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Companies with Fake Employment will be Sanctioned

The Ministry of Human Resources and Emiratisation: Companies with Fake Employment will be Sanctioned

 

The Ministry of Human Resources and Emiratization (“Ministry”) issued Resolution No. 318 of 2024 (“Resolution”) on mechanisms for dealing with companies which have no real employment relationship with the workers registered on them and do not actually practice their licensed activity.

The Ministry, to apply a monitoring process for giving effect to this Resolution, will use its own inspection system and will take a set of administrative measures against those violating companies until the status of the violating workers are settled and corrected.

According to the Resolution, the Ministry identified several administrative measures to deal with those violations, such as freezing the work permits issued to the violating company, imposing the administrative fines prescribed in Cabinet Resolution No. 21 of 2020, and reclassifying the facility as a third category company.

Also, the Ministry shall stop its services which it offers to the violating companies , except for services of cancelling a work permit or registering an absconding report if the absence is proven as per the Ministry’s policies. The Ministry will also suspend services of the registration of a new facility to the owners of violating establishments, and suspend all services to sole establishments exclusively owned by owner of the violating companies, while considering the unity of the partners, except for the services of cancellation of a work permit or filing an absconding report.

The Resolution pointed out that if there are UAE citizens registered in these facilities for fake Emiratization process, administrative and penal measures will be taken against those companies, in accordance with the provisions of Federal Decree Law No. 33 of 2021 and its executive regulations and decisions issued for implementing it.

Further, the Resolution clarified that administrative decision to take an action against any violating company will be taken by the Undersecretary for Human Resources Affairs .

The Ministry shall circulate and file report of those violating companies and their owners as well as actions the Ministry takes in this respect, to the relevant authorities including the Ministry of Economy, the Federal Authority for Identity and Citizenship, Customs and Ports Security, Departments of Economic Development, Municipalities, Chambers of Commerce and Industry in the relevant emirate so that these authorities will implement in return legal procedures and restrictions on those violating companies and their owners.

This Resolution will come into effect from the date of its issuance.


The author of this alert is Rashed Al Sumaity.

Rashid has full rights of audience before all levels of the UAE courts. He has a decade of legal experience in the UAE in all major areas of law, including civil law, commercial law, criminal law, and other areas of litigation.

For more information, please contact him at:

Rashed Al Sumaity

Senior Advocate

rashed@galadarilaw.com