Federal Decree-Law No. 9 of year 2024: Amendments to the Federal Decree-Law on Labor Relations

Introduction

This legislative adjustment is designed to refine the regulatory framework governing employment practices, ensuring a more balanced approach to the rights and obligations of all parties involved.

Key Amendments

1. Enhanced Penalties for Non-Compliance:

The revised Decree-Law introduces significant financial penalties ranging from AED 100,000 to AED 1 million for several critical infractions, including:

• • • • Employing a worker without appropriate authorization or sponsoring a worker without providing actual employment.
      • Closing an establishment without resolving all outstanding employee entitlements.
      • Engaging in fraudulent practices related to labor laws, including sham employment schemes.
      • Employing minors in violation of labor regulations.

2. Criminal Penalties for Sham Employment:

(Article 60, Federal Decree Law no. 33 of 2021 as amended by Federal Decree Law no. 9 of 2024)

The amendment imposes criminal sanctions on employers involved in sham employment practices, including fraudulent Emiratization efforts. Penalties for such offenses range from AED 100,000 to AED 1 million, with the severity of the penalty increasing in accordance with the number of workers affected by the fraudulent practices.

3. Procedural Changes in Labor Dispute Resolution:

(Article 54, Federal Decree Law no. 33 of 2021 as amended by Federal Decree Law no. 9 of 2024)

Labor disputes previously adjudicated by the Appellate Court are now to be addressed by the Primary Court, ensuring a more streamlined process.

Claims related to rights under the Decree-Law will not be entertained if brought forward more than two years after the termination of the employment relationship.

4. Criminal Case Initiation and Settlement:

Criminal cases concerning sham employment can only be initiated upon a request from the Minister of Human Resources and Emiratization or an authorized representative. Employers have the option to settle such cases by paying at least 50% of the minimum fine prescribed for the offense and refunding all financial incentives received by workers under false pretences. The criminal case will be dismissed upon payment of the settlement amount.

5. Transfer of Pending Labor Disputes:

The new Decree-Law mandates that the Appellate Courts transfer all pending applications, disputes, and grievances related to labor relations to the competent Primary Court. This transfer applies to cases as they stand on the effective date of the Decree-Law, except for disputes already adjudicated or awaiting judgment.

Correction of Current Practices

The amendments introduced by Federal Decree-Law No. 9 of 2024 are designed to address several pressing challenges in the UAE labor market that have been identified through recent scrutiny and feedback. These challenges stem from gaps and inconsistencies in the previous regulatory framework, which, if left unaddressed, could compromise the fairness and effectiveness of employment practices.

Here’s a closer look at how the new provisions rectify existing issues:

1. Combating Sham Employment and Unauthorized Hiring:

• • Existing Issues: The prior framework allowed for certain loopholes that facilitated sham employment practices and unauthorized hiring. Some employers exploited these gaps to hire workers under false pretences or without proper authorization, undermining both the rights of employees and the integrity of the labor market.
  • Amendment Impact: The introduction of substantial fines (ranging from AED 100,000 to AED 1 million) and criminal penalties directly targets these abuses. By setting such high financial stakes, the Decree-Law aims to dissuade employers from engaging in fraudulent practices, ensuring that all employment activities are conducted with full transparency and legal compliance. This also includes stricter penalties for employing minors and closing establishments without settling employee entitlements, thus enhancing overall accountability.

2. Addressing Fraudulent Practices and False Emiratization:

• • Existing Issues: Fraudulent practices, including fake Emiratization efforts where workers are employed solely for the purpose of meeting quota requirements without actual job responsibilities, have been a significant concern. These practices not only exploit workers but also distort labor market data and undermine genuine Emiratization efforts.
  • Amendment Impact: By imposing criminal penalties for such fraudulent practices, the Decree-Law aims to enforce genuine compliance with Emiratization and other labor regulations. The graduated fines based on the number of affected workers will further deter employers from engaging in deceptive practices, ensuring that Emiratization and other workforce initiatives are genuinely implemented.

3. Streamlining Dispute Resolution:

• • Existing Issues: Labor disputes often faced delays and procedural complexities due to the involvement of multiple courts. The previous system sometimes resulted in prolonged resolution times and increased costs for both employers and employees.
  • Amendment Impact: The reallocation of labor disputes to the Primary Court and the establishment of a two-year limitation for filing claims aim to simplify and expedite the dispute resolution process. This change is intended to provide a more straightforward, efficient legal pathway for resolving employment-related grievances, thereby reducing bureaucratic delays and fostering a quicker resolution of disputes.

4. Introducing Settlement Provisions:

• • Existing Issues: In cases of sham employment and related offenses, the lack of a clear, pragmatic settlement mechanism often led to prolonged legal battles and uncertainty for both parties. Employers could face lengthy investigations and penalties, while employees might struggle with unresolved claims.
  • Amendment Impact: The provision allowing employers to settle cases by paying a portion of the minimum fine and refunding financial incentives to affected workers introduces a practical and conciliatory approach to resolving disputes. This mechanism aims to facilitate prompt resolution of cases, ensuring that workers receive the compensation they are owed while allowing employers to avoid protracted legal proceedings.

5. Improving Transparency and Accountability:

• • Existing Issues: The previous regulatory framework did not include specific measures to fully ensure transparency in employment practices and accountability in regulatory enforcement. As a result, there were occasional challenges in addressing non-compliance effectively due to less robust monitoring and enforcement mechanisms.
  • Amendment Impact: By specifying detailed penalties and procedural changes, the new Decree-Law enhances regulatory oversight and accountability. The clear definitions and increased penalties are designed to create a more transparent environment where employers are incentivized to adhere strictly to labor laws, thus fostering fair treatment of employees.

Conclusion

Federal Decree-Law No. 9 of 2024 marks a pivotal advancement in the UAE’s ongoing efforts to modernize its labor regulations. By addressing critical gaps in the existing regulatory framework, the Decree-Law implements stricter penalties for non-compliance, streamlines dispute resolution processes, and introduces practical settlement options. These amendments are designed to foster a more equitable and efficient labor market, enhance transparency, and ensure that both employers and employees operate within a robust and balanced legal framework. Through these measures, the UAE aims to uphold workers’ rights, combat fraudulent practices, and create a fairer environment for resolving labor disputes, thereby supporting the overall integrity and competitiveness of the labor market.