The Ministry of Human Resources and Emiratisation (MoHRE) has implemented a modern, three-tiered classification system for private sector establishments, replacing all previous models (including the 2010 structure). Effective since June 2022, this system directly ties a company's regulatory compliance, commitment to national talent, and workforce diversity to the cost and ease of accessing MoHRE services.
Governed primarily by Cabinet Resolution No. 18 of 2022, the goal is to enhance market growth, attract high-skilled talent, and enforce strict adherence to the new Federal Decree-Law No. 33 of 2021 (the UAE Labour Law).
🥇 The Three-Tier Classification System
Companies are automatically placed into one of the three categories based on an automated system that monitors real-time compliance data. The category determines the work permit and transfer fees charged by MoHRE.
| Category | Compliance Status | Work Permit Fee (Approx. for 2 Years) | Key Criteria & Benefits |
| Tier 1 (First) | Highest Compliance | $\text{AED }250$ (Max reduction of 80%) | Exceeds Emiratisation targets by 300%; is an innovative SME; cooperates with Nafis by hiring/training $\ge 500$ citizens annually. |
| Tier 2 (Second) | Default/Standard Compliance | $\text{AED }1,200$ (Standard fee) | Complies fully with the Labour Law, WPS, worker protection, and cultural/demographic diversity policy. All new and generally compliant firms fall here. |
| Tier 3 (Third) | Non-Compliant/Violator | $\text{AED }3,450$ (Highest fee) | Violates the Labour Law, cultural diversity policy, or commits serious breaches (e.g., failure to pay WPS, providing false data, human trafficking). |
🎯 Mandatory Compliance for Tier 2 and Tier 1 Status
To avoid being downgraded to the costly Tier 3, all establishments must adhere to the foundational compliance standards:
1. Zero-Tolerance for Law Violation
Companies must be 100% compliant with Federal Decree-Law No. 33 of 2021, its Executive Regulations, and all ministerial decisions. Violations can lead directly to Tier 3 classification.
2. Wage Protection System (WPS)
Full and timely payment of wages through the WPS is mandatory. Any failure to adhere to the WPS regulations is a major factor in being downgraded.
3. Cultural & Demographic Diversity Policy
Companies must adhere to the policy that promotes cultural and demographic diversity in the workforce. This is a core requirement for both Tier 1 and Tier 2 status.
🏆 Achieving Tier 1: The Incentive-Driven Model
Tier 1 is not the default; it must be earned by meeting the fundamental requirements of Tier 2 PLUS fulfilling at least one of the following premium criteria:
Exceeding Emiratisation Targets: Raising the annual Emiratisation rate to at least three times the targeted rate set by the Cabinet (currently $2\%$ increase per year for companies with 50+ employees).
Nafis Cooperation: Actively cooperating with the Nafis program by hiring and training a high volume ($\ge 500$) of Emirati citizens annually.
SME Status: Being categorized as a Small and Medium-sized Enterprise (SME) owned by a young Emirati citizen or being a project of an innovative nature.
Strategic Sector: Belonging to a targeted economic activity or sector determined by the Council of Ministers.
📉 Financial Impact of Classification
The fee difference highlights the financial incentive for compliance. For a work permit issued or renewed for two years, a Tier 1 company pays a minimal amount (up to $\text{AED }250$), while a Tier 3 company pays a fine-level fee (up to $\text{AED }3,450$).
The new classification system has effectively created a performance-based market where excellent corporate behavior is rewarded with significantly lower operational costs and streamlined government services, while non-compliance results in heavy financial penalties.
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