Overview:

To start with, the UAE labour law defines the employment contract as “any agreement for a definite or indefinite term, concluded between an employer and an employee, whereby the latter undertakes to work in the employer’s service and under his/her management and control, in return of a certain wage that the employer undertakes to pay.” Worker is defined as “any male or female working, for wage of any kind, in the service or under the management or control of an employer, albeit out of his/her sight. This term applies also to labourers and employees who are in an employer’s service and are governed by the provisions of this Law.” Also, employer is defined as “any natural or legal person employing one or more workers in return of any kind of wage.” It is worth noting that the UAE labour law did not require that the employment contract be in writing. The employment contract and its terms and conditions can be verified by all legal methods of evidence. However, in the event that the employment contract is not in writing, such contract is for indefinite term, noting that the mutual rights and obligations under the indefinite term contract are different from those under the fixed-term contract.

The employer is legally required to pay the worker’s wage as agreed upon once the worker performs, prepares himself and devotes his/her time to the job even if no work is assigned to him. The basic wage is what the worker receives under the contract or the agreement concluded between the worker and the employer, in cash or in kind, whether on yearly, monthly, weekly, daily, hourly, piecemeal, output or commission basis as agreed. In addition, the wage shall include the cost of living allowance, or any grant given to a worker as a reward for his/her honesty or efficiency, provided such amounts are stipulated in the employment contract or in the firm’s internal regulations or are being so customarily granted that the firm workers regard them as part of their wage and not as donations.

The basic wage shall be stipulated in the employment contract or to be agreed upon, as the case may be. There is a need to distinguish between the general concept of remuneration and the basic wage as the allowances are not to be taken into account in calculating the basic wage, as opposed to the numeration. This distinction has a significant importance when the worker’s rights and benefits are calculated by the employer. Some benefits are calculated as per the basic wage and others are calculated as per the remuneration inclusive of some or all allowances.

Termination of employment relationship:

The employment relationship, like other mutually binding contracts and other legal agreements, could end in different situations and scenarios. It may be unilaterally terminated by the employee or employer, with or without a legal cause. It could also be terminated by their mutual agreement. The employment relationship could end in accordance with the nature of the contract, in case of the fixed-term contract or upon the completion of an agreed specific work. Also, the employment relationship may be terminated by the court. The employment contract ends upon the death or total disability of the employee by virtue of approved medical certificate. The employment contract may end with the death of the employer if his/her personality has been taken into account upon the conclusion of the employment contract. Having said that, the end of the employment relationship for any reason whatsoever, may result in a dispute between the parties on whether or not any party is entitled to receive any kind of benefits and if so, the amount of the same.

What are the labour entitlements?

Labour entitlements are the rights guaranteed by law or employment contract. In case the employment contract grants the employee more advantageous rights and benefits than those stipulated in the law, such advantageous rights shall take precedence over those set out in the law. As such, the employee has the right to require the employer to pay all his/her guaranteed rights. Such rights include, but not limited to, the right to receive the unpaid wages, overtime pay, end of service benefits, cash in lieu of the notice – in case the employer terminates the employment contract without giving the employee a prior notice, and cash in lieu of the unused balance of the annual leave. In addition, the employee is entitled to make a claim for the numeration of his/her work done during public and official holidays. The employee is also entitled to receive a compensation in case it is proved that his/her termination was unfair without a legal cause. The employee is entitled to receive a repatriation ticket – in cash or in kind – in case he is recruited from outside the state, he does not join another employer and the employer does not prove that the worker is able to bear its expenses. These rights differ according to the type of contract or agreement and its duration and the reason for the termination and the person responsible for it. The amount of the financial value of such rights varies according to the value of the basic wage and numeration, all of which are related to the existence of the legal justification.

Time bar as a general principle:

Prescription means the lapse of the time limit. In jurisprudence, the prescription can either result in the acquisition or the forfeiture of a right. In case of the forfeiture of a right, the statute of limitations imposes a negative situation, i,e. preventing the creditor from exercising his/her right or making a claim of right. The acquisitive prescription requires a positive status, being the possession. As a matter of fact, the statute of limitations is not founded on a purely legal basis, since the lapse of a period of time per se doesn’t lead to any legal effect, as it does not result in the acquisition or loss of any right, unless other elements are added (such as the negligence in making the claim). For various considerations, the jurisprudence adopted the idea that the lapse of a relatively long period of time should lead to the extinguishment of the creditor’s right or the case which protects such right if he remains silent throughout such period and fails to make a claim. The time must erase all things. Such considerations that called on legislators to adopt this system include the reliance on the presumption that debtor’s liability for debt is released, since the statute of limitations is based on the presumption that debtor’s liability for debt is discharged, either because he actually fulfilled it – the presumption of satisfaction– or because the creditor has absolved the debtor of the debt – the presumption of release, because why the creditor remained silent throughout this period and failed to make a claim to recover his/her debt. The other considerations for the statute of limitations include the desire of the legislator not to overburden the debtor with the accumulation of debts so that the accumulated debt for many years, shall be extinguished for the sake of preventing arbitrariness.

