Emiratisation quota and family business law to change UAE workforce
Suzanne Locke 14 December 2022
Two laws come into effect from 1 January which will both make huge differences to the make-up of the UAE workforce and boards.
Emiratisation quota penalties take effect in the private sector (although not in free zones), while a new family business law also comes into effect.
1. Nafis’ Emiratisation private-sector quota
By 1 January 2023, companies with over 50 employees must ensure that two percent of their staff are Emirati.
Any employer that has not reached the quota by 1 January will pay a fine of Dh72,000 – Dh6,000 a month for every month of 2022.
“It is important for companies to be ‘glocal’ – both international and localised,” says Aurora50 co-founder Diana Wilde.
“Companies should invest in the local community and support the development of talent.
“The benefits of developing inclusive organisations – which also provide opportunities for Emiratis – is clear.
“We have 200+ nationalities in the UAE but still need to be connected to the local population to create solutions that resonate with everyone. This should mean companies innovate while leveraging local knowledge – a win- win.”
[AIM is Aurora50’s training accelerator to develop senior managers, while Table Talks helps businesses to take a pulse check of how their employees feel about diversity, equity and inclusion in their organisation.]
The Emiratisation quota differs depending on company size:
- 0-50 skilled employees: one national
- 51 to 100 skilled employees: two nationals
- 101 to 150 skilled employees: three nationals
- 151 skilled employees or more: one national for every 50 employees
It is important for companies to be ‘glocal’ – both international and localised. Companies should invest in the local community and support the development of talent.
Aurora50 co-founder Diana Wilde
There are separate Emiratisation quotas for the banking and insurance sectors, which will remain at four percent and five percent respectively.
The percentage of Emiratis in the private workforce will increase by two percent per year until 2026.
By then, the government expects 10 percent of all staff to be UAE citizens, in line with the Nafis Emirati Talent Competiveness programme to create more than 12,000 job opportunities each year for UAE citizens.
“We’re co-operating closely with the private sector, stemming from our belief in its role as a key partner in developing and shaping the future,” says Saif Al Suwaidi, under-secretary for Emiratisation at the Ministry of Human Resources and Emiratisation.
Family business law
In January a new family business law also comes into effect, to help manage the huge number of family businesses in the UAE.
Around 90 percent of private companies in the UAE are family businesses, compared to 70 percent globally. Sixty percent of the global workforce is employed by a family business.
In the UAE family business conglomerates span logistics, property, retail, tourism, shipping and technology.
Family businesses are increasingly bringing in independent thought with new and more diverse board directors.
Aurora50 co-founder Diana Wilde
The law will “maintain the sustainability of companies for generations to come and will help in the smooth transition of the management of the company from one generation to another”, Abdullah Al Saleh, Undersecretary of the Ministry of Economy said.
The government also hopes the new law will encourage other family businesses worldwide to set up in the UAE.
Family businesses are targeted to double their contribution to gross domestic product (GDP) to $320 billion by 2032 under the Thabat programme.
“Family businesses are increasingly bringing in independent thought with new and more diverse board directors,” says Aurora50’s Ms Wilde.
“As they become an even greater part of the UAE economy and GDP, it is important aspiring women board directors consider joining family business boards.”
[Aurora50 runs two programmes to help women become board directors: Gateway is its online series for aspiring new directors, while Pathway20 is its accelerator to help women take their first independent board role through networking, skill-building and guidance from GCC board members.]
The law will:
- Establish a single register of family businesses in the UAE
- Regulate family business ownership, for instance share disposal
- Remove restrictions on a maximum number of shareholders
- Create Family Business Dispute Resolution Committees in each emirate: disputes are one of the top causes for dissolving family businesses
- Ensure partners receive a share of annual profits
- Create mechanisms to manage the family business by the director or board
- Oversee the business ownership, removing its family business status if it is majority-owned by non-family but allowing it to continue operating if a partner dies or is made bankrupt or insolvent.