Important Changes in the Labor Dispute Resolution Process

Significant changes have been made to the UAE’s labor dispute resolution process with the introduction of Federal Decree Law No. 20 of 2023 (the “Decree”). This Decree amends some provisions of the Federal Decree Law No. 33 of 2021 (the “Labour Law”)

The changes primarily revolve around empowering the Ministry of Human Resources and Emiratization (“MOHRE”) to play a more decisive role in labor dispute resolution. This article will explore the scope of these amendments, their implications, and the practical considerations for employers and employees.

Scope of the Decree:

Expanded Powers of MOHRE

The key amendment introduced by the Decree relates to Article 54 of the Labour Law and the expansion of MOHRE’s authority to act as the final judge and arbitrator for employment disputes below a specified threshold, which is set at AED 50,000.  The Decree also allows MOHRE to issue final executable judgments in cases of non-compliance with the terms of an amicable settlement approved by MOHRE at the mediation stage.

Enforceability of MOHRE’s decisions

Decisions issued by MOHRE in these cases will be deemed as a writ of execution which means that they will obtain the same legal power as a final judgment issued by the local courts, making those decisions enforceable and executable. This is a significant change in MOHRE’s role where it was previously limited to acting as a mediator and referring the dispute to the court whereas it now effectively has the power to act as a court and issue enforceable judgments.

Appeal Process

Importantly, the Decree allows the possibility for appealing MOHRE’s decisions directly to the Court of Appeal within 15 days from the date of issuing the decision and the party’s notification of the decision.

The Court of Appeal is then tasked with making the final determination within 15 days from the appeal registration. Once the appeal is registered, the execution will be suspended, and the decision will not be enforceable until the issuance of the judgment from the Appeal Court.

Threshold

The Decree distinguishes between disputes below the threshold and those exceeding it. For disputes exceeding the threshold, the MOHRE’s role remains unchanged and MOHRE”s capacity will be limited to act as a mediator and refer the matter to the court if amicable settlement is not reached.

Payments of salary

MOHRE can oblige the employer to continue paying the employee’s salary during the dispute up to two months if the dispute caused the suspension of the employee’s salary.

Preventing collective disputes:

The Decree also provides the Minister with the right to issue further precautionary or administrative measures on the establishment/employer to prevent individual measures from escalating into collective disputes, with the aim of protecting the public interest.

Implementation and practical considerations

The Decree is set come into force in 01 January 2024, and as of now, there is no clarity or guidance on the procedure and the administrative tools that will be implemented by MOHRE to exercise its new powers. This presents potential challenges for both employers and employees in particular for claims and labour complaints below AED 50,000 noting that the vast majority of labour disputes are below this threshold.

Notably, the decision-making powers given to MOHRE can be appealed, making MOHRE akin to a judiciary power. This represents a significant change from the conventional legal landscape that has been present to date.

MOHRE’s role has evolved from solely being a dispute mediator to, for cases under the threshold, issuing final decisions. Consequently, there is a need to establish a clear mechanism to implement an adversarial process which is fair and unbiased similar to what parties would expect before the court. The expanded authority, coupled with the absence of experienced judges (not to mention the absence of experts who often assist the court in determining technical aspects of the dispute), has the potential to lead to variable decision making unless the applicable infrastructure is carefully thought through prior to the go-live date of 1 January 2024.

In addition, it remains unclear whether legal representation will be permissible at the stage of considering disputes before MOHRE. Currently, MOHRE actively avoids any legal representation before mediation meetings.

In conclusion, the recent amendments to the Labour Law are set to redefine the labour dispute resolution landscape in the UAE. We await confirmation in terms of many procedural matters and will update you as and when such matters are finalized. It goes without saying that employers and employees will need to adapt to these changes as the UAE looks to streamline and fast track lower value labour dispute resolution.