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Best Practices on Handling Employment Disputes in the UAE
August 30 , 2024|Article, Corporate, Employment
Written by Sakshi Jaiswal (Associate)
In the United Arab Emirates (UAE), the legal framework governing employment relationships is established by Federal Decree-Law No. 33 of 2021, along with its associated Executive Regulations, namely Cabinet Resolution No. 1 of 2022 (collectively referred to as the “UAE Labour Laws”). These laws outline the rights and obligations of both employers and employees, providing a structured approach to managing employment-related issues. The Ministry of Human Resources and Emiratization (MOHRE) is the central authority responsible for overseeing labour relations and ensuring compliance with these laws.
Despite the robust legal framework, disputes between employers and employees are inevitable. These disputes can arise from various issues, such as contract breaches, unfair dismissals, wage disputes, and workplace grievances. To address these conflicts effectively, it is essential to follow a systematic approach that includes both legal procedures and best practices.
Step-by-Step Methods and Best Practices for Resolving Employment Disputes in the UAE:
1. Supplementary Contract and Policies
One of the best practises to ensure minimal inception of disputes is to have an airtight contract beyond the one that MOHRE makes you enter into. Now the MOHRE standard contract includes only basic terms like job title, salary, duration of the contract, limited confidentiality term, the details of the parties etc. However, when we recommend our clients to have a supplementary contract especially with their senior or managerial level employees, it is for a reason. A supplementary contract can be employed to strengthen the confidentiality clause, incorporate non-compete and non-solicitation provisions, expand the termination clause, and introduce an intellectual property assignment clause to protect the employer’s intellectual property rights.
Now this can differ from industry to industry, for example: in the technology sector, the contract might include enhanced confidentiality and intellectual property clauses. Healthcare contracts will need to emphasize licensing, patient confidentiality, and shift work details. Construction agreements would focus on safety protocols and project-based terms. Hospitality and tourism contracts often include customer service standards and seasonal employment provisions. Financial services contracts should emphasize regulatory compliance and performance bonuses, while education sector agreements need clear definitions of teaching responsibilities and professional development.
Additionally, employers must establish comprehensive policies on leaves, workplace conduct, ethics, harassment, non-discrimination, and maternity. These uniform policies provide a clear framework, reducing confusion and ensuring everyone is on the same page. This approach promotes compliance, strengthens employer-employee relations, and fosters a supportive, productive work environment and leads to lesser disputes.
2. Ensure Compliance with Law:
Employers must note that all supplementary contracts and policies must not contradict the UAE Labour Laws. Emphasizing the importance of aligning the supplementary contract with UAE Labour Laws and regulations is vital to avoid legal conflicts across various aspects of employment. For instance, neglecting to outline procedures and compensations for termination without cause as required by law could lead to employee dissatisfaction and potential lawsuits. Likewise, including a non-compete clause exceeding the lawful limit of two years could render it unenforceable in court, undermining the employer’s interests. By ensuring compliance with legal standards in all aspects of the supplementary contract, employers not only mitigate legal risks but also foster trust and transparency in the employer-employee relationship.
3. Mediation and Negotiation
One method of ensuring that parties undergo mediation and negotiation when a dispute arises is to include a process for it under the supplementary contract. This ensures that parties can discuss their differences before being regulated by the regulatory authorities to do so.
Prior to January 1, 2024, MOHRE was primarily responsible for facilitating settlements between disputing parties and referring unresolved cases to the relevant labour court. However, significant changes have been implemented starting January 1, 2024.
From this date forward, MOHRE has been granted the authority to settle disputes by issuing a final decision in cases where the claim value does not exceed 50,000 UAE dirhams. Additionally, MOHRE can resolve disputes arising from the non-compliance of an amicable settlement reached through its mediation, regardless of the claim’s value. Decisions made by MOHRE under these circumstances will be treated as executive orders, holding the same legal status as final decisions by local courts, though they remain subject to appeal in the Court of Appeal.
For disputes exceeding the 50,000 UAE dirhams threshold, MOHRE will continue to act as a mediator. Should the mediation fail to resolve the dispute, MOHRE is required to refer the matter to the competent court for further adjudication. This development is anticipated to significantly expedite the resolution of low-value claims.
Moreover, for employees working in free trade zones other than the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM), the oversight of employment rights primarily lies with the respective free zone authorities. These authorities do not possess the power to issue executive orders in the event of a dispute. Therefore, the impact of the new MOHRE regulations on employment disputes within these free zones remains uncertain.
4. Tawafuq Centre
As part of the UAE’s commitment to enhancing labour relations and streamlining dispute resolution processes, the Tawafuq Centre has been established as a government-approved entity dedicated to facilitating mediation between employees and employers. The Tawafuq Centre operates under the auspices of the MOHRE, providing an accessible and efficient platform for resolving labour disputes amicably.
The Centre specializes in mediating conflicts and, where necessary, arbitrating to reach binding resolutions, ensuring that disputes are settled in a fair and timely manner. By promoting dialogue and understanding, the Tawafuq Centre helps maintain harmonious workplace relationships and reduces the need for lengthy and costly litigation. This initiative underscores the UAE’s proactive approach to labour rights and its ongoing efforts to create a stable and productive work environment for all parties involved.
Similarly, the Dubai Multi Commodities Centre (DMCC) has their own disputes centre which assists parties to resolve workplace disputes and also offer virtual dispute resolution as an option. The ADGM’s arbitration centre also hosts a wide range of professionals on its mediators panel with the help of whom they provide court-annexed mediation services.
5. Dubai Courts
When amicable resolutions through the Tawafuq Centre fails, labour disputes can be escalated to the Dubai Courts. The process begins with the aggrieved party filing a formal complaint and providing necessary documentation, such as employment contracts and relevant evidence. Initially, the court reviews the complaint and may re-attempt mediation. If mediation is unsuccessful, a formal hearing is scheduled where both parties present their cases, supported by legal representatives, evidence, and witnesses. The court then issues a judgment, which could include orders for compensation, reinstatement, or other remedies. Dissatisfied parties can appeal the decision within 30 days to the court of appeal, which reviews for legal errors and can uphold, overturn, or modify the original judgment. The final decision is enforceable, and non-compliance can lead to legal enforcement actions such as wage garnishment or asset seizure.
This structured process ensures fair resolution of disputes, maintaining justice and order in UAE labour relations.
