In a bid to strengthen its labor market, the UAE has introduced significant changes under Federal Decree No. 9 of 2024, reshaping key aspects of labor law to address the growing need for transparency, fairness, and efficiency.
These amendments focus on improving dispute resolution, increasing penalties for illegal recruitment practices, and extending protections for both expatriate and Emirati workers. While the decree brings with it new challenges for businesses, it also offers important opportunities to modernize labor practices and promote a more equitable employment landscape.
Read: UAE issues new labour law to regulate employment, up to Dh1 million fine announced
Crackdown on undocumented workers, fictitious recruitment
One of the most striking changes is the increase in penalties for employing workers without permits, or engaging in fictitious recruitment practices. Under the new decree, companies caught hiring workers without valid permits face fines ranging from AED100,000 to AED1,000,000 — significantly steeper than the previous penalties of AED50,000 to AED200,000. Fictitious recruitment, such as creating fake job offers or hiring workers with no genuine employment intent, now attracts similar fines, which can be multiplied depending on the number of workers involved. This crackdown is aimed at curbing fraudulent recruitment practices and tackling the underground labor market.
For businesses, the risks of non-compliance have grown considerably. The threat of hefty fines and even criminal penalties for engaging in these illicit practices makes it imperative for employers to ensure that all hiring procedures are fully documented and compliant with the law. The repercussions extend beyond financial penalties; companies found in violation could face reputational damage and legal repercussions.
For workers, these amendments promise greater protection, particularly for expatriates. The new measures help ensure that foreign workers are recruited under lawful, transparent conditions, offering them a legal framework that protects their rights. This is likely to enhance the UAE’s attractiveness as a destination for skilled expatriates, who will benefit from stronger legal guarantees against exploitation and abuse.
Streamlining dispute resolution
Another key reform introduced by Federal Decree No. 9 is a revamp of the labor dispute resolution process. Previously, workers seeking legal recourse for employment-related grievances were often forced to navigate a slow and cumbersome judicial system. With the new amendments, the Ministry of Human Resources and Emiratisation (MOHRE) has been granted increased authority to resolve disputes quickly, especially for claims under AED50,000. This move is designed to alleviate the burden on the courts and provide faster, more efficient resolutions to minor employment disputes.
The changes also impact the appeals process. Under the previous framework, dissatisfied parties could appeal decisions made by the ministry to the Court of Appeal. Now, appeals must be made to the Court of First Instance, and once that court issues a ruling, the decision is final, with no further opportunities for appeal. This is intended to expedite the resolution of disputes, with the Court of First Instance now required to adjudicate employment cases within 30 business days.
These reforms are expected to enhance the overall efficiency of the judicial system, benefiting both workers and employers by ensuring that small disputes are resolved swiftly and without unnecessary delays. The speedier resolution of cases is likely to foster a more harmonious labor market, reducing the time and resources spent on protracted legal battles.
More time to seek justice
Another noteworthy amendment extends the time limit for employees to file claims related to unpaid wages or other employment rights violations. Previously, the statute of limitations was one year from the date the employee was entitled to receive their dues. The new law extends this period to two years from the date the employment relationship ends. This extension allows workers more time to seek legal recourse, a critical development for employees who may have been unaware of their legal rights or unable to pursue claims immediately after leaving a job.
For businesses, this means they need to be more vigilant in addressing employee grievances before they escalate into legal disputes. By ensuring timely and fair resolution of employment-related issues, companies can avoid potential legal complications down the line.
Impact on workers
The changes brought about by Federal Decree No. 9 have significant implications for both expatriate and Emirati workers.
For expatriates, the law strengthens protections against illegal recruitment practices. With stricter penalties for hiring undocumented workers, the amendments help ensure that foreign workers are employed under legal conditions. This makes the UAE a more appealing destination for skilled talent, as potential workers will now have greater assurance that their rights will be upheld. The emphasis on transparency and accountability in recruitment will also help reduce the prevalence of exploitation within the labor market.
For Emirati workers, the law targets the issue of ‘fictitious Emiratization’ — where companies falsely claim to have hired Emirati workers to meet government quotas. The introduction of severe penalties for such practices aims to promote genuine Emiratization efforts, ensuring that companies hire Emirati nationals for real roles, rather than simply inflating their numbers on paper. While this creates opportunities for Emiratis to access better job prospects, challenges may still exist in matching available talent with market demands. Nevertheless, the decree encourages businesses to invest in Emirati talent development, creating more sustainable opportunities for the local workforce.
Implications for businesses and the economy
For businesses, compliance with the new labor law will require significant adjustments. Employers will need to invest in stronger HR management systems, conduct regular audits, and maintain up-to-date records to avoid violating the law. Companies may also need to seek legal advice to ensure that their hiring practices comply with the new regulations. Those who fail to do so could face not only substantial fines but also reputational damage and the risk of legal action.
For workers, the amendments offer stronger protections against exploitative practices, ensuring fairer treatment for those employed under both formal and informal contracts. The more efficient dispute resolution processes mean that workers will have faster access to justice, reducing the prolonged stress often associated with labor disputes.
On a broader scale, these amendments are expected to have positive long-term effects on the UAE economy. By fostering a more transparent and regulated labor market, the decree is likely to increase productivity and reduce the risks of exploitation. Moreover, the emphasis on legal recruitment practices will help ensure that the labor market operates on a level playing field, where both employers and employees are held to high standards of accountability.
Conclusion
The amendments introduced under Federal Decree No. 9 of 2024 represent a significant step forward in modernizing the UAE’s labor laws. By tackling illegal recruitment practices, streamlining dispute resolution, and extending protections for both expatriate and Emirati workers, the UAE is taking decisive action to create a more transparent, fair, and efficient labor market. While businesses will need to adapt to the new regulations, the overall outcome is likely to be a more sustainable and equitable labor environment, benefiting workers and employers alike. With these changes, the UAE is not only improving the legal framework for its labor market but also positioning itself as a leader in labor market governance in the region.
Asma Siddiqui is senior associate at BSA Law, Dubai.
