Increased Fines for UAE Labour Regulation Violations Effective August 31, 2024

New Decree Significantly Raises Penalties under UAE Labour Law

In a major amendment to labour regulations, Federal Decree Law No. (9) of 2024 (the “New Decree”) has introduced significant changes to Article 60 of the Federal Decree Law No. (33) of 2021, which governs labour relations in the United Arab Emirates (UAE). These amendments aim to tighten compliance and enforce penalties for violations, enhancing the protection of workers' rights and promoting fair labour practices.

Increased Penalties for Violations

Previously, under Article 60 of the UAE Labour Law, penalties for employer violations ranged from AED 50,000 to AED 200,000. These penalties applied to various offenses, including:

1. Employing a worker without obtaining a valid work permit.
2. Recruiting or hiring a worker and then failing to provide them with work.
3. Misusing work permits for purposes other than those intended.
4. Closing a business or suspending activities without settling workers' rights, in violation of UAE Labour Law and its implementing regulations.
5. Employing a juvenile in violation of the UAE Labour Law.
6. Agreeing to employ a juvenile, where the employer has guardianship or custody over the juvenile, in violation of the UAE Labour Law.

With the enactment of the New Decree, these penalties have been significantly increased, now ranging from AED 100,000 to AED 1,000,000.

New Provisions for Fictitious Employment Practices

The New Decree introduces a new provision under paragraph 2 of Article 60, imposing fines between AED 100,000 and AED 1,000,000 on employers who engage in practices that circumvent the laws and regulations governing the labour market. This includes hiring one or more workers in a fictitious manner. If such actions result in a worker benefiting from any ministry, council, fund, authority, or other government entity authorized by law or Cabinet resolutions related to labour market regulation or workforce competitiveness, the court may also order the employer to return any financial incentives obtained. Employers are prohibited from seeking recourse against the workers for these financial incentives. The penalty is multiplied for each worker employed under such fictitious circumstances.

Criminal Prosecution and Settlement Options

The New Decree also adds paragraph 3 to Article 60, stipulating that criminal cases for offenses outlined in paragraph 2 of Article 60 can only be initiated at the request of the Minister of Human Resources and Emiratisation or their authorized representative.

Furthermore, paragraph 4 of Article 60 introduces the possibility of a settlement for offenses under paragraph 2. Employers may request a settlement before a court judgment is issued by paying at least 50% of the minimum fine specified and returning all financial incentives received by workers employed in a fictitious manner. Upon payment of the settlement amount, the criminal case will be terminated.

The New Decree represents a significant tightening of labour regulations in the UAE, with substantially increased fines and stringent measures to combat violations. These changes underscore the UAE's commitment to safeguarding workers' rights and maintaining a fair and transparent labour market. Employers are advised to review their practices to ensure compliance with the updated regulations, effective 31 August 2024.

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