article is a guide to the new MOHRE labour classification system and how it affects companies in the UAE.

The New 3-tiered System of Classification

Tier 1

This category classifies companies that are fully committed to the labour law, wage protection system, resolutions that regulate the labour market and workers’ rights protection. 

Companies must also satisfy at least one of the following criteria to reach Tier 1:

• Raise Emiratisation rate at least three times above the target.
• Cooperate with the ‘Nafis’ programme to train at least 500 citizens annually.
• Categorised as a training and employment centre that supports implementing the Workforce Planning Policy.
• Being active in the targeted sectors and activities determined by the Council of Ministers based on the ministry's decision.
• Being a venture owned by a young citizen according to approved standard.

Tier 2

Similarly, to tier 1, classification of companies within this category depends on the extent of their commitment to the labour law, wage protection system, resolutions that regulate the labour market and workers’ rights protection.

This tier is broken down into smaller classification categories of A, B, C, or D. This will be decided according to the ratio of skilled workers and to the extent of that company's commitment to multicultural diversity when issuing work permits. 

If the company does not satisfy this criterion, they will then be classified in tier 3.

Category 2A

A company will be classified as Category 2A if it has 40% or more of skilled workers in its total workforce, and at least a 50% ratio of nationality (multicultural) within the company.

Category 2B

A company will be classified as Category 2B if it has between 10% and 40% of skilled workers in its total workforce, and at least a 50% ratio of nationality (multicultural) within the company.

Category 2C

A company will be classified as Category 2C if it has between 5% and 10% of skilled workers in its total workforce, and at least a 50% ratio of nationality (multicultural) within the company.

Category 2D

A company will be classified as Category 2D if it has less than 5% of skilled workers in its total workforce or has less than 50% ratio of nationality (multicultural) within the company.

Tier 3

A company will be classified as tier 3 if it had been found:

• Violating the UAE Labour Law and executive regulations, the resolutions regulating the labour market, and the standards for protecting labour rights.
• Lacking the commitment to promote cultural and demographic diversity in the UAE labour market.
• Committing other violations stipulated in Ministerial Resolution No. 209 of 2022, such as using or recruiting workers without obtaining work permits, providing incorrect data, documents or information to the Ministry, violating obligations on workers' wages, housing and safety standards, conduced fake Emiratisation practices, or committed other serious violations.

In this tier, companies are likely to be fined and penalised for their violations. However, a company can move up from this tier, into either tier 2 or tier 3, after they have served the period of stay within this category, the violations have been remedied, and the related fines have been paid.

However, in the Cabinet Resolution no. (209) of 2022 ‘Classification of establishments under category (3)’, under Article 2, it does state that the MOHRE can issue a decree to keep a company classified under category 3 for an extended period due to the gravity of the violation committed or its recurrence.

For more information regarding the new classification system employed by the MOHRE labour classification system, please visit: https://www.mohre.gov.ae/en/media-centre/news/1/6/2022/new-classification-of-private-companies-comes-into-force.aspx

New Work Permit Fees

Under the system, new work permit fees will be applied depending on the level of skill of the worker, whether they are outside or inside the country, and the category of the company. The fees list has changed significantly, and companies will need to get a good understanding of the changes.

Example of Fee changes for workers applying outside of the UAE

The fee for issuing a work permit for a worker from outside the country is Dh 200 for the three tiers. For two years, the fee for issuing a work permit is Dh 300 for the companies listed in the first category, regardless of the skill level of the worker.

The fees for the second-tier companies include:

• Category 2A - Dh 500 for skilled workers and Dh 1,200 for semi-skilled workers
• Category 2B - Dh 1000 for skilled workers and Dh 2,200 for semi-skilled workers
• Category 2C - Dh1,500 for skilled workers and Dh 2,700 for semi-skilled workers
• Category 2D - Dh 2000 for skilled workers and Dh 3,200 for semi-skilled workers

The fee for work permit for workers from outside the country for companies classified in tier 3 is Dh 5,000 regardless of the skill level of the worker.

For more information of the new work permit fees, please visit the MOHRE website, or see this article by Gulf News here: https://gulfnews.com/uae/government/uae-work-permit-fees-linked-to-company-classification-1.2134346

How can PRO Partner Group help?

PRO Partner Group have an expert team that can offer detailed advice and assistance in regard to the new classification system for companies in the UAE. We can provide support in ensuring that your company complies with the new system, and any changes that need to be made regarding work visas or employment cards for the category you are classified in. 

If you need guidance on complying with the new company classification system in the UAE, or any other related company setup, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, Oman, Qatar or Saudi Arabia, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120  for Abu Dhabi, email us at info@propartnergroup.com, or complete the contact form below and we will be delighted to assist you.