UAE to impose up to AED 1 million fine for labour market violations

In a move to tighten control over the labour market, the United Arab Emirates has introduced a new Federal Decree-Law imposing fines of up to AED 1 million on employers who engage in labour violations.

The government announced on Tuesday amendments to key provisions of the existing Federal Decree-Law on the Regulation of the Employment Relationship, commonly referred to as the "UAE Labour Law."

What exactly are the violations?

Employers found hiring workers without proper permits, failing to provide jobs to workers they have brought into the country, misusing work permits, or shutting down businesses without settling workers' rights will face fines ranging from AED 100,000 to AED 1 million. These penalties also extend to the illegal employment of minors or allowing minors to work in contravention of the law.

The decree further introduces criminal penalties for fictitious recruitment practices, including fraudulent Emiratisation schemes. Employers engaging in fake recruitment activities or circumventing labour regulations by falsely employing workers will be fined between AED 100,000 and AED 1 million, with the penalty multiplied based on the number of workers involved in the fraudulent activity.

In cases of labour disputes, the decree specifies that if a disagreement arises with a decision made by the Ministry of Human Resources and Emiratisation, the matter should be brought before the Court of First Instance, rather than the Court of Appeal. The decree also establishes a two-year limitation period for filing claims following the termination of an employment relationship, after which legal proceedings will not be entertained.

Additionally, the new law stipulates that criminal proceedings for fictitious employment, including fraudulent Emiratisation, can only be initiated upon the request of the Minister of Human Resources and Emiratisation or an authorized representative. The decree empowers the Ministry to settle such cases at the employer's request before a court sentence is issued, provided that the employer pays at least 50% of the minimum specified fine and returns any financial incentives received by the fictitious employees to the government.

Finally, the decree mandates that all ongoing disputes, grievances, and requests related to employment relations be transferred to the competent Court of First Instance from the date of the decree's implementation, except for cases that have already been adjudicated or are awaiting judgment. This move is expected to streamline the resolution of employment-related disputes and reinforce the UAE's commitment to maintaining a fair and competitive labour market.