In a significant legal development, the UAE has extended the statute of limitations for labor claims from one year to two years. This change marks a critical shift in the way labor disputes are handled in the country, offering more time for employees to seek justice.
Background:
On July 29, 2024, His Highness Sheikh Mohammed Bin Zayed Al Nahyan, President of the UAE, issued Federal Decree-Law No. 9 of 2024. This decree amends key provisions of Federal Decree-Law No. 33 of 2021, which governs labor relations in the UAE. The amendment was officially published on July 31, 2024, and will come into force thirty days from that date.
This decree introduces important changes to the legal procedures surrounding labor disputes, particularly in how appeals against decisions by the Ministry of Human Resources and Emiratisation are handled. One of the most crucial changes is the extension of the time limit for filing labor claims.
Key Changes:
The new law doubles the time limit for filing labor claims from one year to two years. Previously, the statute of limitations began on the date the right in question became due. Under the amended law, the two-year period now starts from the date the employment relationship ends, as outlined in the revised paragraph (9) of Article 54. This change provides employees with additional time to bring forward their claims after their employment has ended.
Comparing the Old and New Laws:
New Law: Article 54, paragraph (9) now states: “No claim for any rights arising under this decree-law shall be heard after two years from the date of termination of the employment relationship.”
Old Law: Previously, Article 54, paragraph (9) stated: “No claim for any rights arising under this decree-law shall be heard after one year from the date the right being claimed became due.”
The amendment introduces two significant changes: the extension of the statute of limitations to two years, and the shift in the starting point for the limitation period from the date the right became due to the date the employment relationship ends. The extension of the period is straightforward, but the new starting point is particularly noteworthy.
Implications of the Amendment:
This change has a profound impact on labor claims. Under the old law, the limitation period could begin while the employment relationship was still active, based on when the right in question became due. For example, if an employee was entitled to a commission during their employment, the one-year limitation period started from the due date of that commission. If the employer did not pay, and the employee did not file a claim within that year, the claim would be barred, even if the employment relationship continued.
The new law ensures that the limitation period for all labor-related claims now starts only after the employment relationship has ended. This provides greater protection for employees, who may have previously hesitated to file claims while still employed due to fear of retaliation or other concerns. Now, with the limitation period beginning after the end of employment, employees have a more secure timeframe to pursue their rights.
Impact on Ongoing Limitation Periods:
A key question is how this new law affects ongoing limitation periods that began before the amendment came into effect.
According to Articles 6 and 7 of the UAE Civil Transactions Law (Federal Law No. 5 of 1985), new limitation periods apply to any ongoing periods at the time the new law takes effect. This rule holds even if the new law lengthens or shortens the limitation period. If the new law shortens the limitation period, the new period starts from the date the law takes effect, but if the remaining time under the old law is shorter, the shorter period applies.
In cases where the limitation period is extended, the new law applies to any ongoing periods that have not yet expired. The old rules continue to apply to the commencement, suspension, or interruption of the limitation period for the time before the new law took effect.
In practical terms, this means that the new two-year limitation period will apply to any claims where the limitation period had not expired when the new law took effect. For example, if an employee’s entitlements became due in June 2024 and no claim was filed before the new law came into effect, the limitation period for this claim will now be two years from June 2024, ending in June 2026.
This approach ensures that employees benefit from the extended timeframe while maintaining legal consistency for ongoing cases.
