The UAE has recently amended specific labour law provisions concerning dispute resolution and penalties, increasing fines for several employment violations, and transferring jurisdiction for certain violations.
Under the new amendment, private sector businesses will face significantly higher fines ranging from AED 100,000 (US$ 27,225) to AED 1 million (US$ 272,257) for various violations. These include employing workers without proper permits, hiring or bringing workers into the country without providing them with a job, engaging in fictitious recruitment, misusing work permits, illegally employing minors, shutting down a business or suspending operations while violating workers’ rights. In cases of fictitious recruitment – showing Emirati employees on paper to meet the nationalisation quota – the penalty will increase based on the number of workers involved.
Previously, fines for these violations ranged from AED 50,000 (US$ 13,612) to AED 200,000 (US$ 54,451).
The amendment also grants the Ministry of Human Resources and Emiratisation (MoHRE) the authority to settle cases involving fictitious employment and fraudulent Emiratisation (the number or ratio of Emirati nationals employed by the company) at the employer’s request, before a court sentence is issued. To do so, the employer must pay at least 50% of the minimum specified fine and return all financial incentives received by their fictitious workers to the government.
As per the new amendments, in cases of labour disputes, if either party finds a decision made by the MoHRE unsatisfactory, the case must be directly forwarded to the Court of First Instance instead of the Court of Appeal.
Since the beginning of this year, the MoHRE has been empowered to issue final executive decisions in individual labour disputes involving sums of AED 50,000 (US$ 13,613) or less. Previously, if either party was dissatisfied with the MoHRE’s decision, they could appeal to the Court of Appeals within 15 working days of receiving notification. Once an appeal was filed, the court would schedule a hearing within three working days and deliver a judgment within 15 working days. Under the new amendment, cases are now referred directly to the Court of First Instance, which must convene a hearing within three business days, notify the involved parties, and proceed with adjudication.
The new amendment also stipulates that the court will dismiss any claims filed more than two years after the termination of the employment relationship. Previously, claims related to rights under the Labour Law were rejected if filed more than one year after the date of the violation.
The UAE government has amended the law on dispute resolution for domestic workers. Cases involving AED 50,000 (US$ 13,613) or less will now be handled directly by MoHRE. If an amicable settlement cannot be reached, MoHRE will refer the dispute to the Court of First Instance, rather than the Court of Appeals.
There are a number of potential effects of these reforms. Transferring labour cases directly to the court of first instance could expedite litigation procedures. However, increasing penalties on unscrupulous employers might not necessarily help workers receive their rightful dues (unless the fines are used explicitly to settle the claims), as it could leave employers unable to pay what they owe, ultimately harming the workers. A better solution would be to establish a public fund, to which employers contribute, ensuring that funds are immediately available to settle workers’ dues or allocate the fines paid by employers to the Ministry directly towards settling workers’ claims. Currently, the UAE has a private insurance program, which is not mandatory for all workers and only provides a maximum coverage of up to AED 20,000 (US$ 5,445).
