The UAE through the Federal Decree Law No. 9/2024 (“Amended Law”) issued on 29/07/2024, has amended Article 54 (Individual Labor Disputes) and Article 60 (Fines for prohibited acts) of the Federal Decree Law No. 33 of 2021 regarding the regulation of Employment Relationship (“Labour Law”).
CHANGES TO ARTICLE 54
Article 54 of Labour Law provides procedure for settlement of the Individual Labor Disputes raised by employer or employee with the Ministry of Human Resource and Emiratisation (MOHRE). The new provision under the Amended Law, like the previous one, provides for MOHRE to take suitable actions to reach amicable settlement of dispute between the employer and employee.
The Amended law in addition also states that (a) if the above settlement is not complied with, or (b) if the value of the claim does not exceed AED 50,000, the MOHRE shall settle the matter with a decision which shall have the power of writ of execution. Within 15 days of such decision, the same can be taken up before the Court of first instance, which shall make the final-non-appealable decision on the matter within 30 days of filing the lawsuit.
In cases where the amount of dispute is above AED 50,000, the MOHRE shall make an effort to settle the matter and in absence of such settlement refer the matter to a court of competent jurisdiction.
Further sub-clause (9) added to Article 54 imposes a limitation period of two years for filing a lawsuit for violation of the decree law.
CHANGES TO ARTICLE 60
The Amended Law has made changes to Article 60 of the Labour Law which has resulted in increase in fines. While the previous provision of the Labour Law provided for fines ranging from AED 50,000 to AED 200,000, the same has now been amended and increased ranging from AED 100,000 to AED 1,000,000.
These fines shall be applicable to employers who:
1. Employs a worker not authorized to work for him,
2. Employs a juvenile in violation of the Decree Law,
3. Employs a worker and leaves him without work,
4. Uses work permit for purposes other than those designated for their issuance,
5. Closes down an establishment without settling the rights of the employees.
Fictitious Employment
The Amended Law also aims at dealing with fictitious employment of Emirati individuals with the sole aim of complying with minimum Emirati employment targets. It has been found in several cases, that private companies employ Emirati Individuals without assigning them any effective work roles and additionally claiming financial incentives designed by the government for such employment.
Although the Labour Law already provides for a situation wherein a fine was stipulated for leaving an employee without work, the Amended Law has made the same provision more stringent. Changes to Article 60 of the Labour Law states that the employer shall in addition to the above stated fines also be liable for returning any financial incentives that they may have received from the government for each employee. Further, the employer has been expressly forbidden from seeking refund of the financial incentives from the employees.
The Amended Law also provides for settlement of the above dispute wherein employer can avoid criminal prosecution of their acts if they agree to pay 50% of the stipulated fine along with the refund of the financial incentives received by them.
Conclusion
The amendments to the Labour Law have been made with an aim to effectively implement the existing provisions, wherein stricter and shorter timelines have been put in place to settle the dispute between the employer and employee. Further the increase in fines shows the intent of the government to enhance responsible behaviour from the employers.
For more information, you may contact:
Thomas Paoletti
Francesca Romana Valeri
Fauzia Khan
