The labor law was recently amended through Federal Decree No. 9/2024, published on 29 July 2024. These amendments, which will take effect in 30 days from the date of publishing, modify Articles 54 and 60 of the labor law, covering the following areas:
- Resolution of individual labor disputes
- Rephrasing Article 60 to introduce a new criminal offence for breach of particular labor law obligations and new procedures for such offence.
Resolution of Individual Labor disputes and applicable Statute of limitations:
The labor law provided that any dispute arising from the employment relationship between the employee and employer must be addressed by submitting a request to the Ministry of Human Resources and Emiratization (MoHRE), which will review the request and seek to resolve the dispute amicably.
All labor claims under AED 50,000 must be resolved through the decision of the Ministry of Labor. The Ministry’s decision in these cases is final.
However, either party retains the right to challenge the Ministry’s decision before the relevant Court of First of Instance within 15 days of being notified of the Ministry’s decision. Filing a challenge before the court of first instance will automatically stay the enforcement of the Ministry’s decision until the court issues its ruling which once issued, concludes the dispute.
Failure to comply with such statutory requirements regarding resorting to MoHRE prior to filing a labor case will lead to the dismissal of the case before the labor courts.
Finally, any claims related to entitlements arising from an employment relationship are subject to a statute of limitations of two years, commencing from the date of termination of employment.
It is clear that the newly introduced amendment has;
- Raised the statute of limitations for labor entitlements from one year to two years.
- Provided that commencement of the statute of limitations period shall be from the date of termination not from the date the claimed labor right has become due.
New Criminal Offences for breach of labor law obligations;
The recent amendment has restructured Article 60 to four sub articles which will be reviewed in the following paragraphs.
Article 60.1 of the labor provides that the following acts shall be punishable by a fine not less than AED100,000 and not exceeding AED 1,000,000;
- 1- Employs a Worker who was not authorised to work for him.
- 2- Recruits or employs a Worker and leaves him without Work.
- 3- Uses Work Permits for purposes other than those designated for their issuance.
- 4- Closes down an Establishment or suspends its activities without taking the procedures for settling the rights of the Workers, in violation of the provisions of this Decree-Law and its Implementing Regulation and the decisions issued in implementation thereof.
- 5- Employs a Juvenile in violation of the provisions of this Decree-Law.
- 6- Agrees to employ a Juvenile in violation of the provisions of this Decree-Law, who has guardianship or custody over the Juvenile.
We note that the recent amendment has raised the fines applicable for committing any of the aforementioned acts – which remain unchanged. Previously, the penalties ranged from AED 50,000 to a maximum of AED 200,000.
The newly introduced Article 60.2 imposes stricter penalties for employers who engage in fake Emiratization schemes to circumvent the provisions of labor law, its regulations, and bylaws. The article imposes fines ranging from a minimum of AED 100,000 to a maximum of AED 1,000,000 for such violations. The penalty prescribed shall be multiplied according to the number of employees who were hired through fake Emiratization.
Further, the employer must refund to the paying Authority all the monetary benefits awarded to the employees hired as result of such fake Emiratization and the Employer is prohibited from claiming such benefits from the employees for the purpose of such refund. This assumes that the main perpetrator in the fake Emiratization offence in Article 60.2 is the employer solely with no liability on the employee which can be deduced from the fact that the fine and refund are only imposed on the employer with no liability whatsoever on the employee.
We note that the criminal penalties mentioned in Article 60.2 could be applied along with the administrative penalties imposed by MOHRE pursuant to Cabinet decision 95/2022 as amended.
Article 60.3 introduces a significant limitation on the prosecutor’s authority to initiate criminal proceedings in cases of fake Emiratization pursuant to Article 60.2. The prosecutor’s ability to pursue these cases is conditional upon a formal request made by the Minister of Human Resources and Emiratization or an authorized delegate acting on the Minister’s behalf. In the absence of such a request from MOHRE, the prosecutor’s authority to criminally pursue such crimes is restricted.
Article 60.4 grants MoHRE the right to reconcile the crime provided in Article 60.2 pertaining to fake Emiratization upon the request of the employer and prior to the issuance of a court ruling in consideration of a payment of 50% of the minimum penalty applicable to this crime i.e AED 100,000.
In addition to such payment, the employer must refund all the monetary benefits awarded to the employees hired as result of such fake Emiratization. Compliance with the above reconciliation conditions will lead to the dismissal of the criminal case against the employer for fake Emiratization.
Finally, the said article provides that the scope of its applicability applies to the extent prior to the issuance of a court ruling but it is not clear whether this ruling refers to the court of first instance or appeal court which remains open for interpretation.
For further information, please contact, Bassem Ehab on bassem.ehab@habibalmulla.com, or Abdulrahman Alqassem, on abdulrahman.alqassem@habibalmulla.comor any of the members of our team.
