UAE Labour Courts Explained

01 October 2024

GLORY SONY

It is important for employers to have a good understanding of legal procedures in the UAE Labour Courts in order to effectively manage potential disputes.   This article provides a detailed overview of the litigation process, starting from the submission of claims to the issuance of final decisions, in order to assist employers in understanding important legal principles, common mistakes, and recommended strategies.  

Dubai: Whether you are dealing with a claim or trying to avoid one, this article offers useful information to safeguard your business interests and ensure adherence to UAE labor regulations.  

Employment disputes

The UAE Federal Decree Law No. 33 of 2021 (as amended), along with its accompanying Cabinet Resolution No. 1 of 2022 on the Implementing Regulation of Federal Decree Law No. 33 of 2021 (Executive Regulations), governs all labor or employment claims in the private sector in the UAE, including its numerous free zones, with the exception of employees based within Dubai International Financial Centre and the Abu Dhabi Global Market. Various ministerial resolutions and decrees also play a role in regulating labor and employment matters in the country.

All labor-related claims within the private sector in the UAE, including its free zones, are handled by the UAE's Labor Courts.  

Limitation period

Claims must be filed within 2 years from the date when the entitlement is due, typically the end of the employment.   If an employee does not make a claim within this time frame, the court may choose to hear the claim, but usually enforces the time limit strictly.  

Pre-litigation

Before bringing a formal employment lawsuit to the labor court, all claimants or their representatives must first submit a complaint to the Ministry of Human Resources and Emiratisation (MOHRE) or the appropriate free zone authority where the claimant worked.   The MOHRE or free zone authority will try to facilitate discussions between the parties and set up a mediation session to address the disagreement.   If no agreement is reached within 14 days of the complaint, the MOHRE will issue a no objection letter to the Claimant and transfer the dispute to the Labor Court.  

Litigation process

Important issues to be considered regarding the litigation process are:

·        The language used during legal proceedings is Arabic. All documents presented as evidence must be translated into Arabic by an approved translator from the Ministry of Justice. Only UAE nationals and select other Arab nationalities can represent parties in court.   Individuals may choose to represent themselves in certain cases at the Court of First Instance.  

·        The process of managing hearings and adjournments in the Labor Court involves scheduling appointments where parties submit written arguments and set dates for future hearings. An "adjournment" refers to the time between hearings when one or both parties must typically prepare submissions or arrange for document translations to be submitted.  

·        What is meant by memoranda.   A "memorandum" is a document submitted by a party involved in a claim, similar to a legal pleading.   The claimant first submits their memorandum outlining the claim, and then the defendant responds with their memorandum outlining their defense.   Additional memoranda can be submitted by each party in response to the other party's memoranda and any submitted documents.   This process continues until the Labor Court decides that all issues have been adequately argued and then reserves its judgment on the matter.  

Evidentiary issues

It is necessary to be aware of:

·        The regulations regarding evidence.   The Labour Court, along with other civil courts in the UAE, typically only considers written documentation as evidence to support a party's arguments.   They do not accept written testimony from witnesses in support of a party's case.   If a party is unable to prove or defend a specific point, they can ask the judge to hear oral testimony from a witness.   The judge has the sole authority to decide whether to call a witness, and if so, only the judge can question the witness.   Neither party is allowed to cross-examine the witness.  

·        Is there a responsibility to reveal and share documents?   In the Labour Court, there is no requirement for complete disclosure.   Documents that do not support a party's argument do not have to be disclosed unless the other party is aware of a specific document and requests disclosure from the court.   However, if a party fails to disclose a document that is crucial to the case, and this is discovered by the court or the opposing party, criminal charges can be filed.   If the crucial document is only found by the opponent after the judgment has been made, they can request the court to reconsider and reissue the judgment.  

·        An expert may be appointed by the Labour Court if it deems an issue to be complex or in need of thorough examination.   This could include matters such as calculating annual bonuses.   The expert selected comes from a pool maintained by the Labour Court and is given a specific task and scope for the investigation.   The expert is granted extensive powers to gather information and evidence, including requesting documents, conducting interviews with witnesses, and visiting the employer's premises to review personnel files and policies related to the issue.   The expert then compiles a report of their findings, which is submitted to the Labour Court. Both parties are given the opportunity to provide feedback on the report, although the Labour Court typically relies on the expert's findings in its final decision.  

Successfully navigating through the intricacies of proceedings in the UAE Labor Court goes beyond possessing legal expertise.   It also entails having strategic foresight and a thorough comprehension of the constantly changing legal environment.   This article aims to highlight the important measures that employers need to implement in order to protect their interests and offers assistance throughout the legal proceedings.

Hearings

In Dubai, all hearings are currently being conducted virtually.   Parties have the option to request in-person hearings, but these requests are typically denied unless the case pertains to a marriage dispute.   Other emirates utilize a mix of virtual and in-person hearings.   The court decides which format to use for each case.

Apart from the mode of hearing being virtual rather than in-person, there are no other distinctions between the two types of hearings.   Discussions during the hearing are minimal.   Both parties present their documents, and if the case is clear to the judge and all necessary documents are available, the judge may reserve judgment immediately.

