Carola Uva September 5, 2024September 5, 2024 On 29 July 2024, the new Federal Decree Law No. 9/2024 was enacted and introduced significant amendments to certain provisions of Federal Decree Law No. 33/2021, which governs labor relations. These changes, effective from 31 August 2024, brought notable innovations to Article 54 (on individual labour disputes) and Article 60 (on penalties) of Federal Decree Law No. 33/2021. The background: Federal Decree Law No. 33/2021 Federal Decree Law No. 33/2021 (the “Labor Law”) was issued on 20 September 2021 and establishes a comprehensive framework for regulating the private sector. This law regulates the employer-employee relation, determining rights and obligations of both parties in a balanced manner, ensuring flexibility and protection for both employers and employees. The Labor Law also brought significant innovations to the previous legislation, introducing amendments to the duration of employment contracts, notice period, working hours, leaves and employees’ policies. Federal Decree Law No. 33/2021 has been implemented by Cabinet Decision No. 1/2022, and its provisions must be interpreted in conjunction with these executive regulations. Duration of employment contract Under Article 8.3 on the Labor Law, the Employment Contract “shall be concluded for a fixed term”. The Labor Law does not permit the issuance of unlimited term contracts; therefore, all employment contracts must specify a definite duration. Work patterns Federal Decree-Law No. 33/2021 recognizes various non-traditional employment forms, including part-time, temporary, flexible (freelance), remote work, and job-sharing arrangements. Article 7 of the Decree-Law outlines these employment types, defining full-time, part-time, temporary, and flexible work based on hours, tasks, and employer needs. Other forms like remote work and job sharing are acknowledged under Cabinet Decision No. 1/2022. Notice period during probation The Labor Law also introduces a 14-day notice period for employees wishing to terminate their employment during the probation period (Article 9). This notice must be in writing and mutually agreed upon in the employment contract. Working hours Article 17.1 of the Labor Law sets the maximum working hours for workers at eight (8) hours per day and forty-eight (48) hours per week. Furthermore, Article 19 introduces significant changes to the regulation of overtime hours, setting a maximum of 144 working hours over a three-week period. The new law also clarifies that all overtime pay is calculated based solely on basic salary. Leaves The Labor Law provides for an extended period of maternity leave, amounting to sixty (60) days, the first forty-five (45) days of which are full paid and the other fifteen (15) days are half paid (Article 30). Article 32.1 b) also introduces a new paternity leave for a period of five (5) days for the worker who has a child, that must be requested within six months from the date of the child’s birth. Furthermore, Article 32.1 a) provides for a bereavement leave of five (5) days in the event of death of worker’s spouse or siblings, starting from the date of death. Employees’ policies Article 4 of the Labor Law prohibits discrimination based on race, colour, sex, religion, national or ethnic origin, or disability, with an exception for emiratisation policies. Additionally, Article 14 prohibits sexual, verbal, physical, and psychological harassment, allowing employees who experience such harassment to terminate their employment without notice (Article 45.2). The new Federal Decree Law No. 9/2024: amendments to Article 54 and Article 60 of the Labor Law The newly enacted Federal Decree Law No. 9/2024 (the “New Labor Law”) significantly amended Article 54 and Article 60 of the Labor Law, by introducing specific procedures for the resolution of employment disputes between employers and employees. The New Labor Law also reviewed the powers of the Ministry of Human Resources and Emiratization (“MOHRE”), recognizing binding effects to its decisions and significantly increased the penalties applicable to employers for several labour violations. Article 54 – individual labour disputes Article 54 of the Labor Law – as amended by Federal Decree Law No. 9/2024 – outlines the procedure for handling individual labour disputes between employers and workers. A first innovation concerns the introduction of a binding effect on the decision issued by the MOHRE, that have the same effect as a court order. According to the new provision, the decision has the power of a writ of execution and must be stamped with an executory formula. This means that the MOHRE’s decision can now be directly executed without the need for a separate court process. However, if any party disputes the MOHRE’s decision, they have the right to appeal to the Court of Appeal within 15 working days from the notification date. This appeal process suspends the enforcement of the MOHRE’s decision, and the court’s ruling on the appeal is final. Article 54 also establishes a cap on claims in labour disputes. The MOHRE can issue binding decisions for disputes where the claim does not exceed AED 50,000. For disputes involving higher amounts, the MOHRE acts as a mediator and, if an amicable settlement is not reached, refers the case to the court with a summary and recommendations. Another significant change in the amended Article 54 is the extension of the time-bar for employment disputes. Previously, legal actions related to employment rights had to be filed within one year from the date the dues were owed. The new provision extends this period to two years, starting from the date the claim become due. This means that after two years, the right to file a claim is forfeited, regardless of its merit. In cases where an employee’s salary is suspended due to a labour dispute, the MOHRE may require the employer to continue paying the employee’s salary for up to two months during the dispute period. If the dispute is not resolved within 14 days, the MOHRE will refer it to the competent court for resolution. The court is mandated to handle such cases expeditiously, with a hearing set within three working days of receiving the referral and a final decision to be made within 30 days. Article 60 – penalties Article 60, as revised in Federal Decree-Law No. 9/2024, imposes increased fines ranging from AED 100,000 to AED 1,000,000 for various labour violations. These include employing unauthorized workers, recruiting workers without providing work, misusing work permits, closing businesses without settling workers’ rights, and illegally employing juveniles. With the expansion of the scope of Emiratization, many employers are found to be engaging in “fictitious employment” to circumvent the provisions of the law. Hence, penalties are now introduced for such violations. Employers who engage in “fictitious employment” to exploit government benefits face the same fines and must repay any benefits obtained. The fines increase with the number of workers involved in fictitious employment. Criminal charges for fictitious employment can only be initiated at the request of the Minister and can be settled before a court ruling by paying at least 50% of the minimum fine and returning any benefits obtained. In such cases criminal case is dismissed when the settled amount is paid. The amendments introduced by Federal Decree-Law No. 9/2024 mark a significant shift in the UAE’s labour landscape, reinforcing the existing framework established by Federal Decree-Law No. 33/2021. These changes significantly enhance the powers of the Ministry of Human Resources and Emiratization (MOHRE), streamline the resolution of labour disputes, and impose stricter penalties for non-compliance. By extending protections and providing clearer procedures in settling labour disputes, the revised law strengthens the rights of employees while holding employers to higher standards of accountability. It is essential for employers in the UAE to thoroughly understand and adapt to these updates to ensure their practices are in full compliance with the latest legal requirements, thereby avoiding substantial penalties and fostering a fair and transparent work environment.