Also, it has been said that the statute of limitations is based on the idea that the negligent creditor, who waited until such long period of time lapsed without making a claim of right, should be punished. In this regard, the law prefers the interest of the debtor who did nothing to be blamed for to the interests of the negligent creditor. This type of statute of limitations focuses on several considerations intended to protect the public interest, since the stable dealings are largely based on the concept of limitations. For instance, if the creditor can make a claim against his/her debtor regardless of how long time has lapsed since he was entitled to receive the claimed amount, and the debtor is required to prove that he has already fulfilled his/her liability and received the relevant discharge and clearance letter; then, it will be very burdensome to require the debtor to keep such discharge and clearance letter safely for ever to prove that he has fulfilled the claimed debt.

For the sake of stable dealings, the creditor who kept silent for a long period of time is supposed to have received his/her entitlements or to have discharged the debtor of the debt. The creditor’s right may not stand existing for an indefinite period. Therefore, legal jurisprudence came to establish an appropriate and reasonable period of time that varies according to the type of right and the relevant legislation, so that such period is not so long to overburden the debtor, nor it is short to prejudice the creditor’s rights. It is worth noting that the UAE legislator has stated in Article ( 473) of the Civil Transactions Law that (A right shall not expire by the passage of time but no claim shall be heard if denied after the lapse of fifteen years without lawful excuse, but having regard to any special provisions relating thereto). It follows that the UAE legislator, as a general principle, defines the duration by which the claim of right is time barred as fifteen years without a legitimate excuse, taking into account the events which are subject to special provisions. The UAE labour law contains special provisions indicating the time by which the labour claims are time barred as stated in detail in the below Article:

The statute of limitations in respect of labour claims and disputes in the UAE labour law:

Building on the above, the statute of limitations can be defined as the passage of a given period of time without creditor making a claim against the debtor to recover his/her debt the resulting consequence of the extinguishment of the debtor’s liability for the claimed debt and the forfeiture of the creditor’s right to make a claim in respect of such debt. The UAE legislator has adopted the principle of statute of limitations in respect of the claims arising from labour rights, while some comparative legislations have adopted the idea that the cases for labour entitlements are not time-barred at all.

The UAE legislator has set forth special provisions indicating the statute of limitations in respect of claims related to labour rights. The claims related to labour entitlements are not heard after one year in case of denial by the opponent party. Article (6) of the Labour law stipulates that no claim for any rights due according to the provisions of this Law will be heard after lapse of one year from date of its maturity.

This shows that the prescription period shall commence from the actual due date of such rights. Such period shall be calculated in days and the first day may not be counted. The period will be completed by the last day thereof, unless the last day falls on an official holiday. In such event, it extends to the next day. The days are calculated by reference to the Gregorian calendar. The year is 365 days and the month is 30 days, unless the contract of employment stipulates otherwise.

Suspension and interruption of the statute of limitations period in respect of labour claims:

According to the UAE Civil Transactions Law, the statute of limitations to hear a claim of right is fifteen years. However, as an exception to the general principle mentioned above, the UAE Labour Law sets forth a special provision stipulating that the labour claims are time-barred after the lapse of one year from date of its maturity. However, this period stipulated in the UAE labour law may not apply absolutely to all events. The running of time for prescription shall be suspended if there is a lawful excuse whereby the claim for the right could not be made. The period during which that excuse subsisted shall not be taken into account in the prescription period. An admission by an obligor of a right, whether express or by implication, shall interrupt the time laid down for prescription. Also, the prescription period shall be interrupted upon a judicial claim being made or by any judicial proceeding being taken by an obligee to enforce his/her right. As general rule, if the period of prescription is interrupted, a new period equivalent to the first period shall commence.

The jurisprudence and legislation in the UAE have indicate some mitigating circumstances which may suspend or interpret the prescription period in respect of the labour claims. While it has not been explicitly set out in the Labour Law, it has been consistently held by the UAE courts that the lawful excuse suspends the prescription period in relation to labour claims by reference to the general rules of law stated in the Civil Transactions Law. Noteworthy, in case a labour claim is made after the expiry of the time limit by the legal heirs of a deceased employee and some legal heirs have a lawful excuse and the others don’t have a lawful excuse, the claim brought by those who are having lawful excuse shall be heard to the extent of their share. In any event, the determination of whether or not an excuse constitutes a lawful excuse suspending the prescription period or whether or not the admission by an obligor of a right which interrupts the prescription period is valid shall be subject to the discretionary powers of the court.

To sum up, cases related to labour entitlements, may not be heard after the lapse of one year from the due date thereof, in accordance with the special provisions set out in the UAE labour law. This is an exception from the general rules and provisions stated in the Civil Transactions Law, which provides a prescription period of fifteen years from the due date. However, the UAE legislator have established some mitigating circumstances and exceptions intended to protect the public interest by stabilizing the situations arising out of the employment relationship and the non-forfeiture of the right, as stipulated in the general rules which interrupt or suspend the prescription period in respect of cases arising out of labour disputes. Needless to say, the UAE legislator did not consider the argument related to the forfeiture of right in relation to hearing labour rights as a mater of public order as the court may not deal with such argument on its own, unless it has been raised before the trial court.

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Everything You Need to Know about Limitation Period of Labour Cases in the UAE was last modified: February 3rd, 2020 by Ahmed Salih