Classification of Private Sector Establishments

Sorts MoHRE-registered establishments into three categories that drive work-permit fees and incentives. Category 1 requires full compliance with labour, permit, contract and wage-protection rules plus a merit criterion such as Emiratisation at three times the target; Category 3 is reserved for establishments that breach the law or ignore workforce-diversity policy.

Official title
Cabinet Resolution No. 18 of 2022 Concerning the Classification of Private Sector Establishments Subject to the Provisions of the Law Regulating Labour Relations
Instrument
Cabinet Resolution No. 18 of 2022
Issued by
UAE Cabinet
Jurisdiction
UAE Federal
Dates
issued 14 March 2022 · in force 1 June 2022
Status
in force
Topics
Employment · Emiratisation
Official source
uaelegislation.gov.ae · official text (PDF)
Verified
29 October 2026

Summary

Cabinet Resolution No. 18 of 2022 sorts every private-sector establishment registered with the Ministry of Human Resources and Emiratisation into one of three categories. Issued on 14 March 2022, it came into force on 1 June 2022 (Article 11), repealed Cabinet Resolution No. 26 of 2010 (Article 10) and is in force. The category matters because the Ministry's work permit and service fees are tiered by it, with first-category establishments paying the least and third-category establishments the most; the fee figures themselves sit in the Ministry's fee resolutions, not in this text.

Article 2 reserves the first category for establishments that comply at a rate of 100% with the Labour Law, its executive regulation and the Ministry's resolutions on work permits, citizens' contracts and the wage protection system, and that also meet one of six merit criteria: raising Emiratisation annually to a rate not less than three times the Cabinet target; cooperating with the Emirati Talent Competitiveness Council (Nafis) to hire and train at least 500 citizens a year; sponsoring young citizens' projects, small and medium enterprises or innovative initiatives; operating as a training or employment centre that supports the workforce planning policy; operating in sectors designated by the Cabinet; or affiliation with the Higher Corporation for Specialized Economic Zones. Article 3 places in the second category establishments that comply with the law and the Ministry's requirements for citizen and non-citizen permits and contracts and that commit to the workforce planning policy by promoting cultural and demographic diversity. Article 4 places in the third category all establishments that are not committed to that policy and any establishment the Ministry has proven to have violated the Labour Law, its regulation or the related ministerial resolutions, as detailed in a ministerial resolution; the text itself does not enumerate the violations.

Article 5 exempts establishments with 50 or more workers from the diversity commitment during a transitional period whose end is set by the Ministry with the Ministry of Finance. Article 6 lets the Ministry move an establishment between categories whenever it meets, or ceases to meet, the criteria. Article 7 starts every new establishment, whatever its size, in the second category provided it follows the diversity policy when issuing work permits, dropping it to the third category if any Article 4 ground applies. Article 8 adds a worker-protection condition: the establishment must pay a bank guarantee of AED 3,000 for each worker or insure each worker under a Ministry-approved mechanism, and establishments the Ministry classifies as high risk must insure every worker. Article 9 leaves implementing resolutions to the Minister. There is no definitions article, no fixed review cycle and no fee table in the resolution.

Who it applies to

Every private-sector establishment subject to Federal Decree-Law No. 33 of 2021 and registered with the Ministry of Human Resources and Emiratisation, on the mainland and in free zones that issue MoHRE permits, from the day it opens its establishment file. DIFC and ADGM employers, government entities and establishments outside MoHRE's permit system are not classified.

Key provisions

Article 1Divides establishments subject to the Labour Law into three categories: first, second and third.
Article 2First category: 100% compliance with the Labour Law, its executive regulation and Ministry resolutions on permits, citizen contracts and the wage protection system, plus one merit criterion such as Emiratisation at not less than three times the target, 500 Nafis hires a year, sponsoring SMEs, running a training centre, operating in a designated sector or affiliation with the specialised economic zones corporation.
Article 3Second category: establishments that meet the law and the Ministry's permit and contract requirements for citizens and non-citizens and commit to the workforce planning policy by promoting cultural and demographic diversity.
Article 4Third category: establishments not committed to the manpower planning policy, and establishments the Ministry has proven to have violated the Labour Law, its regulation or related ministerial resolutions as set out in a ministerial resolution.
Article 5Establishments with 50 or more workers are exempt from the diversity commitment during a transitional period ended by the Ministry with the Ministry of Finance.
Article 6The Ministry may reclassify an establishment up or down whenever it meets or ceases to meet the criteria of a category.
Article 7New establishments of any size start in the second category if they follow the diversity policy when issuing work permits, and fall into the third category where any Article 4 ground applies.
Article 8Each establishment must pay a bank guarantee of AED 3,000 per worker or insure each worker under a Ministry-approved mechanism; establishments classified as high risk must insure every worker.
Articles 10–11Repeals Cabinet Resolution No. 26 of 2010 and brings the resolution into force on 1 June 2022.

