Labour Litigation in the United Arab Emirates: The New Process in front of the Ministry of Human Resources and Emiratisation

In a recent update to the UAE Federal Law. No 33 of 2021 as amended (the UAE Labour Law), the mediation process in front of the Ministry of Human Resources and Emiratisation (the MHRE) has been amended. The change will come into effect on 1 January 2024. In essence, the MHRE has been awarded judicial power to adjudicate employment disputes with a value of less than AED 50,000. In this article, we summarise the new mediation process.

1. Applicability of the Amendment

The new process will apply to disputes with a value of less than AED 50,000. Furthermore, the new process will apply to employers and workers (as defined in the UAE Labour Law).

A Worker is defined as “every natural person permitted by the MHRE to work for any establishments licensed in the UAE, […]”. It therefore remains to be seen how the new process will apply to companies licenced in one of the UAE’s free zones (except the Dubai International Financial Centre and the Abu Dhabi Global Market which are subject to their own dispute resolution mechanisms). 

Our forecast at the moment is that free zones retain their power to mediate any employment dispute falling within their remit. Currently, if this mediation fails, the party that has submitted the complaint will receive a so-called No Objection Certificate (NOC) from the free zone to proceed to the MHRE. The MHRE then simply converts the NOC and lets the employee proceed to the Labour Court. We assume that from next year onwards the MHRE will then adjudicate any dispute coming from a free zone with a value of less than AED 50,000 and only issue NOCs to proceed to the Court for disputes with a value of AED 50,000 or more. 

2. Claims with a value below AED 50,000

From 1 January 2024, the MHRE will have the power to issue final decisions in relation to labour disputes with a value of less than AED 50,000. In addition, the MHRE has jurisdiction to adjudicate disputes arising from a breach of a settlement between an employer and an employee previously reached in front of the MHRE, regardless of the value of the settlement. 

The MHRE’s decision will have the power of an executive deed which can be executed by the winning party in accordance with the usual execution procedures. 

In case one of the parties is not content with the MHRE’s final decision, either party has the opportunity to file an appeal within 15 working days from the notification of the decision. This means that a decision from the MHRE for a claim value between AED 50,000 has the same status as a decision from the Court of First Instance.

The appeal against the decision from the MHRE is submitted to the Labour Court of Appeal. Any judgment consequently rendered by the Court of Appeal will be considered final, meaning that it will not be possible for either party to appeal the Court of Cassation. 

3. Claims with a value of AED 50,000 and above

The procedure for claims with a value of AED 50,000 and above remains as is. This means that any dispute will first be mediated by the MHRE. In case the MHRE is unable to settle the matter between the employer and the employee, the case will be referred to the Labour Court’s Court of First Instance. 

4. Outlook

The change to the litigation process under the UAE Labour Law is a surprising change. We will need to await the implementation of the process is in practice to get answers to questions, such as whether legal representation will be permitted in front of the MHRE, whether proper memoranda will need to be submitted or whether the MHRE will also consider any internal employment contracts. 

If you have any questions in relation to this new development, please get in touch with Sara Khoja or Lisa Merod or your usual point of contact within the employment team.