Key Updates to the UAE Labour Law: 2024 Amendments Explained

The United Arab Emirates (“UAE“) is a land of expats, with more than 80% of its population comprising foreigners.[1] The large proportion of foreign nationals who come to the UAE for work necessitates a robust and dynamic labour law structured to protect all parties in the workplace.

The Federal Decree-Law Regarding the Regulation of the Employment Relationship (“UAE Labour Law“) was introduced in 2021 and was most recently amended on 31 July 2024 through the Federal Decree-Law No. 9 of 2024 (“Amendment“).[2] The UAE Labour Law aims to optimise the labour market’s efficiency and competitiveness while regulating workplace relationships. It defines the rights and obligations of all the parties involved: employers and employees alike. Being a key source of protection of labour rights, the Amendment to the UAE Labour Law deserves a close look to see how the newly introduced changes affect employment dynamics.

ADJUDICATION OF INDIVIDUAL LABOUR DISPUTES

A labour dispute arising between an employer and an employee (or their beneficiary) must be submitted to the MoHRE for resolution.[3] The MoHRE then reviews the complaint and takes the necessary steps to resolve the labour dispute amicably. If the dispute cannot be amicably resolved or the claim’s value is less than AED 50,000, MoHRE can proceed to render a decision.[4] This decision by MoHRE is treated as an executive bond and is binding on the parties.

Either party may file a suit before the relevant Court of First Instances, challenging the MoHRE’s decision, and consequently, MoHRE’s decision will be suspended. [5] The Court of First Instance will decide this suit within thirty (30) working days from the filing day. This is a development from the pre-Amendment UAE Labour Law, which allowed aggrieved parties to file the suit directly before the relevant Appeals Court. The Appeals Court must now refer all disputes, grievances and requests regarding the regulation of labour relations to the Court of First Instance immediately, except for those disputes that have already been adjudicated or have been reserved for judgment.[6]

Apart from the circumstances mentioned above, if there is a dispute that MoHRE is not able to settle amicably, then MoHRE must refer the dispute to the appropriate Court of First Instance with a memorandum summarising the facts of the dispute, the arguments of the parties to the dispute, and MoHRE’s recommendations.[7] Any litigation regarding labour disputes must be put before the Court within two (2) years of the employment termination date.[8] The Court will schedule a hearing for the matter within three (3) days and decide on it summarily.[9] Further, if MoHRE believes an individual labour dispute could potentially turn into a collective labour dispute that may be prejudicial to public interest, then MoHRE may take administrative measures against the employer.[10]

PENALTIES

The following actionable conduct will attract fines under the UAE Labour Law:

Employing workers without obtaining a proper work permit.
Hiring workers or bringing them to the UAE and failing to provide them with a job.
Misusing work permits for any purpose other than the intended purpose.
Shutting down businesses or suspending activities without following the prescribed procedure and settling workers’ dues.
Illegal employment of minors (actionable on the part of both the employer and the minor’s guardian).

The Amendment has revised the fine applicable for these offences to a minimum of AED one hundred thousand (100,000) and a maximum of AED one million (1,000,000).[11]

These penalties also apply to employers who appoint employees in fictitious circumstances, resulting in any benefits or advantages from any government entity. This could be in the form of fictitious Emiratisation to meet the Emiratisation requirements under the relevant law. The penalty is multiplied by the number of employees recruited under such fictitious circumstances. The employer is debarred from recovering any financial incentives given to the government entity from the fictitious employee. Beyond a fine, the act of fictitious employment has been criminalised, and criminal proceedings for fictitious employment can be initiated only at the request of MoHRE or their authorised representative.[12]

MoHRE may settle cases of fictitious employment before the court issues its sentence, provided that the employer requests it and pays at least 50% of the minimum stipulated fine.[13] In case of fictitious employment, the employer must also pay back all financial incentives received from the government.

