Business Setup Consultants
Business Setup Consultants



New Law - Company Category Change and Fees

June 10, 2022

Cabinet Resolution No 18 of 2022 Concerning Classification of the Private Sector Establishments - attached for reference

With the recent changes to the categories of companies and the corresponding fees, this email is to try and explain what this means for us all.
The company categories A,B,C & D we are currently used to are being replaced by a new tier system 1,2,3.
The Ministry of Human Resources and Emiratisation (MoHRE) is streamlining the category system to reflect those companies who comply with the UAE Labour Law rules and those that do not.
Tier 1 - This is those companies who increase their workforce by promoting cultural and demographic diversity in the labour market and that includes co-operating with the Emirati Talent Competitiveness program (Nafis). They will also undertake hiring and training Emiratis of at least 500 a year or your company is one of the targeted economic activities and sectors which is determined by the Council Ministers.
Tier 2 - This is the tier that most of us are hopefully going to fall into. These are the companies who comply with all procedures related to Federal Law No 33 (attached) - all employees have the correct work permits, contracts and every employee is paid through the Wages Protection Scheme. Adhering to the skilled manpower policy by promoting cultural and demographic diversity in the workplace.
Tier 3 - This is a tier that does not comply with the skilled manpower policy which requires promoting the cultural and demographic diversity - if your company only employs one nationality this could see you placed in this tier. If you are not paying all your employees through the Wages Protection Scheme your company could be considered for tier 3.  Companies who are categorised as tier 3 are not following the UAE Labour Law.
All new companies established in the UAE are placed in tier 2 initially and this new company must endeavour to be compliant with UAE regulations so that as time progresses MoHRE keeps the company in Tier 2 or Tier 1.
Transition Period - It is mentioned in Resolution 18 of 2022 concerning the classification of companies that if most companies are complying with the UAE Labour Law and cultural diversity most companies will start in tier 2 until MoHRE review companies compliance. The time frame for the expiration of the transitional period is not determined as yet.
Wages Protection Compliance each month is now 90%. If you are not complying with this percentage in relation to employees salaries detailed in the MoL Employment Contract you will be blocked and placed into Tier 3. As you can see below Tier 3 is the most expensive category to employ.
There are corresponding revised labour card/tasheel fees introduced into the new Tier structure and they are detailed below but as a general observation we all need to review that we are compliant with tier 2 or even 1 for those of you who employ Emirati nationals. 
Please note this is just the new revised Labour card fees which relate to your new Tier category - some of you will benefit from the Tier change and see cheaper fees some of us will see more fees than we are used to.
Remember MoHRE can change your Tier at any time so good administration and compliance with the Law is essential to keeping in the top 2 tiers.