Obligations and deadlines

  • Keep work permits, contracts and wage protection filings fully compliant to hold or reach the first category (Article 2).
  • Follow the workforce planning and diversity policy when issuing work permits (Articles 3 and 7).
  • Lodge the AED 3,000 per worker bank guarantee or approved insurance for every worker (Article 8).
  • Avoid any proven labour violation, which moves the establishment to the third category (Article 4).
  • Document Emiratisation, Nafis or other merit criteria if applying for first-category status (Article 2).

Penalties

The resolution imposes no fines. Its sanction is reclassification: a proven violation of the Labour Law, its regulation or the Ministry's resolutions, or failure to commit to the diversity policy, places the establishment in the third category (Article 4), which carries the highest Ministry fee tier for every work permit and service. The underlying violations are fined under the Labour Law and the Ministry's own penalty resolutions.

In practice — how Polaris handles it

Our clients' MoHRE category sets what they pay for every permit we process, so keeping them out of the third category is a practical objective of our PRO and payroll work. New companies start in the second category, and the usual ways to fall are a proven violation, a missed wage protection cycle or ignoring the diversity policy when hiring, so we monitor WPS submissions and permit expiries and clear fines before they are recorded as violations. For clients with 50 or more employees we also track the Emiratisation targets, since a proven failure there is a Ministry violation and a strong Emiratisation record is the most common route into the first category. The AED 3,000 per worker guarantee or insurance under Article 8 is a cost we build into staffing budgets. We explain to clients that the category is not fixed: Article 6 lets the Ministry move them up as readily as down.

Related instruments

UAE Labour Law

FDL 33/2021 · UAE Federal · in force (amended)

The principal private-sector employment law: fixed-term contracts, work permits, probation, working hours, leave, wages, termination, end-of-service gratuity, non-compete…

Labour Law Executive Regulations

CR 1/2022 · UAE Federal · in force

Implements the Labour Law: defines the twelve work-permit types (including freelance, part-time, temporary and juvenile permits), the contract models (full-time, part-tim…

Emiratisation Rates and Contributions (50+ employees)

MR 279/2022 · UAE Federal · in force

Requires MoHRE-registered establishments with 50 or more workers to raise the Emirati share of skilled jobs by 2 percentage points a year, reaching 10% by 2026. Non-compl…

Emiratisation Targets (20–49 employees)

MR 455/2023 · UAE Federal · in force

Extends Emiratisation to establishments with 20 to 49 employees in 14 selected economic activities: at least one Emirati must be employed in 2024 and a second in 2025. Mi…

Nafis Violations and Penalties 2025

CR 43/2025 · UAE Federal · in force

Current penalty regime for Emiratisation abuse: sham Emiratisation and false data carry fines of AED 20,000 to 100,000 per worker or case; circumventing targets costs AED…

WPS Resolution 2026

MR 340/2026 · UAE Federal · in force

The current Wage Protection System rules: wages fall due on the first day of each month and at least 85% of wages due must pass through WPS-authorised channels. Measures …

Unemployment Insurance Law

FDL 13/2022 · UAE Federal · in force

Creates the mandatory Involuntary Loss of Employment (ILOE) scheme for private-sector and federal government workers. Those who lose their job for non-disciplinary reason…

Related Polaris services

Source and verification. This page was written from the official text published at uaelegislation.gov.ae, read on 29 October 2026. Quoted from that text: “New establishments, regardless of the size of the establishment, shall be classified within the second category”
This summary is published for general information by Polaris Corporate Services FZ-LLC, a licensed Trust and Corporate Service Provider. It is not legal advice and does not replace the official text, which prevails in case of difference. Arabic is the authoritative language of UAE federal and emirate legislation; English translations are provided by the issuing authorities. Instruments change: check the status and the official source before relying on this page.

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