Alternatively, the judge may ask questions to clarify certain points and ensure the correct documents have been submitted.   If the parties want to address anything mentioned during the hearing, they can request an adjournment and submit a memorandum before the next scheduled hearing.

When the judge reserves judgment, a final hearing will be set up for the judge to deliver their oral and written decision.   There is no set minimum or maximum time for a hearing, it can be as short as 1 minute or as long as a few hours for a complex matter with numerous documents.

Judgments in the Court of First Instance can be as quick as 6 weeks, but typically range from 3 to 6 months.   In cases of complexity requiring an expert, it can take 12 months or longer.   The written and oral judgment will be issued in Arabic on the day of the final hearing, and the judgment, along with the parties' names, will be made public and available on the court's website.  

Who hears the case?

If the claim is worth less than AED 10 million, one judge will handle the case.   In instances of complexity, an expert may be brought in to aid the judge.

For claims exceeding AED 10 million, three judges will be assigned.   Experts may also be summoned to assist in such cases.

Claims below AED 50,000

The Ministry of Human Resources and Emiratisation (MOHRE) now has the power to make the final decision in labor disputes with a claim value below AED 50,000 or if either party fails to follow an approved settlement decision from the mediation stage, regardless of the claim's value.

If either party wishes to challenge the decision made by MOHRE, they can appeal to the Labour Court of First Instance within 15 working days of being notified.   The Court of First Instance will hold a hearing within 3 working days and issue a final decision within 30 working days of the appeal being lodged.

According to the resolution, MOHRE's final decisions must be executed as per customary practices.   However, it remains uncertain how these decisions will be enforced through regular execution procedures given MOHRE's lack of judicial authority.  

Appeal

Either party has the option to challenge the verdict by submitting an appeal application, along with a statement of claim and supporting documents, to the court.   These documents can be filed in hardcopy at a typing center or uploaded to the court system.   The deadline for filing an appeal is 30 days from the day after the Labor Court issues its judgment.   If no appeal is made, the ruling from the Court of First Instance becomes final, allowing the winning party to proceed with execution.   However, if an appeal is lodged, the Court of Appeal will conduct proceedings similar to the initial case, with the exchange of memoranda, until a final judgment is reached.   The appeal must provide detailed grounds for challenging the decision, which can extend beyond legal matters.

It's important to highlight that if the claimant is the party appealing, the Court of Appeal cannot rule for an amount less than what was granted at the Court of First Instance, regardless of the judge's opinion.   Conversely, if the defendant chooses to appeal, the judge retains the authority to reduce the awarded sum.   Parties have 60 days from the date of the Court of Appeal judgment to escalate the case to the Court of Cassation.

For cases exceeding AED 500,000, an appeal can be directed to the Court of Cassation, where a panel of 3 to 5 judges will oversee the proceedings.   The Court of Cassation follows a similar process to the Court of Appeal, including the submission of an appeal application, statement of claim, and exchange of memoranda, ultimately leading to a final ruling.   Appeals at the Court of Cassation are limited solely to legal matters.   

Legal representation

Parties in legal matters can have a registered UAE national (or certain other Arab nationalities) or a family member up to the fourth degree represent them.   Company managers can also designate a staff member to act as a representative in court.   All representatives must possess a power of attorney that has been authenticated by a notary public.   Parties have the option to represent themselves, which is often seen among employees, in the Court of First Instance and the Court of Appeal, but not in the Court of Cassation.

Costs and judgments

The main issues to be aware of in relation to costs and judgments are:

·        Each party is responsible for their own legal costs and disbursements, which cannot be recovered by the winning party, except for a small nominal amount towards legal costs awarded to the winning party at the final hearing.

·        Court fees amount to 5% of the total claim amount (up to a maximum of AED 20,000). Despite the outcome of any claim, a respondent employer is required to pay the court fees.   Employees and their heirs are exempt from paying court fees for claims under AED 100,000. For claims exceeding AED 100,000, both the employee and employer are expected to pay 5% of the total claim amount.   The employee can request the court to postpone payment of court fees until the final judgment is issued.   If permission is granted, the court will deduct these fees from the amount awarded to the employee in the judgment.

·        Typically, expert fees are borne by the claimant, although the Labour Court may order the parties to share these costs.

·        The Labour Court may grant interest on the judgment amount at a rate of 5%, at its discretion.

·        The duration of the process may vary.   While a judgment in the Court of First Instance can be as swift as 6 weeks, it usually takes 3 to 6 months.   In more complex cases where an expert is involved, the process can extend beyond 12 months.

·        Judgments are initially provided in the form of a brief verbal summary, with the detailed written judgment following at a later stage.   

ALKETBI TOUCH:

ALKETBI team is highly skilled and frequently provides legal assistance specializing in sustaining employers and employees. For further insights and updates on employment law reforms, visit our website and social media platforms as it provides valuable resources and guidance for understanding the complex landscape of employment law in the region and beyond. If you request further guidance or you have concerns and queries, Let us know!