An Overview on Recent Amendments to the UAE Labour Law

Recent Amendments to the UAE Labour Law

On 29 July 2024, the UAE government announced significant amendments to the country's labour law under Federal Decree-Law No. 9 of 2024. These changes, effective from 31 August 2024, are designed to modernize the UAE’s labour regulations and align them with international best practices. This article explores the key amendments, focusing on the changes to Articles 54 and 60, and their implications for both employers and employees in the UAE.

The UAE’s labour law has long been instrumental in defining the relationship between employers and employees, aiming to balance rights and ensure a safe working environment. With the rapid pace of economic and social change in the UAE, there has been a pressing need to update these laws to meet contemporary demands and challenges. The recent amendments are a response to this need, designed to protect employee rights, enhance working conditions, and introduce greater flexibility into the labour market.

Overview of Amendments

The 2024 amendments under Federal Decree-Law No. 9 bring notable changes to Articles 54 and 60 of Federal Decree-Law No. 33 of 2021, which regulates labour relations in the UAE. These changes reflect a broader shift towards enhancing dispute resolution processes and imposing stricter penalties for labour law violations.

Article 54 Amendments

One of the most significant changes is the transformation in the role of MOHRE concerning labour disputes. The Ministry’s decisions are now legally enforceable through an "Execution Order," which functions similarly to a court order, allowing for the execution of MOHRE’s rulings. This change aims to streamline the dispute resolution process and provide a more direct mechanism for enforcing decisions.

Right to Appeal MOHRE Decisions

The amendments introduce a new right to appeal MOHRE decisions. Parties involved in a dispute can now appeal MOHRE’s decision before the Court of Appeal within 15 working days from the notification of the Ministry's decision. The Court of Appeal’s ruling is final, and the appeal process suspends the enforcement of the Ministry's decision, offering a more structured avenue for contesting decisions.

Cap on Claims in Labour Disputes

The new law sets a cap on the claim amount in labour disputes. MOHRE is authorized to make binding decisions in disputes where the claim value does not exceed AED 50,000. For disputes exceeding this amount, MOHRE will continue to act as a mediator and refer the matter to the court if an amicable settlement is not achieved. This cap is intended to expedite resolution for smaller claims and reduce the burden on the judicial system.

Statute of Limitations in Labour Claims

A notable change in the statute of limitations is the extension from one year to two years from the date the claim becomes due. This extension allows employees more time to bring forth claims related to employment rights, thus providing additional protection and aligning with international standards.

Continuation of Salary Payments During Disputes

The amendments also address the issue of salary payments during disputes. If a dispute leads to the suspension of an employee’s salary, MOHRE may instruct the employer to continue paying the employee’s salary for up to two months during the dispute period. If no settlement is reached within 14 days, MOHRE will refer the dispute to the competent court along with a summary and recommendations.

Article 60 Amendments

Increased Fines for Labour Law Violations

The amendments to Article 60 significantly enhance the penalties imposed on employers for various violations. The revised fines now range from AED 100,000 to AED 1,000,000, up from the previous limits of AED 50,000 and AED 200,000. These increased penalties cover a broad spectrum of infractions, including employing workers without proper authorization, recruiting or employing workers and subsequently leaving them without work, misusing work permits, closing a business or suspending its activities without resolving workers' rights, and employing minors in violation of the law.

Addressing Fictitious Employment

The amended Article 60 introduces new provisions targeting fictitious employment practices. Fines for such offenses also range from AED 100,000 to AED 1,000,000, with additional penalties based on the number of workers involved. The Ministry is also granted authority to settle disputes related to fictitious employment if the employer pays at least 50% of the minimum fine imposed and reimburses the government for any improperly obtained benefits.

Implications for Employers and Employees

For Employers:

Enhanced Compliance Requirements

Employers must exercise greater caution to ensure full compliance with the amended labour laws. The increased penalties serve as a strong deterrent against violations, and the expanded scope of fines, especially related to fictitious employment, emphasizes the need for accurate and lawful employment practices.

1. Streamlined Dispute Resolution: The new provisions provide a more efficient dispute resolution process for small claims. The authority granted to MOHRE to make binding decisions on claims up to AED 50,000 aims to reduce delays and administrative burdens, allowing for faster resolution of employment disputes.
2. Financial Impact: The possibility of severe fines for non-compliance, especially in cases of fictitious employment, underscores the financial risks associated with labour law violations. Employers must ensure they adhere to legal standards to avoid substantial penalties.

For Employees:

1. Increased Protection: The amendments offer enhanced protection for employees, particularly in disputes involving unpaid salaries or wrongful termination. The continuation of salary payments during disputes and the extension of the statute of limitations provide greater security and time for employees to assert their rights.
2. Fairer Dispute Resolution: The changes in the dispute resolution process, including the right to appeal MOHRE decisions and the faster adjudication period, contribute to a fairer and more efficient system for resolving employment disputes.
3. Enhanced Security Against Violations: The increased fines for violations and the focus on fictitious employment practices ensure that employees are better protected against fraudulent and exploitative practices by employers.

Conclusion

The amendments to the UAE Labour Law under Federal Decree-Law No. 9 of 2024 represent a significant step towards modernizing the country’s labour regulations. By enhancing the dispute resolution process, increasing penalties for non-compliance, and providing greater protection for employees, the UAE is reinforcing its commitment to creating a fair, transparent, and well-regulated labour market. These changes reflect the UAE’s ongoing efforts to align its labour laws with international standards and address the evolving needs of its dynamic economy. For both employers and employees, understanding and adapting to these amendments will be crucial in navigating the new legal landscape and ensuring compliance with the updated regulations.