Significant amendments to the UAE Labour Law: Articles 54 and 60

On 29 July 2024, Federal Decree-Law No. 9/2024 introduced significant amendments to Articles 54 and 60 of the UAE Labour Law. These changes, effective from 30 August 2024, aim to enhance the enforcement of employment rights and impose stricter penalties for non-compliance. This article outlines the key changes and their implications for employers and employees.

Article 54: dispute resolution and legal procedures

1. Ministry's role in dispute resolution:

The Ministry of Human Resources and Emiratisation (MoHRE) continues to play a crucial role in resolving disputes related to employment rights. The MoHRE continues to be tasked with examining employment disputes and attempting to settle them amicably. The MoHRE continues to have the authority to issue binding decisions for disputes where the claim value does not exceed AED 50,000 or if either party fails to comply with a previous amicable settlement, regardless of the claim’s value. In such cases, the MoHRE's decisions are binding.

2. Enforcement and appeal process:

One of the significant updates in Article 54 is the explicit confirmation that decisions made by the MoHRE have the power of a writ of execution. This means that such decisions can be enforced directly, giving them more weight and immediacy. Furthermore, either party has the right to appeal the MoHRE's decision before the Court of First Instance within 15 working days of notification. Previously this role was undertaken by the Court of Appeal. The Court of First Instance must now schedule a session within three working days and resolve the matter within 30 working days, extending the previous timeline of 15 working days. A decision by the Court of First Instance is final and cannot be appealed in such instances.

3. Court procedures:

The article also outlines the procedures for disputes that the MoHRE is unable to settle. If a dispute falls outside the MoHRE's direct decision-making power (e.g., disputes exceeding AED 50,000 or not involving non-compliance with a settlement), the MoHRE must refer the case to the competent court, a process unchanged in practice. The updated text clarifies that the court must address these disputes promptly, ensuring a more efficient resolution process. 

4. Salary continuation:

The MoHRE retains the power to order employers to continue paying an employee’s salary for up to two months if the dispute has led to the suspension of salary payments. This provision ensures that employees are not left financially vulnerable during protracted disputes.

5. Preventive measures against collective disputes:

To prevent individual disputes from escalating into broader collective disputes that could harm public interest, the MoHRE has the authority to impose additional administrative measures on establishments. This preventive measure is designed to maintain workplace harmony and protect public order.

6. Timeliness and validity of legal claims:

The revised article emphasises the importance of adhering to the specified procedures and timelines for a lawsuit to be considered valid. Notably, the statute of limitations for filing a lawsuit regarding employment rights has been extended from one year to two years from the termination of the employment relationship. This extension provides employees with a longer period to assert their rights, reflecting a more employee-friendly approach.

Article 60: penalties and compliance

1. Increased penalties:

The amendments to Article 60 introduce significantly harsher penalties for violations of employment laws. Previously, fines ranged from AED 50,000 to AED 200,000 for various infractions, including unauthorised employment and misuse of work permits. Under the new law, these fines have been dramatically increased, now ranging from AED 100,000 to AED 1,000,000. This change signals a stricter stance on compliance and a greater emphasis on deterring violations.

2. New clause on fictitious employment:

A notable addition to Article 60 is the introduction of a clause addressing fictitious employment. Employers who engage in practices that circumvent labour laws, such as appointing workers in a fictitious manner, face fines between AED 100,000 and AED 1,000,000. The penalty is multiplied by the number of workers involved in such practices. Moreover, if the worker gains any benefit from government entities due to this fictitious employment, the employer is required to return the value of these benefits, with no recourse to recover them from the worker. This new provision aims to curb fraudulent employment practices and protect the integrity of the labour market.

3. Criminal case initiation and settlement:

The updated Article 60 also introduces provisions for initiating criminal cases and settling disputes related to fictitious employment. A criminal case can now be initiated at the request of the MoHRE or an authorised representative, adding a layer of oversight. Additionally, employers have the option to request a settlement before a ruling is issued. To settle, they must pay at least 50 per cent of the minimum fine and return all financial incentives obtained through fictitious employment. Once the settlement amount is paid, the criminal case is considered closed. This settlement option provides a pathway for resolution while ensuring that employers who engage in unlawful practices are held accountable.

Conclusion

The changes to Articles 54 and 60 of the UAE Labour Law reflect a significant shift towards more robust enforcement mechanisms and stricter penalties for violations. By clarifying the MoHRE's role in dispute resolution, enhancing the appeal process, and introducing severe penalties for fictitious employment, these amendments strengthen the legal framework governing employment in the UAE. Employers must take note of these changes and ensure full compliance to avoid the severe consequences outlined in the new legislation.

If you would like further information or advice on the UAE Labour Law, please contact Sara Khoja, Ben Brown, Jassar Aljohani and Sarit Thomas. 

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