EFFECT OF THE AMENDMENT

MoHRE has been made the first step of adjudication, with its decisions binding the parties. This can streamline disputes for smaller claims and situations where amicable resolution through negotiation is possible. The limitation period for bringing labour disputes before court has been extended to 2 years, giving the employee more time to claim unpaid dues from their employer.

MoHRE has also been given the power to mandate the employer pay the aggrieved employee wages for up to two (2) months if the prolonged dispute is causing their wages to be withheld. These provisions safeguard the interests of the employees engaged in such disputes. Further, any appeals to MoHRE’s decision are mandatorily directed to the Court of First Instance instead of the Appeals Court.

The Amendment has enhanced the fines for offences under the UAE Labour Law. The imposition of severe fines and criminalisation should serve as a strong deterrent against such practices that amount to fraudulent labour acts. These amendments come in the light of recent events, as MoHRE has caught and penalised private companies which employed numerous persons in fictitious roles without providing actual employment.[14] The companies engaged in these actions in order to improperly benefit from government incentives such as the Nafis Programme, which incentivises Emirati participation in the private sector.[15] The Amendment ensures that employers are made aware of the illegal nature of fictitious employment and are deterred from engaging in it.

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[1] International Migration 2020 23, United Nations Department of Economic and Social Affairs (2020). Available at: https://www.un.org/development/desa/pd/sites/www.un.org.development.desa.pd/files/undesa_pd_2020_international_migration_highlights.pdf

[2] UAE Government Issues Federal Decree-Law Amending Regulation of Employment Relationship Law, United Arab Emirates Ministry of Human resources & Emiratisation (Aug 13, 2024), https://www.mohre.gov.ae/en/media-centre/news/13/8/2024/uae-government-issues-federal-decree-law-amending-regulation-of-employment-relationship-law.aspx

[3] Article (54), Clause 1 of Federal Decree-Law No. (33) of 2021, as amended by Federal Decree-Law No. 9 of 2024.

[4] Article (54), Clause 2 of Federal Decree-Law No. (33) of 2021, as amended by Federal Decree-Law No. 9 of 2024.

[5] Article (54), Clause 3 of Federal Decree-Law No. (33) of 2021, as amended by Federal Decree-Law No. 9 of 2024.

[6] Article (2) of Federal Decree-Law No. 9 of 2024.

[7] Article (54), Clause 4 of Federal Decree-Law No. (33) of 2021, as amended by Federal Decree-Law No. 9 of 2024.

[8] Article (54), Clause 9 of Federal Decree-Law No. (33) of 2021, as amended by Federal Decree-Law No. 9 of 2024.

[9] Article (54), Clause 7 of Federal Decree-Law No. (33) of 2021, as amended by Federal Decree-Law No. 9 of 2024.

[10] Article (54), Clause 6 of Federal Decree-Law No. (33) of 2021, as amended by Federal Decree-Law No. 9 of 2024.

[11] Article (60), Clause 1 of Federal Decree-Law No. (33) of 2021, as amended by Federal Decree-Law No. 9 of 2024.

[12] Article (60), Clause 3 of Federal Decree-Law No. (33) of 2021, as amended by Federal Decree-Law No. 9 of 2024.

[13] Article (60), Clause 4 of Federal Decree-Law No. (33) of 2021, as amended by Federal Decree-Law No. 9 of 2024.

[14] UAE: Company fined Dh 10 million for fake employment of 113 citizens, Khaleej Times (29 Jul 2024), https://www.khaleejtimes.com/uae/uae-company-fined-dh10-million-for-fake-employment-of-113-citizens; 894 UAE companies fined up to Dh 100,000 over fake Emiratisation posts, Khaleej Times (29 Nov 2024), https://www.khaleejtimes.com/uae/894-uae-companies-fined-up-to-dh100000-over-fake-emiratisation-posts.

[15] Emiratis’ employment in the private sector, UAE Portal, https://u.ae/en/information-and-services/jobs/employment-in-the-private-sector/emiratis-employment-in-private-sector