Recruitment and HR offices, workplaces and social media in the UAE are abuzz with discussions about 'demographic diversity' as some companies were unable to procure work visas for new employees.

As Khaleej Times reported last week, when companies with an overwhelming number of employees from a particular nationality apply for new visas for people of the same nationality, a message from the authorities pops up, asking them to “achieve demographic diversity while hiring”.

So, what is this requirement? We spoke to three legal experts to understand what the requirement is and when it was implemented.

The requirement is part of what is known as ‘Workforce Planning Policy’ formulated by the Ministry of Human Resources and Emiratisation (MoHRE). Its aim is to "develop the market’s business environment without violating the employers’ freedom to choose the talents and competencies they wish to employ while setting new fees for services that are essentially linked to the choices made by the employers".

Through the policy of cultural and demographic diversity, the ministry aims to translate the social and cultural diversity of the UAE and make it an integral part of the core values of the companies in the private sector. This will be done by diversifying the cultural backgrounds of their employees and offering equal employment opportunities while empowering UAE citizens as per the applicable percentages of Emiratisation.

Classification system

Legal experts the Khaleej Times spoke to said they were aware of some work permit applications being denied where the company is not deemed to be sufficiently diverse.

Joanna Matthews-Taylor, partner and head of the employment practice in the UAE, and Sami Nasr, a paralegal, at Baker McKenzie, said there are laws to promote the principle of workforce diversity, including Cabinet Decision No. 18/2022 on the classification of private sector establishments. The law classifies companies into three key categories: first, second and third depending on a number of different factors, including Emiratisation, general labour law compliance and promotion of workforce diversity.

Being classified in a higher category has certain benefits, including payment of lower fees, compared to falling into the third category. The third category is typically reserved for companies with low levels of compliance.

For example, companies fall into the third category if they are not compliant with the UAE Labour Law, its executive regulations or supplementary resolutions and decisions; do not promote demographic and cultural diversity; or commit certain violations, such as faking Emiratisation quotas or recruiting employee without the correct work permits in place.

Abdulla Ziad Galadari, a senior partner at Galadari Advocates & Legal Consultants, told the Khaleej Times that all establishments violating the skilled manpower policy which requires promoting cultural and demographic diversity in the labour market will fall under Category 3.

“MoHRE may move establishments from one category to another and from one level to another (up and down) as long as they satisfy the requirements of the category or level they are moved to, set forth in the Cabinet resolution,” he said.

Baker McKenzie official said that the official policy and communication from the authorities is that companies must ensure that no single nationality exceeds 20 per cent of the total workforce. The calculation would be the “number of particular nationalities/total workforce.”

Penalties for violating demographic diversity

Joanna and Sami Nasr said failure to meet the requirements for the promotion of cultural and demographic diversity will result in the company being reclassified under the third category.

This will mean the company will have to pay higher work permit fees of Dh5,000 per employee regardless of skill level for employees being hired from outside the country, renewals of work permits will be Dh2,500 per employee as compared to establishments classified at higher levels.

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