The employee-employer relationship is one of the most complex yet crucial relationships in any society. Recognizing its significance, the UAE legislator has made it an ultimate goal to enhance and nurture this relationship. Frequent changes and amendments to labor laws signal the proactive steps being taken to achieve this objective. The legislator understands that a healthy employee-employer relationship has far-reaching effects, impacting not just individual businesses but the broader economic landscape of the country. Improved performance and productivity stemming from positive workplace relations contribute to a stronger economic position and overall national growth.
In light of the above, On August 12, 2024, the UAE government promulgated significant amendments to Federal Decree-Law No. 33/2021, which governs labour relations. These amendments introduce stringent measures aimed at ensuring compliance with labour regulations, thereby enhancing the protection of workers’ rights within the UAE. Below is an analysis of the key amendments and their potential legal implications.
I. Introduction of Enhanced Penalties
A key feature of the recent amendments is the introduction of substantial financial penalties for employers found to be in violation of the Labour Law. The amendments prescribe fines ranging from AED 100,000 to AED 1,000,000 for specific infractions, which include:
Unauthorized Employment: Employers who engage workers without the requisite authorization or allow individuals to work without valid permits are now subject to severe penalties. This measure aims to curtail illegal employment practices and ensure that all workers are legally employed and afforded the protections of the law.
Failure to Settle Employee Entitlements: In instances where employers close their businesses without settling outstanding employee entitlements, they will be liable to substantial fines. This provision serves to protect employees from being denied their lawful rights in the event of business closure.
Circumvention of Labour Market Regulations: Employers attempting to evade compliance with labour market regulations, including the engagement in sham employment contracts, will face significant penalties. This includes practices that involve fake employment arrangements designed to exploit loopholes in the law.
II. Cumulative Penalties for Multiple Violations
The amendments also establish a framework for imposing cumulative penalties in cases where multiple violations are committed by an employer. For instance, an employer found guilty of employing several workers under fraudulent contracts will incur separate fines for each infraction. This approach seeks to strengthen deterrence and prevent the proliferation of unlawful employment practices.
III. Legal Recourse and Dispute Resolution
The amendments further provide a mechanism for judicial review in cases where decisions issued by the Ministry of Human Resources and Emiratisation (MOHRE) are contested. If either party—the employer or the employee—disagrees with the decision, the matter may be referred to the primary court for adjudication. This amendment ensures that disputes are resolved in a manner that upholds the principles of fairness and justice.
IV. Implications for Employers and Employees
The amendments reflect the UAE government’s ongoing commitment to fostering a transparent and equitable labour market. Employers must exercise increased diligence in their employment practices to ensure full compliance with the amended regulations. Non-compliance could result in significant financial liabilities and other legal consequences.
For employees, the amendments offer enhanced protections and clearer avenues for recourse in the event of rights violations. The strengthened legal framework serves as a robust safeguard against the infringement of employee rights, ensuring that such violations are met with appropriate legal redress.
V. Conclusion
The recent amendments to Federal Decree-Law No. 33/2021 mark a pivotal development in the regulation of labour relations in the UAE. By introducing stringent penalties and reinforcing legal recourse mechanisms, the government aims to uphold high standards of compliance and fairness within the labour market. It is imperative that both employers and employees familiarize themselves with these amendments to ensure that their actions align with the legal requirements and that they are fully aware of their rights and obligations under the revised law.
Disclaimer
This publication does not provide any legal advice and it is for information purposes only. You should not rely upon the material or information in this publication as a basis for making any business, legal or other decisions. Therefore, any reliance on such material is strictly at your own risk.
Author: Ahmed Usama Rabie (Executive Associate)
