United Arab Emirates: Employment & Benefits – 2024 Highlights and 2025 Outlook

This year has seen some key employment developments in the United Arab Emirates (UAE) for employer-employee relationships, while providing an insight into the implications of such developments for employers operating in the UAE. This article outlines the key highlights from 2024 and looks ahead to 2025.

2024: HIGHLIGHTS

• Extended time frame for labour claims: Employers and employees now have two years from the termination of the employment relationship to file a labour claim, an increase from the previous limit of one year.

• Simplified dispute resolution: Claims valued under AED 50,000 are now handled solely by the Court of First Instance (eliminating the option to appeal to higher courts), aiming to expedite the resolution of small cases. Higher value claims would still follow the standard legal process.

• Increased penalties for employer violations: Fines for labour law violations have been significantly increased, now ranging between AED 100,000 and AED 1 million, depending on the specific violation.

• Enhanced employee protections during disputes: In cases where an employee's wages are withheld during a dispute, the Ministry of Human Resources and Emiratisation (MOHRE) may now instruct employers to continue wage payments for up to two months during the dispute process, preventing financial hardship for employees awaiting dispute resolution.

2025: OUTLOOK

• Prolonged statute of limitation: The new two-year time line for filing employment claims may lead to an increase in claims in 2025, as parties who previously felt pressured by the one-year deadline now have more flexibility to file a claim.

• Enhanced penalties and compliance: In our view, the significant increase in fines for employer violations will lead to employers being more careful about compliance in 2025 and beyond. This includes ensuring all employees have the necessary work permits and that employee entitlements are fully settled, especially as businesses shut down and operations change.

Overall, the changes we have seen in 2024 signal a stronger regulatory environment in the UAE, focusing on the better treatment of employees and a more streamlined judicial process, while encouraging employers to adopt strict compliance and fair employment practices.