The UAE Ministry of Labour has clarified that new labour law amendments due to be implemented in July this year are aimed at easier categorisation of companies operating in the country.

The new amendments, one of which states degree-holders must be paid a minimum of Dh12,000 per month, however, come as requirements if the company aims to be included under Category I.

A top official at the Ministry of Labour told this website that companies will be classified into three categories [I, II and III], according to skill levels of employees and Emiratisation ratio.

For enterprises to be included under Category I, 20 per cent or more of their total staff must fall under skill levels 1 (degree-holders), 2 (diploma holders) and 3 (unskilled workers).

The salary of employees (both citizens and expatriates) under skill level 1 [holders of Bachelor’s degree or higher] should not be less than Dh12,000, according to the new Labour Ministry resolution.

Salary for diploma holders should not be less than Dh7,000 and for those who fall under skill level 3 should be paid a minimum of Dh5,000 per month.

Minister of Labour Saqr Ghobash said that all establishments should aim to become Category I firms.

Proportion of Emiratis included across the three skill levels should not be less than 15 per cent of total staff strength. It is mandatory for national employees to be registered with one of the public bodies or government funds such as a pension and social security scheme, and avail retirement benefits at the UAE level or at the individual emirate level.

Private sector establishments that make it to the top category can avail several benefits including a waiver in visa deposit fees and bank guarantees, among others. However, if they fail to adhere to the rules, companies will be demoted to the lower categories, said a ministry official.

Category I private sector companies, which do not meet the abovementioned  guidelines will be demoted to Category II.

According to Council of Ministers' Decision No 26 of 2010, companies included under Category I will be exempted from paying guarantees on deposits. According to Article V of the Ministerial Resolution, companies listed under Categories II and III must pay bank guarantees.

Category II firms will be further sub-divided into three levels – A, B and C. Firms listed under Category II (A) will be obliged to pay Dh3,000 bank guarantee for each worker, with a maximum of Dh1.5million.

Facilities under Category II (B) will pay a bank guarantee of Dh3,000 for each worker but with a maximum of Dh3m. And companies classified in the Category II (C) will pay bank guarantee of Dh3,000 for each worker with a maximum of Dh5m.

Similarly, establishments under Category III are entitled to pay a bank guarantee of Dh3,000 for each worker with a maximum of Dh10m.

However, the ministry has exempted industrial projects licensed by the Ministry of Economy, as well as companies and institutions under Federal or local government from paying bank guarantees.

Non-profit organisations, cooperative associations, national associations under the supervision of the Ministry of Social Affairs are also exempted from bank guarantee payments.

Similarly, projects approved by the Ministry of Finance need not pay bank guarantee.

No ‘fictitious Emiratisation’

Minister of Labour Saqr Ghobash said once the new categorisation comes in place, it will give establishments an opportunity to enhance their workplace functions and take advantage of the various benefits that await them.

The recommended classification structure has taken into account the current market condition, Emiratisation requirement, salaries and other expenses such as housing etc. whereas the ministry was earlier focusing only on the workplace aspect.

Such requirements are bound to open up more jobs for nationals and will do away with “fictitious Emiratisation”, Ghobash added.

Category I should be the aim of all establishments, he said.

Once categorised, no going back

Meanwhile, Humaid bin Dimas, Assistant Undersecretary of the Ministry of Labour, was quoted by Al Khaleej newspaper as saying in one of the weekly labour meetings that once the establishments are upgraded to Category I, they cannot reduce salaries of employees. If any such incident comes to light, the company will be downgraded.

Bin Dimas also urged companies to adopt WPS [wages protection system] and transfer salaries to banks. The new amendments also include a two-year validity of labour cards and reduced fee for labour transfer, he added.