The UAE has significantly reduced fees for issuing work permits for expatriate employees starting 1 June 2022, to incentivise companies that surpass nationalisation quotas. The nationalisation quota for high-skilled jobs in private sector companies with 50 or more workers was increased to 2% annually, in a decision announced earlier this year.

Government authorities have not specifically identified which “high-skilled” jobs are included in this scheme, but according to Article 3 of Cabinet Resolution No. 18 of 2022, classification of jobs are decided based on skill, educational qualifications, productivity, professional or wage levels, and residency status.

The Ministry of Human Resources and Emiratisation (MoHRE) introduced the fee reduction along with a new classification system for private companies to determine the discounted rates. The system categorises companies into three groups:

Category	Criteria	Fee
First tier	Raising the emiratisation rate 3x over the target 2% or -Cooperation with ‘Nafis’ programme to train at least 500 Emiratis annually or -Being a venture owned by a young Emirati	AED 250 (USD 68) per permit
Second tier	Committing to the law and policy of promoting cultural and demographic diversity	AED 1200 (USD 326) per permit
Third tier	Companies that fail to fulfil the laws and policies that protect workers’ rights and promote cultural and demographic diversity in the labour market	AED 3450 (USD 939) per permit (No discount)

 

*A work permit for a worker hired within the UAE, with a valid residency permit, will cost AED250 for all companies regardless of their standing in the new system.

Companies can be promoted to the first category or drop to lower categories based on compliance with the set criteria. Based on this new classification, companies ranked in the first and second categories will receive discounts on service fees for work permits. Companies in the first tier will be charged no more than AED250 per permit over two years, while companies in the second tier will be charged AED1200 per permit over two years. The fee reductions apply to specific services, including issuing a two-year work permit, a one-mission work permit, and renewing work permits and contracts.

The Ministry stated there are “simplified but smart mechanisms that directly monitor companies’ and establishments’ initiatives" but has not clarified what these monitoring systems look like.

The incentives were introduced alongside steep penalties. Starting from January 2023, non-compliant companies will have to pay AED6,000 (US$ 1,633) monthly, for every Emirati who is not employed below the quota.

The Gulf states have implemented numerous laws and regulations in recent decades to promote the hiring of nationals in the private sector. However, because most of these initiatives fail to address the general wage and labour rights deficiencies in the Gulf’s private sector, they have had little impact. In some cases, these nationalisation policies lead to “ghost” employment that worsen working conditions for migrant employees.