New Decree Significantly Raises Penalties under UAE Labour Law
Federal Decree Law No. (9) of 2024 (the “New Decree”) has introduced significant amendments to Article 60 of the Federal Decree Law No. (33) of 2021 on regulating labour relations (the “UAE Labor Law”).
Under the previous Article 60 of the UAE Labour Law, the penalties for employers’ violations ranged from AED50,000 to AED200,000 for the following offenses:
- Employing a worker who has not obtained a permit to work for him
- Recruiting or employing a worker and leaving him without work
- Using work permits for purposes other than those designated for their issuance
- Closing an establishment or suspending its activities without taking the procedures for settling the rights of workers, in violation of the provisions of the UAE Labour Law and its implementing regulations and implementing decision.
- Employing a juvenile in violation of this UAE Labour Law
- Agreeing to employ a juvenile in violation of this UAE Labour Law, who has guardianship or custody over the juvenile.
The New Decree has increased these penalties significantly, ranging from AED100,000 to AED1,000,000.
Moreover, the New Decree introduces a new provision in paragraph 2 of Article 60 which imposes a fine between AED100,000 and AED1,000,000 on employers who circumvents the laws, regulations, or decisions governing the labour market and hires one or more workers in a fictitious manner. If this results in the worker benefiting from any ministry, council, fund, authority, or other governmental entity granted by law or Cabinet resolutions with jurisdiction over labour market regulation or enhancing workforce competitiveness or aiding in evading obligations under any legislation, the Court will also order the employer to return the financial incentives. The employer is also not able to have recourse to the worker to claim the financial incentives that they paid to any of those entities. This penalty is multiplied by the number of workers who were appointed in a fictitious manner.
Furthermore, the New Decree also added paragraph 3 of Article 60 which stipulates that a criminal case for offenses under Article 60 (2) may only be initiated at the request of the Minister of Human Resources and Emiratisation or their authorized representative.
Finally, the New Decree also introduces paragraph 4 of Article 60 wherein it allows the Ministry of Human Resources and Emiratisation to make a settlement for the offenses under Article 60 (2) if the employer requests it before a court judgment is issued in it, and pays not less than 50% of the minimum value of the fine specified for this crime, and returns all the values of the financial incentives obtained by his workers who were appointed in a fictitious manner. In such cases, the criminal case shall expire upon payment of the settlement amount.
Reda Hegazy is a Partner at Alsuwaidi & Company. He is listed Legal Consultant in the Government of Dubai Legal Affairs Department, a Member of the DIAC 40, Young Practitioners Group in Dubai International Arbitration Centre (DIAC), a certified arbitrator and member of the International Commercial Arbitration Centre (ICAA) in Sharjah (Tahkeem).
To speak to Reda directly, contact him at r.hegazy@alsuwaidi.ae
