Page 254 - Ministry of Economy - December 2017

12/26/2017 Explained: Changes to the UAE’s worker classification system - Gulf Business

While some procedures already exist and employment visa applications must be supported with relevant proof of
qualifications for most designations, authorities are now working on rewarding employers who recruit highly
skilled professionals. But before we look at the essence of the topic, let us consider some background
information.

The evolution of the company classification system

In 2005, the Ministry of Labour and Social Affairs (now the Ministry of Human Resources and Emiratisation –
MOHRE) introduced a company classification system for the purpose of evaluating employer compliance with
standards and regulations set by the Ministry.

Depending on their commitment to Emiratisation, cultural diversity and records of violations, companies were
grouped into three categories: 1, 2 and 3, with 1 being the highest in the rank and 3 being the lowest category in
the rank.
In general, the higher the category, the greater the incentives offered to the employer by MOHRE. Therefore,
those in category 1 could benefit from lower governmental fees and were given priority in processing their labour-
related applications, whereas companies classified as 2 and 3 had to pay higher recruitment fees and would face
longer turnaround for labour-related applications. Furthermore, financial security, in the form of a bank
guarantee, was compulsory for every employee recruited by a company in category 2 and 3.

Bank guarantees were introduced to the recruitment process in 2001, making it mandatory for employers to
deposit a fixed amount of Dhs3,000 ($817) for each employee under their sponsorship as financial security
against potential violation of worker’s rights. Exemptions from paying bank guarantees at the time applied to
companies operating in specific sectors such as oil and gas, insurance, tourism, those with an industrial license
issued by the Ministry of Finance, and industry (now the Ministry of Economy), and companies in category 1.

A discounted fee of Dhs1,000 ($272) was offered to companies in category 2 with a headcount exceeding 500
workers.

A few years later, in 2010, authorities amended the classification system by adding three sub-categories – A, B
and C – to the second level of classification, which resulted in the employers being identified as 1, 2-A, 2-B, 2-C
or 3. The move was dictated by the fact that the majority of employers would fall into the second level of
classification, and further differentiation was necessary.

At the same time, abiding to a timely payment of salaries and providing labour accommodation to certain
employees became additional key factors in the Ministry’s evaluation process.

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