A Closer Look at Federal Decree-Law No. (20) of 2023: New Jurisdictional Rules for Labour Disputes in the UAE

October 24, 2023
Tim Al-Ghraoui

Recently, His Highness Sheikh Mohammed bin Zayed Al Nahyan, acting in his role as the President of the United Arab Emirates, promulgated Federal Decree-Law No. (20) of 2023. This new legislation revises several elements of the existing Federal Decree-Law No. (33) of 2021, which concerns employment regulations within the nation.

Scheduled to become effective 1st January 2024, this legislative update meaningfully changes specialised rules governing specific labour disputes. The overarching aim of these changes is to expedite the dispute resolution process and foster greater employment stability.

Key Elements of the New Rules

There are four key elements of this new legislation.

Delegation of Adjudicative Powers to the Ministry of Human Resources and Emiratisation (MOHRE)

For the first time, the MOHRE has been empowered to make binding decisions in straightforward labour disputes, provided a claim’s value does not exceed AED 50,000. The new jurisdiction also covers labour disputes that arise from a breach of any prior amicable settlement endorsed by the Ministry, regardless of the claim’s financial value. Prior to this change, the Ministry’s role was restricted to sending unresolved cases to judicial courts.

Legal Enforceability of the Ministry’s Decisions

Decisions rendered by the MOHRE will be granted the status of an execution instrument, and they can be executed in a customary fashion.

Right to Appeal to the Court of Appeal

After receiving notification of the Ministry’s decision, either disputing party has the right to appeal to the Court of Appeal within 15 days. The Court’s decision will be final and will result in the temporary suspension of the Ministry’s original ruling.

Mandatory Adherence to Procedures

Adherence to the these procedures is now a matter of public order. Therefore, failure to follow them will result in the court dismissing any lawsuits brought on the grounds of inadmissibility.

Exploring the Impacts: The Dual Sides of the Legislative Amendment

This legislative change aims to bring forth transformative adjustments in the realm of labour disputes. However, like any legislative enactment, it carries both positive and negative implications for employees and employers alike.

On the positive side, one of the most notable benefits is the potential alleviation of court backlogs. By delegating the authority to handle lower-value disputes to the MOHRE, the legislation offers an alternative avenue for dispute resolution. This could free up judicial resources and enable courts to focus on more intricate and substantial cases.

Additionally, the swifter dispute resolution mechanism holds promise for low-income workers who often find themselves entangled in lower-value disputes. By sidestepping the notoriously lengthy and expensive court proceedings, they stand to gain both emotionally and financially. These benefits extend further, allowing courts to allocate more time and resources to complex labour disputes that necessitate exhaustive investigation and deliberation. This focused judicial attention could result in more equitable outcomes in complicated cases, meeting the legislative aim of fostering greater employment stability.

However, these amendments are not without their potential drawbacks.

One looming question pertains to the quality of adjudication under the Ministry’s purview. The MOHRE, while competent in its traditional roles, has not previously had the mandate to adjudicate disputes. There are legitimate concerns over whether it possesses the requisite expertise and resources to render fair and effective judgments.

Adding to this is the risk of bureaucratic delays within the Ministry itself. As the MOHRE takes on this expanded role, it may face its own backlog issues. If it becomes overwhelmed by the influx of cases, this could—ironically—perpetuate the very delays the amendment aims to mitigate.

There’s also uncertainty concerning legal representation. The legislation currently does not clarify whether employees or employers will have the right to legal representation when dealing with the MOHRE. This ambiguity could significantly impact the fairness and equilibrium of the dispute resolution process, potentially undermining the new system before it has even been implemented.

A New Day for Labour Disputes in the UAE

Federal Decree-Law No. (20) of 2023 presents a potentially groundbreaking shift in how labour disputes are managed in the UAE, but its success will ultimately depend on its effective and equitable implementation. Both employees and employers will be watching closely as the new rules take effect and redefine the landscape for labour relations in the nation.